How not to fix business

So, I think the Tribune has some management issues, they are in bankruptcy for one thing. I am willing to bet they are not looking to hire any of the ex Merrill guys, nor are they looking to hire Bob Nardelli. I bet they would love someone who would take a salary of, say 500k and a lot of restricted stock that would make a lot of money if the Tribune company became highly profitable again. What dya think?

When President Obama dictates to the private sector what it can and cannot pay its executives does the Chicago Tribune editorial board still believe he is "pragmatic".

In just a few weeks time Obama is looking more and more like a socialist dictator, ala Hugo Chavez

"Compensation caps would hurt the ability of these firms to attract and retain top talent."

Are you seriously telling me that there aren't brigades of young, sharp, motivated people who graduated second-tier business schools around the country who wouldn't love to take a half a million dollars to run a fortune 500 financial company and make a name for themselves? Plus stock? Hire some of those people and maybe you'll get someone who's more interested in doing what's right to make their company run than in buying themselves the most outlandish status symbols and making believe that they are made of a different substance from the rank and file that they lead. More money for execs did not result in success for Lehman, Merrill Lynch, or any of the others currently circling the drain.

Thain handed out $15 billion in bonuses while at the same time reporting $15 billion in losses. This occurred while BofA got $20 billion in government funding.

I want these companies to succeed? No, I'm looking for a pound of flesh here. In fact, offshore the jobs of these thieves. I'm sure we can get just as many smart people from India and China to manage these banks and their salaries are cheaper. These banks are already doing that anyway.

Kevin wrote:

When President Obama dictates to the private sector what it can and cannot pay its executives does the Chicago Tribune editorial board still believe he is "pragmatic".
In just a few weeks time Obama is looking more and more like a socialist dictator, ala Hugo Chavez

Lets see how these companies, not just banks, do without the government stepping in to help. They did not go looking for help because they were making money hand over fist, they went looking for help because they were losing money hand over fist and that started long before Obama became president.

I have mixed feelings about this issue, but the idea that CEO's must be paid tens of millions of dollars is one of the greatest sales snow job ever perpetrated. The way to stop overpaying CEO's is to stop overpating CEO's. CEO skills are not that rare. If Candidate A demands millions to lead your company say no thanks and move on to Candidate B. Look within the ranks of your own employees. Is their a talented manager who deserves elevation? Look within the upper middle managers of your competitors.

Maybe the cap will have the opposite effect, since a company knows that a CEO candidate can't get mreo than $500k at GM, they will only offer $750k or $1 million instead of $2 million + a $10 million bonus.

The role of CEO is very important to be sure, but the day-to-day success of a business is just as dependent on the customer faciing individuals or the men and women on the manufacturing line. If they don't take proper care of the customer or make a quality product, then all the MBA fueled strategies in the world won't keep the company from crashing.

The days of the rock star CEO need to end. Should they be the highest paid employee? Maybe. Should they make millions while the average employee makes thousands? No.

"Compensation caps would hurt the ability of these firms to attract and retain top talent. If salaries are higher at robust firms that aren't taking federal help, that's where talented people would go."

First find me a business mind among these clowns that can be called good first. Then fioind the best.. What a joke.

THESE are the idiots that caused this mess. Isn't John Thain one of these best business minds?

Robust firms ...And where is a robust firm among the Wall Street thee days. Where would these best business minds comefrom? Where would they go?

Keep in mind this is coming from a newspaper that is in bankrupcy court. From people who can't turn a profit but still take big paychecks and bounuses themselves.

The rich keep getting richer off the back of the poor. Drink your koolaid and believe this trash. As these executives whine about having to fly first class instead of the corporate jet the people who have given them their livley hood are too por to get health care, too poor to retire, and are being robbed of their future so these "best minds" can have $37,000 toilets.

GROW UP THE RICH WANT YOU TO BE AFRAID. BUT IT IS THEIR GREED THAT HAS CAUSE THIS MESS

You're ignoring the fact that these execs can take stock options that can't be exercised until the company is on its feet and Uncle Sam gets his money back.

THAT'S an incentive for the smart people to take over and make these companies profitable again.

Legislators like Chris Dodd are the reason why dictators like Hugo Chaves succeed.....

How about just letting the chips fall where they may? Why can't your editorial board just advocate that? No more free money for Wall Street and no more free money for the dummies who signed on to loans they couldn't afford.

eddie wrote:

You're ignoring the fact that these execs can take stock options that can't be exercised until the company is on its feet and Uncle Sam gets his money back.
THAT'S an incentive for the smart people to take over and make these companies profitable again.

Yes, and stock options that can't be exercised (and very lucrative is fine with me) should be their main compensation. If you can't live on 500k per pyear and don't have assets to live off of if you want to live better than that, then why should I believe you can fix the mess these companies are in???

Oops---Yes, and stock options that can't be exercised (and very lucrative is fine with me) until the company is worth something should be their main compensation.

"Compensation caps would hurt the ability of these firms to attract and retain top talent. If salaries are higher at robust firms that aren't taking federal help, that's where talented people would go."

Not to worry. In order to "level the playing field", the Leftists in charge will simply make the cap apply to ALL firms, regardless of whether they accepted bailout money or not.

I understand where the author is going with this but not sure I completely agree with its premise. As a taxpayer, it would behoove the highest paid executives of these financial institutions to spend my money wisely...meaning increase lending...which is something that has not been done. Taxpayer money should not go towards executive salaries or bonuses. If the company outperforms and increases lending, then the stock price will follow suit and the executives will benefit. Also, I do not agree with Dodd's Countrywide activities, but that doesn't preclude a stimulus bill from capping executive pay.

In 1993, Congress said only $1 million of an executive's salary would be tax deductible. So companies began paying their CEOs massive amounts in other forms, like stock options and deferred compensation.

http://www.time.com/time/business/article/0,8...

I wonder what new way to avoid well inteneded but ultimately useless restrictions will be invented this time.

"Compensation caps would hurt the ability of these firms to attract and retain top talent"

Really? Would that be the same top talent that took home billions collectively and failed to see this storm coming or do anything about it?

Top managers of these firms have failed. The market punishes failures. Let the market do it's job. Maybe you're convinced these guys are the only people in the world who could run a bank but I'm not. Old management cannot survive without government money. The price for this should be every penny of their personal net worth. The fed should demand these geniuses risk their own wealth and not just taxpayer dollars. Not taking any salary of bonus this year is easy when you're sitting on hundreds of millions. The only solution is a combination of private capital and public financing. The public financing is in place but we have not had an equal invest from the private sector. Blow out the top management of BofA, Citi, and Morgan Stanley see how quickly private equity firms scramble to grab these assets.

Pro Sports are given "assistance" in the form of being allowed a monopoly. I suggest the same limits be placed upon them or they lose their special status.

See how slippery this slope is......

Maybe this will also drive more of the "brigades of young, sharp, motivated people who graduated second-tier business schools around the country" into government service, where they will not only be better compensated (at least they will not be expected to pay taxes, apparently), they will assuredly be more competent than most of the people in THOSE positions.

Kevin writes:

"When President Obama dictates to the private sector what it can and cannot pay its executives does the Chicago Tribune editorial board still believe he is "pragmatic"."

No sir. A dictator would have nationalized their banks three months ago and installed his own management team. He probably would have either killed or imprisoned the John Macks, Ken Lewis's and Vikram Pandit's and taken all their assets to boot. What Obama is doing is adding conditions for the money he is giving them. Much like a bank would do with you if your loan was deliquent and they wanted to work it out rather than call the loan.

"Pro Sports are given "assistance" in the form of being allowed a monopoly. I suggest the same limits be placed upon them or they lose their special status.

See how slippery this slope is......"

what "monopoly"? One MLB has any protection. The NFL doesn't, the NBA doesn't. The PGA doesn't. The only exemption MLB enjoys is an antitrust exemption. The other leagues have all faced competitors in the past and will do so again in the future. Their stadium deals are indeed a bad investment for taxpayers but that's a state and city issue, not a federal one.