President Obama has decided that those financial companies that choose to accept aid from the government to survive should limit compensation to senior executives to only half a million dollars a year. And of course, many are whining that those businesses, will simply lose the top talent to their competitors. Wah.
To all those complaining about socialism and the government taking over businesses by limiting pay, the solution is simple: don’t take taxpayer money and let the chips fall where they may. If your company survives, great. You obviously didn't need the money. If not, too bad for you , your stockholders and your employees.You work for the government now and new rules apply. You have demonstrated that the oldlaissez faire business model is broken and needs to be repaired, or at least adjusted, for a time.
I understand that the government is not the best player to create wealth, outside of making long term investments in infrastructures like schools, roads, police etc. that capitalists can exploit to create wealth. But the capitalistsystem is broken for the moment. You are dependent on the taxpayers' money and different rules apply. The government is the player of last resort and as the player of last resort, gets to dictate the rules. Don't believe me? Ask Andy Pettitte how well that rejection of $10M guaranteed for 2009 from the Yankees worked for him (he ended up signing for $5M, plus $7M in incentives after no one else would meet his price). And let's not start on the still unsigned Manny Ramirez, who was insulted by a one year, $25M offer from the Dodgers.
And as to leaving for other companies? Good luck. You have already failed at what you do. You’ve put your company on welfare. While you may have friends who will give you jobs, they will also have more competent friends than you. You have run your company into the ground. You have not acted in a prudent manner as you were supposed to have done. The only way for your company to survive to accept government money. You don’t deserve even $150k a year. You have failed.
And, Mr. Failure? $500k a year will be a lot better than $0 a year if your company fails and those assets (including jobs and customers) go to competitors. But go ahead. See if someone will hire you for more than $500k when they realize you're one of the ones responsible for killing the golden goose. Your successors, who will happily accept whatever fringe benefits and stock options (for when the company is off the dole) that replace the excess bonuses, can’t do worse than you and might even do better. However I doubt it. And if I'm wrong, I plan to make sure I dis-invest out of whatever company you land up in. My childrens' college funds have already taken a big enough hit.
No one is forcing them to accept only $500k per year. They're still free to take their failures to a competitor or allow their companies to go belly up. If it's the former, I'm sure there are some bright folks right behind them willing to take $500k and gamble on possible stock options etc if things go well. If it's the later, while there may be a little pain at the start, their competitors should become healthier a little more quickly and new businesses will be created to take their places.
This financial crisis won't last forever. It probably won't even last more than a few years at worse. Consider this challenge a speed bump on your road to riches.
