Thought this quote was kind of funny.

From a NY Times story on the administration’s plans to cap corporate executives’ pay at $500K if they accept bailout money:

“That is pretty draconian — $500,000 is not a lot of money, particularly if there is no bonus,” said James F. Reda, founder and managing director of James F. Reda & Associates, a compensation consulting firm. “And you know these companies that are in trouble are not going to pay much of an annual dividend.”

Tough times… just $500K. AND no bonus. How will they eat?

Written by devotchkaa

10 Comments

Kristof

This quote by James Reda offers an excellent glimpse into the psyche of the very folks who’ve gotten us most into the current financial mess. Keep in mind that the extras & options they’re talking about often far eclipse their already enourmous salaries. Many of the big bank CEOs were (and still are) collecting EIGHT FIGURE BONUSES on an ANNUAL basis. Bush’s recent $700 billion unregulated giveaway to banks, intended on paper to ‘help the NATIONS economy’, prompted one such CEO to ‘do his share’: he organized an ‘office makeover’ at a price of over $1 million (including a $1400 waste paper basket, and $3500 commode). And all this was to HELP…he anticipated better job performance if given a basic ‘proper work environment’.

What is most apalling to the majority of us is the simple blind conception of loss by these fat cats: Reda clearly sees a policy enforcing half a million in annual pay as someone taking away something that is his. But this is their mindset: you can understand it if you simply look out your window and decide that whatever you can see is rightfully yours. Close out any sense of conscience and then limit your view to only what you perceive thru your own senses, and anything you do to justify your actions becomes legitimate. What is best for you becomes what is best for everyone, and what is felt right by you must be right for all. Its mindboggling to know that people can be that way, and even more dramatic when you meet people like that in real life (i’ve gone to school with some of their children and they are quite scary). But when you wonder how they can possibly weep the ‘loss’ of one million of their multi billions, or have their hand out for taxpayers money and right afterward throw a $50 million CEO party at a super-exclusive resort, its because to them all of it is seen as theirs anyway. Family’s foreclosed homes and broken life savings weren’t those familie’s losses…they were THEIR losses ultimately.

With the recent $700 billion giveaway to banks, it is only now becoming evident that it was done without oversight or accountability for how those funds would be spent, and without requirements for caps on CEO’s salaries and bonuses. “But it had to be done this way for the good of the nation” we’re told. And surprise surprise…the economy continues to fall. This week the CEOs of 8 major banks are being brought before Congress to explain how they spent our taxpayer funded bailout money. Moveon.org polled its members inquiring that If you could ask those banks any question, what would you ask? My question was this: “As you require the strictest terms/scrutiny over the people you grant loans to, how is it you offer none yourselves regarding the money the people have loaned you?” I do not expect any real answer to this; that would require thinking outside the boundaries of the twisted view of reality these people have limited themselves to. I can already sense the responding pause, and then the attempt to swing around it. “…Question not logical …does not ompute… override…”.

But its too bad we were only allowed one question. If given a 2nd one, i would have probabily inquired about solution strategies to preventing this from happening again, should we ever climb out of the mess we’re in now. I know they don’t have a realistic answer, but the reason i’d ask it is because i think i do. Very simply, it entails allowing me to spend just one day in a locked room with these CEOs. Because if any of them ever left that room…they’d be begging for a salary of $500,000. And they might even be just a bit more humble, too.

They would be damn thankful.

Reply
sven

For someone who seems obsessed with compensation in the financial services sector, you should at least get your facts straight. Very few, if any, of the big bank CEOs received any bonus for 2008. In fact, Citigroup’s CEO Vikram Pandit said he will take a salary of $1 and no bonus until the bank becomes profitable again. Also, while I certainly don’t defend Thain’s remodeling of his office at Merrill Lynch, it’s a far stretch to argue that it was prompted by TARP (if by “unregulated giveaway” you indeed refer to the Troubled Asset Relief Program). And FYI, the scope of TARP is much broader than just banks.

As for your assertion that TARP is simply a giveaway without oversight and accountability, well that’s just wrong again. You seem unaware for instance of the concessions required of car makers or capital and lending requirements for banks.

While TARP, TALF, FSP and all the other measures that are aimed at overcoming this depression will necessarily have their shortcomings, populist rhetoric and locking CEOs in rooms won’t get us anywhere.

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Kristof

just curious: is this response meant as support/simpathy for bank CEOs, or meant more to jab at the stupid parts of the points i made? I’ll admit i’m ashamed of some things i wrote there. But i can’t see any need for simpathy toward these men who are crying about only making a half mil/year; to me that seems not only wrong, but crazy.

Reply
sven

Wasn’t meant as a jab at you personally, apologies if it came across like that. Many CEOs, not just those of banks, exhibited despicable behavior and destroyed shareholder value. I absolutely agree that they need to be held responsible for their actions. What I take issue with is blanket statements about Wall Street and its role in causing this depression. Let’s not forget how peoples’ faith in ever increasing real estate prices led to an unsustainably low savings rate, which is causing many of the foreclosures … How can anybody belief that the value of their house will increase by 20% annually forever? It reminds me of the time when investors believed that an online pet food company should be worth at least $1billion … I call that crazy.

I am also disappointed with this administration that seems to resort to populist rhetoric whenever they run out of constructive ideas. Just look at the new stimulus bill: tax credits for people who don’t pay tax and limits on executive pay because of mistakes made by relatively few; doesn’t get much more populist.

Reply
Kristof

Greetings Sven; thanks for answering. Its ok…i think it was more my feelings were hurt based on how monumentally stupid some of what i said sounded after your response, haha. Thats my own fault tho of course. But i had been hearing a lot about CEOs continuing to get these outrageous bonuses after collecting government stimulus money in 2008 (it may or may not have been specifically bank CEOs). After a couple hours of multitasking a busy work schedule while listening to such stories thru my headphones i flipped over to the mousybabe site, which i usually browse to read Em & Su’s pleasant light-hearted posts when i need a cheering up. Seeing James Reda’s dick-headed droning was kind of like a straw that broke the camel’s back

Dunno man, i’m not so sure how to react to hearing that many bank CEOs turned down bonuses in 2008; i just have too many questions. A couple weeks ago WSJ frontpage headline read “Bankers Face Strict New Pay Cap; Stimulus Bill Puts Retroactive Curb on Bailout Recipients (meaning for 2008); Wall Street Fumes”. To that i ask, if these guys weren’t taking bonuses anyway, then why are they fuming mad about retroactive restructions and the half-mil pay cap? If this upsets them so much, that says to me either A) they plan on going straight back to taking outrageous bonuses when (if) things get better, or B) they’re just plain lying. Moreover, if last year’s stimulus package was well regulated, then why is it the 8 large bank CEOs brought for questioning before congress could offer no information about how they’re using those funds? If they are doing nothing outside the people’s best interest, then what is there to hide?? I understand various consessions are in place on these packages; but how are we to tell wether these terms are being enforced or followed at all?

I certainly don’t think any non-executive’s hands are clean. I agree personal responsibility should be borne by folks who purposefully got themselves into debt by either buying too big a house or exausting their credit for frivolous crap. But i don’t think this is comparable to the acts of greed done by the elite. Selfish acts are and have been committed by folks on all ends of the social spectrum; meanwhile somewhere in between are tons of folks who are losing their shirts just trying to make a living, as well as probabily a few decent executives. But that top tiny percent that controls the bulk of wealth/resources commit individual acts which ultimately affect the well-being and livelyhood of countless others. A CEO already earning millions doesn’t just give himself another ego boost when he throws an 8 figure bonus on top of that; he also diminishes some potential for hundreds or thousands of working people to earn a basic living or feed their families. Why is a woman in Iowa who owes $14 for an overdue library book arrested when guys like Bernie Madoff who stole $50 billion are free on bail? The 2 may both be crooks if you want to use broad definitions, but doesn’t the latter clearly affects us all unfathomably deeper than the former?

This is what brings me to the issue of compensation: why does a CEO really deserve a bonus on top of an already outrageous salary at all? Do they really create that much benefit to our world or society as a whole that they’ve justified ‘earning’ it? I don’t have exact stats, but it seems that ever since the Reagan years there’s been a gradual concentration of wealth & power into very few hands. Actual wealth & income for the majority of us seems to have flatlined or decreased while the richest elite just keep getting richer. This creates inevitable situations where it becomes illegal to, say, rob a store of $80 to pay the rent, but legal to rob a nation of billions to enrich an individual. So i think limits on executive pay are the right way to go, wether or not only a few CEO’s have made mistakes. To me, that entire system is a mistake that needs fixing…one which if allowed to continue will inevitably bring about much more violent revolt than just electing a president who’s a great talker.

The result of this system is seen in folks like James Reda who become so blind to reality that regulating their pay to even a level higher than many see in a lifetimes is seen by them as someone taking away something that is theirs. But CEOs don’t have to be badguys just by definition. What i’d really like is to find some way to bring folks like this out of their self-indulgent protective bubbles and back in to the real world. My guess is that they would be way too scared to leave their bubble if asked…and too ashamed to go back and face those who do live in the real world if forced. That said, from what i’ve written it sounds like what i’d really like to do is create my own Guantanimo, round up all the pigs i can, and mess these guys up. Sounds a lot like the Dick we just had the past 8 years. This makes me personally ashamed for some of what i’ve said, because i suspect the sentiment to do just that isn’t entirely untrue (even if it is only sentiment). Ultimately its just a rant from another powerless person who’s still young enough to want to change the world overnight.

Its interesting that Su used only 4 words and a goofy cartoon to basically say more than i think either of us have. “How will they eat?”…thats classic. But all that said, out of curosity, are you the Sven that is in a few of the pictures on this site? (if you don’t mind my asking). Best,

Kristof

Reply
LYNN

HELLO ALL-
I AGREE TOTALLY WITH KRISOF (I ALSO KNOW HIM PERSONALLY). WHO EVER COMPLAINES ABOUT LOSING ANY FIGURE OVER 6-NEEDS TO COME BACK TO REAL LIFE.
* SOMETIMES I HAVE TO RETURN BOTTLES TO GET FOOD/GAS….HAS ANY CEO DONE THIS IN THE LAST 10 YRS ( DON’T THINK SO)

* ALSO I HAD TO MISS DR’S APPT’S BECAUSE OF NO GAS…..HAS ANY OF THE CEO’S WENT THRU THIS (DON’T THINK SO)

* MY GREATEST HOPE, AND DREAM JOB WAS THE WALL STREET/NOW I CHOOSE MCDONALDS.

* AND FOR MY LAST QUESTION: HOW COME THE CEO’S AND THE GUY WHO I SHALL KEEP NAMELESS (UNDER HOUSE ARREST)- WHY, OH WHY AREN’T THEY MADE TO HAVE AN IMMEDIATE ESTATE SALE..

* WHEN THESE ANSWERS ARE MET, THEN THE RECESSION MIGHT BE OVER SOONER -THAN LATER.

* WHERE’S MY MONEY- I ACTUALLY WORKED ALL MY LIFE..NOT TAKEN ..THERE BETTER BE SOME GOOD ANSWERS BEFORE I START A PETITION FOR LOW INCOME PEOPLE /DON’T PAY YOUR TAXES (LIKE THEM), DON’T CARE ABOUT OTHERS (LIKE 85% OF THEM), WORK UNDER THE TABLE WHEN EVER YOU CAN>> HOW ABOUT THAT..

* LET THEM WORK THE SYSTEM THEIR WAY- AND WE’LL WORK IT OURS..

THANK GOD FOR OBAMA…OBAMA…OBAMA…OBAMA

Reply
Kristof

heh, i stayed a bit after work and wrote my last comments. Some of my co-workers were curious why i stayed, so i showed them this site. Now they want me to see their comments too. Looks like none of us will ever be president now, haha :-]

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devotchkaa

Kristof, while cleaning our apartment I found a small stack of Exit Clov bumper stickers that you’ve been asking about. I thought we were out of them! I’ll try to remember to them in April when we go to Boston :)

Reply
Kristof

Rawkin! Do you have one in chrome? Unfortunately my hot rod is still off the streets tho – remains bent & banged up due to last accident :-(

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