Friday, February 06, 2009

Curbing Pay, Obama Seeks to Alter Corporate Culture

“Curbing Executive Pay”

NY Times reported on Wednesday the executive pay limits

President Obama is trying to hold the financial industry accountable to taxpayers while aiming to change an entrenched corporate culture that endorses outsize bonuses and perks that often bear little relationship to corporate performance

President Obama is on his way to altering 'Corporate Culture' in America; changing the face of culture across the corporate board will mean more structured salaries. The brightest and the best who failed at performance are facing 2009 with a reality check "shape up or shape out"

The new rules would set a $500,000 cap on cash compensation for the most senior executives, curtail severance pay when top executives left a company, restrict cashing in on stock incentives until government assistance was repaid and prod corporate boards to closely scrutinize luxury perquisites like private jets and country club memberships.

New rules will mean Shareholders have more say about restricting stock incentives and bonuses capping. Obama commented on Wednesday

We don’t disparage wealth. We don’t begrudge anybody for achieving success. And we believe that success should be rewarded. But what gets people upset — and rightfully so — are executives being rewarded for failure. Especially when those rewards are subsidized by U.S. taxpayers

Hopefully this is sending out the right message not only in the USA but in UK, Europe and everywhere else; people want to be the CEO but very few want to “Do” CEO moving in this direction is politically necessary.

Source: NY Times


Anonymous said...

What happens to the one's who were compensated after the bailout, they get to keep the money Citigroup CFO racked up a cool 18m, surely he could of forego this and pay staff at the end of the food chain. How do you value a year worth of work at 500k, it can buy 2 homes. If someone is taking 18m compensation why are they still working, and what are they doing that they call value

Anonymous said...

Staff under perform they get the sack, loose shares incentives and a lot more. CEO's under perform they get paid off to leave, graze for a few months and then get elected to some board or end up in consultancy. Corporate culture sucks.

Anonymous said...

Don't blame it on corporate culture blame it on management teams who sit back and let things slide. When the biggest and best in the industry fail heads should roll in all directions

Anonymous said...

If you ask me lets not cap executive pay, lets cap the executive