We interrupt this regularly scheduled expo for important financial news. I should mention I abhor corporate CEOs and executives who enrich themselves without increasing shareholder value. What I hate even more is the following… A CEO or executive who has received hundreds of millions of dollars of compensation based on the incorrect assumption he was somehow smarter than everyone else and was able to achieve something with his company that others could not. This is especially infuriating if the CEO ran a company which participated in a business he didn’t understand too well – only to find out later he brought down his company and much of the global financial system.
Today the Obama administration announced that they are capping executive pay at $500,000 a year if a bank takes government funds. There are plenty more restrictions which I am sure will help build confidence in global financial markets.
I should mention that a CEO at a company like Google who is obviously adding value to the company and ensuring it generates legitimate profit should be paid as much as possible to ensure he stays motivated.
The executives running many Wall Street firms have proven to the world they were incompetent on many levels and are directly responsible for the loss of jobs in the millions as well as the destruction of retail chains and other calamities to come soon.
Many of the executives now at banks and other institutions were in charge during the “good” years. They were there when the risk officers mentioned there could be potential problems down the road. They were there to dismiss the risk and instead assign it to US taxpayers.
Obviously this does not apply to all Wall Street executives but in the ultimate irony of ironies, many risk managers who were ignored and/or fired as a result of doing their jobs are now out of work. Had someone listened to them earlier, we would not be in this mess.
I am looking forward to a good old fashioned lynching of some of those people responsible but for now, a good first step is limits on executive compensation.
I wish we could extend these rules to limit pay to executives who don’t increase shareholder value as well.