New EVEN TIGHTER restrictions on executive pay.

Excerpts from:

http://www.nytimes.com/2009/02/14/business/economy/14pay.html?_r=1&hp

"The provision, inserted by Senate Democrats over the objections of the Obama administration, is aimed at companies that have received financial bailout funds. It would prohibit cash bonuses and almost all other incentive compensation for the five most senior officers and the 20 highest-paid executives at large companies that receive money under the Treasury’s Troubled Asset Relief Program, or TARP.

The restriction with the most bite would bar top executives from receiving bonuses exceeding one-third of their annual pay. Any bonus would have to be in the form of long-term incentives, like restricted stock, which could not be cashed out until the TARP money was repaid in full.

In addition, the Congressional rules would affect not just a bank’s top management, but also star traders, investment bankers, fund managers and commission-based sales representatives. They have traditionally received multimillion-dollar payouts based on their year-end results. "

....

Wow. Just... wow.

The fact that these restrictions affect the 20 highest paid executives means that actually effects ALL the executives... as far as pay number goes anyhow. Since if you used to be number 21, earning 800k, and suddenly the top 20 drop to 500k, and you are now number 1, putting you under these rules. Get it? Basically, everyone drops to below 500k a year.

A lot of the top CEOS were getting over 10 times their annual salary as cash bonuses... now that's dropped to 1/3. Wow.

Secondly... talk about a loss in disposable income... they basically cannot spend their bonus until TARP is repaid. You know how you normally get your annual bonus and spend it all pretty fast? Imagine having to wait several years to use your bonus!

However.

They talk about the risk of a brain drain.

On the other hand, they should consider something:

Their might not be much of a brain drain, after all.

There is a LOT of negative goodwill attached to some of these big TARP receiving companies. And their management has gotten quite a rotten public opinion.

If you were running a hedge fund, and actively trying your best to convince people to entrust their money to you, are you SURE you would want to hire one of the most despised and distrusted money managers in America? I mean, sure, he USED to have a brilliant track record, but nowadays, a lot of these guys' names are like poison to the American public...

They talk about how this might cause the banks to try to pay back TARP early...

Well...

I got news for you...

That is EXACTLY what the American public wants! Those who don't need TARP, give it back, and maybe the American government will do something MORE USEFUL with the money... like start up a new government bank and give loans DIRECTLY to the public instead of this indirect (and currently nonworking) method.