David Kirkpatrick

February 4, 2009

Wall Street Journal hits back at Obama’s exec cap

Filed under: Business, Politics — Tags: , , , , — David Kirkpatrick @ 5:05 pm

Not surprising. Some good points are made here, but the reality is this move is largely symbolic and if anyone thinks C-level compensation will actually significantly fall is deluded.

Base pay may be much lower, but overall compensation will still be there through all the loopholes that are wide open and easy to see already.

From the WSJ link:

The Obama administration had to do something. But capping executive pay at $500,000 at banks needing “exceptional assistance” could create as many problems as it solves.

First, it could distort labor markets. Employees and executives will be tempted to flee troubled banks to subsidiaries of foreign banks or stronger U.S. institutions. That could make the weak even weaker.

Second, the plan caps pay for top employees. It doesn’t yet address the arguably more important issue of generous pay structures lower down organizations. The cap could encourage those in, say, better paying jobs running big departments at an investment bank to shun top positions where pay would be limited.


  1. […] — the Wall Street Journal hits back. Possibly related posts: (automatically generated)Bailout nonsenseBarack Obama: Auto execs are […]

    Pingback by Half million cap on bailout exec salaries « David Kirkpatrick — February 4, 2009 @ 5:16 pm

  2. While it should go without saying that even a legitimate President’s “ordered” $500,000 pay cap is an unenforceable intrusion into the private sector, as if that weren’t enough, Obama LACKS EVEN OSTENSIBLE AUTHORITY to issue the order UNTIL HE OVERCOMES “RES IPSA LOQUITUR” BY SUPPLYING HIS LONG FORM BIRTH CERTIFICATE AND PROVING HIS ELIGIBILITY TO BE PRESIDENT UNDER ARTICLE 2 OF THE US CONSTITUTION.

    Comment by Ted — February 4, 2009 @ 10:06 pm

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