PDA

View Full Version : Obama caps US Executives salaries



David Guyatt
02-05-2009, 05:52 PM
Wow! Great move if he is able to police it? But the question is what punishment awaits those tho who break the cap. Surely senior execs will simply make arrangement for their corporations to pay sums offshore and then stash money in Swiss bank accounts or other jurisdictions that offer secret banking?

Time to read the fine print of his Presidential Order (when it is signed), I think...

http://www.huffingtonpost.com/2009/02/03/obama-to-limit-executive_n_163765.html

Obama Caps Executive Pay Tied To Bailout Money (SPEECH TRANSCRIPT)

AP | JIM KUHNHENN | February 3, 2009 10:33 PM

WASHINGTON President Barack Obama imposed a $500,000 pay cap on some senior executives whose firms receive government financial rescue money, a dramatic intervention into corporate governance in the midst of financial crisis.

Standing with his Treasury Secretary Timothy Geithner, Obama said the United States doesn't disparage wealth nor does it begrudge those who succeed, but lavish bonuses for executives at companies seeking taxpayer dollars was unfair.

Read the President's remarks:

Thank you, Tim, for your hard work on this issue and on our economic recovery.

The economic crisis we face is unlike any we've seen in our lifetime. It's a crisis of falling confidence and rising debt. Of widely distributed risk and narrowly concentrated reward. A crisis written in the fine print of sub-prime mortgages, on the ledger lines of once-mighty financial institutions, and on the pink slips that have upended lives and cost the economy 2.6 million jobs last year alone.


We know that even if we do everything we should, this crisis was years in the making, and it will take more than weeks or months to turn things around.

But make no mistake:

A failure to act, and act now, will turn crisis into a catastrophe and guarantee a longer recession, a less robust recovery, and a more uncertain future. Millions more jobs will be lost. More businesses will be shuttered. More dreams will be deferred.

That's why I feel such a sense of urgency about the Economic Recovery and Reinvestment Plan that is before Congress today. With it, we can save or create more than three million jobs, doing things that will strengthen our country for generations to come. It is not merely a prescription for short-term spending - it's a strategy for long-term economic growth in areas like renewable energy, health care, and education.

Now, in the past few days I've heard criticisms of this plan that echo the very same failed theories that helped lead us into this crisis - the notion that tax cuts alone will solve all our problems; that we can ignore fundamental challenges like energy independence and the high cost of health care and still expect our economy and our country to thrive.

I reject that theory, and so did the American people when they went to the polls in November and voted resoundingly for change. So I urge members of Congress to act without delay. No plan is perfect, and we should work to make it stronger. But let's not make the perfect the enemy of the essential. Let's show people all over our country who are looking for leadership in this difficult time that we are equal to the task.

At the same time, we know that this Recovery and Reinvestment plan is only the first part of what we need to do to restore prosperity and secure our future. We also need a strong and viable financial system to keep credit flowing to businesses and families alike. My administration will do what it takes to restore our financial system; our recovery depends upon it. And so next week, Secretary Geithner will release a new strategy to get credit moving again - a strategy that will reflect the lessons of past mistakes while laying a foundation for the future.

But in order to restore our financial system, we've got to restore trust. And in order to restore trust, we've got to make certain that taxpayer funds are not subsidizing excessive compensation packages on Wall Street.

We all need to take responsibility. And this includes executives at major financial firms who turned to the American people, hat in hand, when they were in trouble, even as they paid themselves their customary lavish bonuses. As I said last week, that's the height of irresponsibility. That's shameful. And that's exactly the kind of disregard for the costs and consequences of their actions that brought about this crisis: a culture of narrow self-interest and short-term gain at the expense of everything else.

This is America. 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.

For top executives to award themselves these kinds of compensation packages in the midst of this economic crisis is not only in bad taste - it's a bad strategy - and I will not tolerate it as President. We're going to be demanding some restraint in exchange for federal aid - so that when firms seek new federal dollars, we won't find them up to the same old tricks.

As part of the reforms we are announcing today, top executives at firms receiving extraordinary help from U.S. taxpayers will have their compensation capped at $500,000 - a fraction of the salaries that have been reported recently. And if these executives receive any additional compensation, it will come in the form of stock that can't be paid up until taxpayers are paid back for their assistance.

Companies receiving federal aid are going to have to disclose publicly all the perks and luxuries bestowed upon senior executives and provide an explanation to the taxpayers and to shareholders as to why these expenses are justified. And we're putting a stop to these kinds of massive severance packages we've all read about with disgust; we're taking the air out of the golden parachute.

We're asking these firms to take responsibility, to recognize the nature of this crisis and their role in it. We believe that what we've laid out should be viewed as fair and embraced as basic common sense.

Finally, these guidelines we're putting in place are only the beginning of a long-term effort. We're going to examine the ways in which the means and manner of executive compensation have contributed to a reckless culture and quarter-by-quarter mentality that in turn have wrought havoc in our financial system. We're going to be taking a look at broader reforms so that executives are compensated for sound risk management and rewarded for growth measured over years, not just days or weeks.

We've all got to pull together and take our share of responsibility. That's true here in Washington. That's true on Wall Street. The American people are carrying a huge burden as a result of this economic crisis: bearing the brunt of its effects as well as the costs of extraordinary measures we're taking to address it. The American people expect and demand that we pursue policies that reflect the reality of this crisis - and that will prevent these kinds of crises in the future.

Thank you.

Simon Westly
02-05-2009, 07:13 PM
This is Obama in wish mode or else his cynical side in action. Choose which.

There is no Executive Order. There will be no Executive Order. This is guidance only and has no force in law and no teeth. Senior US executives regularly ignore the law when it is in their interests, and they will bellylaugh at this speech.

Magda Hassan
02-06-2009, 12:30 AM
Welcome to the forum Simon.
Theatre politics if you like. Gestures for public consumption as the general public is getting pretty tired of the continued trough swilling by the financiers. I can't see that there wont be a way found around this. Most people I know would be able to scrape by on $500,000 per year but not all apparently. If it is not enforceable in law and spirit it really isn't worth anything. And in any case is over and above their already more than adequate salaries.


We're asking these firms to take responsibility, to recognize the nature of this crisis and their role in it. We believe that what we've laid out should be viewed as fair and embraced as basic common sense.
No point asking them politely to take responsibility for their role in causing the crisis. They will never do that. Look at the responsibility shown by them up till now. None. They must be made to take responsibility and they must be made to give up control of the money market. They asked for no regulations. They got no regulations. We have seen how they can't manage a shit in a toilet. There has to be regulation, accountability and transparency. There must also be serious consequences for breaches of law and trust. Big financial penalties and long jail time.
If Obama wants to talk common sense them the whole system must go as it is not sustainable, ethical, or even useful (to the majority that is).
Common sense says you can't make money from nothing.
Common sense tells me that Obama is just dog whistling to the boys to keep the noise down a bit so the party can go on and on and on. Other wise the neighbours may come over and pull the plug and tip the kool aid down the sink.

Myra Bronstein
02-06-2009, 02:54 AM
This is Obama in wish mode or else his cynical side in action. Choose which.

There is no Executive Order. There will be no Executive Order. This is guidance only and has no force in law and no teeth. Senior US executives regularly ignore the law when it is in their interests, and they will bellylaugh at this speech.

Yes, unless it's law it's theater. And even if it's law it better be written to prevent loopholes that'd make it virtual theater.

Welcome to DPF Simon.

Simon Westly
02-06-2009, 10:37 AM
Gee, you mean he doesn't really expect anyone to take any notice of his advice? Does that mean he's nice but stupid or not nice and not stupid?

Good intentions paved the road to Hell they say.

Magda Hassan
02-06-2009, 10:55 AM
The best paved road ever made that one. A super highway. A veritable Autobahn gold plated and dusted.

I don't think Obama is too stupid and he seems nice. But what does that mean? Does it even mean anything? Does he really think he has the power of the office of President or does he know that he is just sitting there on behalf of others and it is they who pull the strings, his strings? I suppose it is a matter of time will tell.

I do know that bankers are not going to develop a social conscience over night and give back all their ill gotten gains. I know they will try to get more money any way they think they can get away with short of jail or having it confiscated. All corporations are sociopathic. Banks are no different. Maybe worse. Some certainly look like the Hanibal Lecter of the corporate world at the moment.

Magda Hassan
02-07-2009, 06:44 AM
New thread started here on this subject:
http://www.deeppoliticsforum.com/forums/showthread.php?p=3632#post3632

David Guyatt
02-07-2009, 04:07 PM
Brown tips cap to Obama and caps UK bank executive salaries -- not

It seems that the use legislation to do the necessary is only necessary to ensure that the ordinary citizen adheres to state requirements in today's double standards world.

http://news.bbc.co.uk/1/hi/business/7871828.stm

Brown warns banks on bosses' pay
The Prime Minister has insisted there should be "no reward for failure" at banks which have had to be bailed out by the taxpayer.

Gordon Brown was speaking after reports Royal Bank of Scotland is considering awarding large bonuses, despite expectations of huge annual losses.

However Mr Brown stopped short of saying the government would impose a salary cap on rescued banks.

On Wednesday President Obama capped executive pay at rescued US banks.

RBS warned

Earlier, Business Secretary Lord Mandelson sent a direct warning to RBS, saying the bank risks alienating ordinary people if it gave its executives "exorbitant" bonuses.

Responding to a report in The Times newspaper saying RBS was planning to pay millions in bonuses to its senior bankers and traders, Lord Mandelson said: "Please be mindful about how this looks and what public opinion will be."

The recently bailed-out bank said its pay policy had yet to be decided.

RBS told the BBC: "The Board has yet to decide on remuneration policy for the year."

"We have previously announced that the Board will receive no bonuses in 2008 and if there are any bonuses for 2009 they will be paid in shares."

Lord Mandelson added: "Of course you have got to do all you can to recruit the best people and keep the best people in place - there is a huge job on our plates.

"On the other hand the banks have got to be sensitive to public opinion and I think they need to think about what is the best way forward."

No reward

Speaking later at Downing Street, the Prime Minister was keen to stress that top executives at rescued banks had left without severance pay and bonuses.

HAVE YOUR SAY If the bank executives can't manage their own finances what are they doing running banks? Andrew Lefevre, Norwich

The new boards would not be receiving any cash bonuses and there would be no dividends for shareholders, he added.

Mr Brown also said he "strongly agreed" with the approach to executive pay being taken by President Obama.

The PM was speaking one day after the US President announced a $500,000 (355,000) limit on executive pay at US firms that needed fresh government aid.

Wall Street paid $18.4bn (12.7bn) in bonuses in 2008 and $32.9bn (22.7bn) in 2007.

However Mr Brown stopped short of saying the government would impose a similar salary cap.

Record loss expected

RBS, which is set to be 70% owned by the government, is due to release its annual earnings results on 26 February.

It has already said that it expects to report write-downs of between 7bn and 8bn in 2008. The forecast caused shares in the bank to plunge 67%.

Analysts predict it will report a record annual loss for 2008, beating the 15bn loss posted by Vodafone in 2006.

According to The Times newspaper, RBS paid out 1.83bn in remuneration in 2007, most of which is thought to have been in bonuses.

Simon Westly
02-09-2009, 11:34 AM
As public pressure mounts about bank bosses paying themselves big bonuses with taxpayer funds the Chancellor reacts decisively and authorises a probe.

http://news.bbc.co.uk/1/hi/business/7877161.stm

Chancellor warns RBS over bonuses
Chancellor Alistair Darling has told RBS failure should not be rewarded with huge bonuses, but says he cannot rule out pay-outs for some bank staff.
It comes as reports put the potential total bonus figure at up to 1bn for the company's 177,000 workers.
The Treasury has ordered a probe into general UK bank management to be led by ex-City regulator Sir David Walker.
Opposition parties have expressed anger that his final recommendations may not come until the end of the year.

Sir David, a former executive director of the Bank of England and former chairman of the Securities and Investments Board, he is now a senior adviser at Morgan Stanley International.
His preliminary conclusions are not due until the autumn and final recommendations by the end of 2009.
The timescale fuelled complaints from opposition parties that the Treasury response was too slow.
Shadow chancellor George Osborne said it was "inadequate" and the review would come "far too late" to do anything about this year's bonuses.
Lib Dem treasury spokesman Vince Cable said: "Instead of dealing decisively with the problem, as President Obama, the Swiss and others have done, the government is clearly playing for time in order to avoid doing anything to upset the bankers."
The independent investigation will also look at the pay and bonuses of top executives in the industry.
"The chancellor feels he has the right to limit bonuses and set conditions on pay at any bank propped up by us, by taxpayers, which broadly includes all British banks, since they've all received exceptional loans and guarantees from taxpayers over the past few months," said BBC business editor Robert Peston.
'Absolute minimum'
Banks were said to be looking to pay a fraction of last year's bonuses.
But the scale of the reported pay-out at RBS has caused an outcry, after the company had to be taken into 68% public ownership at a cost of 20bn in taxpayer money.

RBS has experienced a year of turmoil, and has already flagged up that it will post a huge loss for the past 12 months.
In January RBS said it was heading for a record loss, and expected to report a deficit before write-downs of between 7bn and 8bn for 2008.
Mr Darling told BBC One's Andrew Marr Show that "no figure on bonuses has been agreed on" but said he had told RBS no-one associated with the losses should be rewarded.
"I have spoken to the chief executive of RBS, and made it quite clear - and he agrees - that no-one associated with these huge losses should be allowed to walk away with large cash bonuses," Mr Darling told the programme.
But he added: "Obviously there are contractual problems with some staff. And... if you look at your average teller, they're not terribly well paid, and no-one would quarrel with making sure they are properly rewarded."

He said that in the past a bonus was a reward for hard work or extra effort, but was now seen as a right by bankers.
He added that the bank wanted "to make sure they cut down these payments to the absolute minimum they have to."
"They have to understand that these banks would not be here but for the British taxpayers, therefore they have to show the degree of restraint that people would expect."
'Burst'
The shadow chancellor told the Andrew Marr Show: "The party is over for the banks.
"For senior management, cash bonuses at a time like this for people who have been involved in the higher echelons of a bank is simply unacceptable."
Mr Osborne added that there had to be a new economic model, and that "the bankers and indeed the government have to understand you can't just reflate the balloon that burst".
Referring to the Treasury inquiry, he also questioned the need for "yet another review".
Liberal Democrat party leader Nick Clegg told the BBC's Politics Show: "You don't need a review to answer the simple question: should senior bankers receive bonuses? The answer is no."
RBS confirmed it was talking to the government about bonuses but declined to comment on any specific numbers, adding that it had contractual obligations to many executives but was trying to do the right thing at the same time.
The bank has said that any bonuses will be dramatically reduced and there will be "no reward for failure in those bits of its business where the losses were concentrated".
Incentives
Meanwhile, former deputy prime minister John Prescott, who runs an online grassroots banking campaign, said: "We are all [RBS] shareholders now and the shareholders demand you give up the bonus."
One of the key issues that will be examined in the Treasury review is the extent to which financial incentives encourage bankers to take risks.
Mr Darling said that it would be wrong to reward people whose excessive risk-taking brought the banks down.
Angela Knight, chief executive of the British Bankers' Association, said the size of bonuses was likely to come down in future.
"They have seemed very high," she said. "What I will say is that I don't think you'll see those again."

She added: "Looking at very detailed as well as general changes to remuneration structures is something that the banks are already doing."
Last week US President Barack Obama announced a $500,000 (355,000) limit on executive pay at US firms that needed substantial fresh government aid.
The move follows widespread public anger over the levels of pay on Wall Street, but is not expected to be applied retrospectively.

===============

http://news.bbc.co.uk/1/hi/uk_politics/7878418.stm


Brown talks tough on bank bonuses
The culture of rewarding bankers for failure and short term gain is being "swept away", Gordon Brown has said.
Labour would "aggressively" pursue action to ensure that future rewards for bankers were based on "long-term success" and failure was penalised.
The government is under pressure amid reports RBS Group, in which it holds a major stake, could pay 1bn in bonuses.
The Tories said ministers were "asleep on the job" on the issue while the Lib Dems said the response was "pathetic".
Speaking in London, Mr Brown said: "We are leading the world in sweeping away the old short term bonus culture of the past and replacing it with a determination that there are no rewards for failure and rewards only for long-term success."
"In the future there must be rewards for success - but long-term sustainable success and not just short-term gains."
Earlier, Treasury minister Yvette Cooper said any contractual or legal obligations on banks to pay bonuses at a time when they were making huge losses must be "challenged".
'Moral responsibility'
"We have made very clear that as major shareholders in these banks we won't accept bonuses for failure," she told the BBC. "These do need to be curtailed."
Ms Cooper said there was "a lot to be said" for going down the same route as the US and banning future cash bonuses for bank staff but said bankers should also look to their own actions.
"I think there is a moral responsibility on some of these bankers, even if they are legally entitled to take bonuses, at a time when the bank is only still standing because of government intervention and why I think there is an important issue of needing to restore trust in the city, senior executives need to take responsibility and consider whether they should be taking bonuses."
Chancellor Alistair Darling said on Sunday the RBS Group should not reward staff with huge bonuses, but says he cannot rule out pay-outs for some bank staff.
The Treasury has ordered a probe into general UK bank management to be led by ex-City regulator Sir David Walker.
The timescale of the Walker review has fuelled complaints from opposition parties that the Treasury response was too slow.
'Outrageous'
Tory leader David Cameron said the review was "much too late in coming" and that he had been warning about the dangers of excessive bonuses for many months.
"It does appears that the government has been completely asleep at the wheel," he said.
For banks now owned by the taxpayer, future bonuses should consist of shares not cash and only be paid out when much of the investment made by the government had been repaid.
Executives at RBS needed to "recognise the fact" that the bank would have not survived in its current form if the government had not stepped in, he added.
"As the principal shareholder, you are able to say what is and what is not acceptable."
"It is outrageous for taxpayers to put 20bn into banks to see a billion of that used to pay out bonuses," he said.
The Lib Dems said that instead of dealing "decisively" with the problem, the government was "playing for time" in order not to upset the banking industry.
"You don't need a review to answer the simple question: should senior bankers receive bonuses? The answer is no," said the party's leader Nick Clegg.
The independent investigation will also look at the pay and bonuses of top executives in the industry.
'Absolute minimum'
Under the terms of October's bank-bailout, no board directors at partly state-owned firms will receive any cash bonuses this year.
But the scale of the reported pay-out at RBS, in which the government holds a 68% stake, has caused an outcry and led to calls for an across the board ban on bank bonuses.
RBS has experienced a year of turmoil, and has already flagged up that it will post a huge loss for the past 12 months.
RBS confirmed it was talking to the government about bonuses but declined to comment on any specific numbers, adding that it had contractual obligations to many executives but was trying to do the right thing at the same time.
The bank has said that any bonuses will be dramatically reduced and there will be "no reward for failure in those bits of its business where the losses were concentrated".
Former deputy prime minister John Prescott has said that as shareholders, the public demands that bankers give up their bonuses.
Last week US President Barack Obama announced a $500,000 (355,000) limit on executive pay at US firms that needed substantial fresh government aid.
The move follows widespread public anger over the levels of pay on Wall Street, but is not expected to be applied retrospectively.

Magda Hassan
02-09-2009, 12:40 PM
As public pressure mounts about bank bosses paying themselves big bonuses with taxpayer funds the Chancellor reacts decisively and authorises a probe.
A probe as deep and decisive as that done on Jack Kennedy's back wound during his autopsy. Wow. I bet those bankers are really worried now.