To participate in Emperor Paulson's bailout, CEOs demand a price: Keeping all their money
The executive compensation issue is trivial by the side of the bailout, but this is annoying (and, in any case, the issue should be executive jail time, not executive compensation). WaPo:
Treasury Secretary Hank Paulson (R-Goldman Sachs) made the rounds of the talk shows on Sunday, pleading for financial executives to be allowed to keep their multimillion-dollar compensation packages even if their companies need to be rescued by the $700 billion federal bailout.
"If we design it so it's punitive and so institutions aren't going to participate, this won't work the way we need it to work," Paulson, whose net worth is said to be north of $600 million, told Chris Wallace on "Fox News Sunday."
"While it is very appealing to think about executive compensation as being a part of this, one of the drawbacks to that is perhaps that we would have fewer entities participate in what is essentially a voluntary act," Sen. Mel Martinez (Fla.) said on CNBC yesterday morning.
Good God! Does responsibility to shareholders mean nothing? Does fiduciary responsibility mean nothing?
Simple answers to simple questions.
Meanwhile, 15% of American homeowners with a mortgage (7.5 million people) spend 50% of their income on housing, when the historical average is closer to 30%. And we get?
UPDATE In Online WSJ, here's the mindset that's the problem:
The Treasury is looking for a compromise, a structure that satisfies Congress yet doesn't punish firms that want to participate, said people familiar with the matter. One potential option is for executive compensation curbs to apply in cases where Treasury structures a deal where it injects a significant amount of capital into a firm.
The firm is not the executives, right? The shareholders own the firm, right? (at least when the firm is publicly traded).
So how does punishing the executives punish the firm? Indeed, some might say that the firm has already been punished enough -- by those same executives.