Recent reports of billions of dollars being doled out to execs at bailed-out companies, have caused outrage among many unemployed and struggling workers. In response, the White House’s pay czar Kenneth Feinberg slashed the pay of the 25 highest-paid execs at seven banks and automakers–AIG, Bank of America, Citigroup, GM, Chrysler, Chrysler Financial, and GMAC. Top execs at these companies could see their cash compensation plummet as much as 90%. Execs will be issued company stock in lieu of cash in an effort to tie their pay to the company’s financial performance, in much the same way that consumers’ fortunes are tied to stock performance.
The Federal Reserve also issued compensation guidelines to the 5,000 bank holding companies and 800+ smaller state-chartered banks its regulates in an attempt to discourage the excessive risk-taking that nearly leveled the global financial system.
Not surprisingly, bank execs, lobbyists and “pro-free market” advocates are crying foul, saying the White House is interfering with the free market and making it difficult for them to compete for talent (Nothing new here).
What do you think? Should the White House mandate lower cash payments and more performance-based pay for execs at bailed-out companies? Should this mandate extend to all financial services companies?