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Ever thought executive compensation in financial firms excessive?
And now, with those firms seeking a taxpayer-funded bailout, should there be limits on how much executives get paid?
The issue is a key flashpoint in the debate currently raging in Congress over the $700 billion financial bailout.
On the one side some, including Secretary of the Treasury Hank Paulson, think such limits could actually discourage deserving firms from seeking government help. Distressed companies could lose the talent necessary to fix them.
But others counter that a public bailout should require safeguards against corporate excess. They also wonder what opposition to pay caps says about our country’s executives.
“I don’t think it is much of a discouragement in this kind of emergency situation,” says Paul Hodgson, a senior research associate for Corporate Library, a leading voice on compensation and governance. “Faced with the choice of dissolution and/or bankruptcy, and there being some sort of arbitrary limitations placed on potential compensation, I would think most executives would go for having the [Paulson] plan invest in their company and therefore submit themselves to the limits.”
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