Monday, January 28, 2013
Pay Still High
This article talks about several executives at large companies that were bailed out still receive enormous salaries. Personally, I think it's ridiculous and completely wrong for these executives to make so much money while they lay off workers and their company has to be bailed out by the government. What do you guys think of this?
Subscribe to:
Post Comments (Atom)
While I do agree that executives get paid to much, I also believe that most if not all of these companies are back on the rise after their fall. What the government wants is its money back and by seeing an improvement in the company and giving the company some space to do what it wills with its money is a way to ensure they get all of their money back. Also while the pay may be ti high, executives are extremely busy and they do a lot of work, are in charge of a ton of stuff and often times are required to travel around a lot, sacrificing valuable family time.
ReplyDeleteI couldn't agree more with Keaton on this issue. If the companies that these executives work for are being bailed out maybe they should look at what they are doing and see if their actions might have contributed to the fall. If they truly care about the company they work for they should want the company to succeed even if it means a slight decrease in salary. I'm sure they would still be able to support their families with the new salary.
ReplyDeleteIt might even save their job in the long run, by saving a little money now it could insure that the company would not completely collapse.
This seems like a moral issue and i can not help it but agree with you here. But in the business/economics world just how much can we leave to morality? I dont fully understand the Treasury's stance on this. I dont see how big pays can make the firms payback
ReplyDeleteI agree with Gift, it's a moral issue and that makes it harder to change. The problem is that the people who have control over the executive salaries also make a ton of money. Most organizations aren't democracies so the people have no say. Another issue with tampering with executive salaries is that they are fundamentally proportional to every other salary level in a corporation. I fear that changing executive salaries would also trickle down into every other salaried worker. But I also agree and if a company is doing so poorly to need to be bailed out, maybe they should have pulled out all the stops to avoid that, even if it is a company wide salary cut.
ReplyDeleteYikes! Though executive are most definitely to blame for taking such high salaries, I believe the market is also a key player in this discussion. If you are running a Fortune 500 company, high salaries are expected. If compensation is not awarded accordingly, executives will walk. Think about how many executive search firms there are out there, experienced talent can be hard to find. With this being said, companies like GM and Ally need to balance their budgets before anything else! There is no point in paying executives or anyone in that case if the company is facing bankruptcy. Bailouts are not the answer! At the end of the day, if executives are running successful businesses they are going to demand high salaries based on market standards. In general do I think executives are being paid too high? Yes, but this is for the market to decide not me.
ReplyDeleteI agree with Gift, there was no such thing called morality existing in business world. While many workers had to be unemployed and millions people were trying to save every single dollar to survive, 16 top executives at Ally Financial, the American International Group and General Motors earned combined pay of more than $100 million. It was such an unfair world and the sad thing was who controlled power got the money. I also wondered how the executives could make so much money at this bad economy. The rich always got richer while the poor got poorer.
ReplyDeleteI agree with Bianca and Gift's analysis. Whatever we may think of high pay, it's important to think about the reasons such pay comes about and what could feasibly be done about it. Companies make millions, often billions of dollars, and therefore a successful executive who can make their company only 1/2% more successful is likely making millions of dollars for the company, especially if we're talking about the Fortune 500. Therefore, pay a successful executive too little, and they could be bought up somewhere else. As for when businesses fail and we bail them out, it'd be nice to think that we could do bailouts and only help low wage workers and the macroeconomy, but unfortunately, executives and the high paid are going to end up benefiting as well. We can try to control this through making bailouts conditional on paycaps or replacing the management with government appointees, but I think this risks doing more harm than good through unintended consequences. I think we should let the market set corporate pay, and then use the progressive tax system to try and even things out.
ReplyDeleteI can understand why it seems crazy to pay these executives so much money when they need to bailed out in certain situations, but at the same time they are the ones with the skills putting them in those positions in the first place. If you cut their pay, they will walk, as Bianca said. I also agree that it is the way business and markets work, and its hard to find a solution to it. What is fair? People can argue they get paid too much, but if you were to ask an executive, I'd think they would disagree.
ReplyDeleteAs Bianca said, the number of executives is limited as it is an extremely skillful job. The payment seems ridiculous to most of us, but in most cases only certain portion of executive's salary is the base salary and rest of the salary depends on company's performance. As long as the company does well, it makes sense to pay executives high amounts because thats how things work in free market. Should they be paid such ridiculous amount when the company is being bailed out? No. But the company needs to keep the talent if they want to see their company progress in the future.
ReplyDelete