Monday, February 16, 2009

Obama Sets Hard Salary Cap, Players Union to File Grievance

President Obama signed an executive order on February 4th placing a cap on CEO pay to those financial firms that will be receiving federal bail out money. The cap is $500,000. While I consider that a lot of money, it may not be to someone that has been making a few mill every year.

While the policy is great for public support, there is zero chance this will work.

Before Leon Panetta was tapped for Chief Spy, he made over $700,000 in speaking and consulting fees. Now he makes a lot less. Poor guy.

My point with that is if Panetta can make that kind of money in consulting fees, imagine what a real Wall Street CEO who just quit his high-profile gig because of the salary cap is going to make in consulting fees.

Patrick McWallstreet is so unhappy with his new found un-glory that he quits his CEO position with Bank De America. He’ll be OK. There is another bank that has an opening for a CEO. ACME Bank hires McWallstreet, but not as CEO. They hire him as a consultant at $1 mill per, plus performance incentives. The leave the CEO position open but have a Consultant-in-Charge in McWallstreet.

The only true effect the salary cap is going to have is lots of restructuring and renaming of job positions.

By meddling with free market economics, the only thing Obama has done is change someones job title from CEO to consultant.

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