Finally a brave politician has put the knife into the banking sector, and companies that received government aid at the start of the current financial crisis. The income of these bank executives and CEO's has been slashed from it's previously outrageous levels to, what I would call, a more acceptable level, but all is not what it seems.
President Obama has been the first world leader with guts enough to attempt cutting the exorbitant salaries of these people. He appointed Kenneth Feinberg this summer to look into the huge payments, and he has just released the first phase results.
I can hear the moans in the Boardrooms across America now; "Damn! I was going to get myself another Ferrari, a new villa in the Bahamas, a massive yacht, and a huge new cabin cruiser to park in Puerto Banus Harbour in Spain (the most expensive), and oh, the wife wanted a new ironing board. I was even thinking of buying Yellowstone National Park to build some condo's. Now I guess all that will go on hold. Damn that Obama fella!. Doesn't he understand I want to be super-rich?"
Of the top seven companies bailed out by the US tax payer, 136 employees from; AIG, Citigroup, Bank of America, General Motors, Chrysler, and Chrysler Financial have all taken a hit.
According to the news, bank executives and CEO's will have to take a 90% pay cut, while their employees, traders etc, would take a cut of up to 50%. Bosses would no longer receive huge bonuses, but get stock in their company they could not sell until 2011.
It is staggering to see the pay-packets some of these individuals take home. Top of the tree is Sanjay Jha, Co-CEO of struggling Motorola, who took home a massive $104.4 million in 2008. His salary was a mere $484,615, but he made a further $412,096 in 'Perks', $36 million in stock grants and $67,59 million in stock options.
He and his fellow CEO Gregory Brown ($24.2 million), were magnanamous in December last year and took a 25% salary cut. At the same time, Motorola froze all employees salaries and retirement contributions. It sounds like a case of; "Pull up the ladder Jack, I'm on board".
Mr Jah no doubt owns several Ferrari's, probably one for each day of the week. His only problem would be to decide which colour to drive on which day! "Let me see. Monday the blue one, Tuesday the black one......."
I wish I had those problems, the only trouble is I would find it hard to decide; I used to be indecisive, but now I'm not so sure!
Mr. Jah is of course not alone with this problem. The CEO's of; Oracle, Walt Disney, American Express, Citigroup, Hewlett Packard, Calpine, News Corp, Honeywell International and Proctor and Gambell all face the same agonizing problems, and I haven't mentioned the car industry yet!
Among the "Money Men', under the new rules AIG's top executive will get the highest salary at $10.5 Million which will include a salary of $3 million, a $3.5 million bonus, and $4 million in stock options. AIG is still one of the companies bailed out by the tax payer. But there's worse to come!
The top 22 executives of Citigroup, bailed out with billions, will share a staggering $118 million in salary, stock options, and restricted stock options that will increase over the next four years. Mama! I want to be a bank executive. Please, can I????
All I can say is; firstly, I should have chosen banking as a career instead of the military and aircraft industry, and secondly; everyone should start keeping their money under the mattress and let the bankers starve.
Of course, the bankers and CEO's are complaining. Their arguement is, that without the current bonus scheme they will lose all their star performers to companies that are not covered by the new ruling. Citbank and Bank of America have already reported losing key personnel to companies like Goldman Sachs and JP Morgan Chase who managed to escape from the governments clutches during the summer. Some companies are activly engaged in luring away these people with promises of even double their previous bonuses and salaries. Who can refuse that.
The downside is, the loss of key personnel may affect the recovery of the institution concerned, putting repayment of the government loans in jeopardy.
But when all is said and done, these people may not lose as much as first thought. The ruling on bonuses put in place by Ken Feinberg is not watertight. Instead of bonuses they will get 'Incentive Pay' in the form of company stock, so all may not be lost after all, just be a little more complicated.
Scrutiny on the part of the general public is advised to see how all this ends, but I for one hope the money trail dries up for these people because they have been milking us for far too long.
All we need now is for the heads of state and governments around the world to take action on this despicable practice once and for all.
May your mattress bulge in all the right places!
Roy.
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