xcessive executive compensation is widely seen as a problem, both for encouraging risks like the kind that helped sink the economy and in terms of fairness and value. But it's not clear what, if anything, the government should do about it. Obama compensation czar Kenneth Feinberg has stepped into the debate, instituting pay caps at seven federally bailed-out companies. Here are some thoughts on the benefits and pitfalls of pay caps.
There's a balance between being too harsh and too lenient "Pay czar" Kenneth Feinberg, in Bloomberg: I'm "very concerned" that executive pay caps will drive away talent at taxpayer-supported business, but "maybe I've struck the right balance....Hopefully some of this will percolate into the private sector, we'll have to see....I'll measure my success, really, if these seven companies repay the taxpayer, that's really the litmus test."
"Feinberg 'concerned' pay cuts could drive our talent"
The pay caps are counterproductive
GM Chairman Ed Whitacre, in USA Today: "To find top-level people where you need them, that's a more difficult thing to do at that salary level....I don't think (the caps) will be lifted, but hopefully they'll be modified."
"Compensation cap hampers hiring, GM chairman says"
Executive pay is too high, but pay caps won't solve it
Bill Gates, in Reuters: "The compensation problem is a very interesting problem. I do think compensation is often too high, but it's a very tough problem to solve....It was a bad milestone in controlling executive salaries when that $1 million cap went on" in 1993, because it pushed compensation into risk-encouraging stock options.
"Billionaire Bill Gates says Wall Street pay too high"
Bankers don't deserve eight figures
Felix Salmon, Reuters: "One of the key drivers of the [economic] crisis was the hubris and general lack of humility of senior bank executives. This is connected to the issue of executive pay: almost everybody thinks he deserves what he's earning. But the only way you can deserve an eight-figure pay package is if you're really on top of what's going on in your bank....They weren't; lower pay and more humility would have helped enormously in curtailing some of the most egregious excesses."
Good workers deserve good pay
Lloyd Blankfein, Goldman Sachs, in the Business Insider: "We believe in pay for performance... I often hear reference to our higher compensation per employee metric - but what people fail to mention is that our net income generated per head is a multiple of the peer average. The people of Goldman Sachs are one of the most productive workforces in the world."
"Goldman: Thanks, America"
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