President Obama to Wall Street CEOs: You've Been Very Naughty!
Wall Street, that's one...that's two...that's three! OK, you've just earned time out!
Do You Need Time Out?
If you were to ask my two older kids what Dad always says when they are misbehaving, I am quite sure that each of them would say, “There are always consequences for bad behavior.” They could say this, verbatim, because it is the exact same mantra I've been saying to them probably since before they could understand what it meant (watch out Isaiah! You'll be hearing those words from me soon....Isaiah will be 2 in April.)
This is an appropriate analogy to describe the policy just announced yesterday by President Barack Obama regarding CEO compensation. Did you hear about this? If not, you heard it here first! President Obama announced that any CEO who is head of a company that has come to the Federal Government seeking bailout assistance will have his or her salary capped at $500,000 a year. Any additional compensation the company provides will be in the form of stock that can only be sold once the loan the government provided for his or her company has been paid.
Now, you may say that a half-million dollar salary each year is not much of a sacrifice, but when you consider the fact that the lowest paid CEO's these days are being paid in the neighborhood of $3 million a year, that constitutes a dramatic cut in pay. Yeah, you say, but they can give him stock, right? Sure they can, if the company wants to, but have you seen the stock market lately? Some of those CEOs will be getting stock that is barely worth the paper it's printed on. Now, if said CEO actually does the job, turns around the company, and is able to repay Uncle Sam, then he or she will be able to cash in all this extra stock and resupply his bank account (that is assuming that there's still a bank to have an account in.)
Critics of President Obama will say that such a gesture is small potatoes in the broad scheme of things, and they would be right. If that was a major component to President Obama's economic recovery plan, then it would be a tremendous disappointment. But we all know this is not the main point of his plan, and it's not even an important part of his vision. But it was, in my opinion, a necessary step.
So much of the economy is governed by the attitudes of the consuming public. If people are afraid they are going to lose their job, or if they have already lost their job and they are afraid they will not find another job before their unemployment benefits run out, such people are not going to be going out buying items that will stimulate the economy. They'll cut corners any way they can. But if those same people begin to have hope that the President's plans and actions are actually going to improve the economy, they will begin to have more confidence in the economy. Sending a message to that segment of the population that the Obama Administration will not be bosom buddies with all these corporate big whigs like Boy George and his Merry Band of Neocons will send a great message to the people who are one paycheck away from living in a homeless shelter.
Not to mention that it's a basic matter of fairness. I guess maybe I'll never make it big on Wall Street, because I just don't understand the culture. Why would a company pay exorbitant sums of money to CEOs who have driven their companies into the ground? They shouldn't! As I always tell my children, there are always consequences for bad behavior, and these CEOs have been very bad! They should consider themselves to be lucky to have a job at any significant salary for the mess they have created of their company, their country, and the whole damned world by extension!
So President Obama, I'm glad that you are exercising tough love on these corporate delinquents. Now let's see the rest of this plan get passed, so we can all sleep a little better at night!