The Obama administration is cutting executive pay at the seven most-bailed-out companies, says Felix Salmon in Reuters, and it clearly means business. Pay czar Kenneth Feinberg is ordering 90 percent reductions in salary, and a 50 percent cut in total compensation, for the 25 best-paid people at each firm. “Feeling outraged?” Don’t. “These guys are effectively civil servants now, and they deserve to be paid as such.”
“There is no way this will work as advertised,” says Alex Tabarrok in Marginal Revolution. If Kenneth Feinberg “actually follows through” on this, the executives at the affected firms—Citigroup, Bank of America, AIG, GM, Chrysler, and the financing arms of the two automakers—will jump ship for higher-paying jobs elsewhere. What will Obama do when “chaos” ensues? “Order people back to work?”
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