Firms that have been bailed out by the government are still receiving huge bonuses that are approved by - yes, you guessed correctly - the government. Three companies - Ally Financial, AIG, and General Motors - all received money from the Troubled Asset Relief Program and had to abide by strict rules when handing out bonuses and giving raises to top executives. Despite the guidelines imposed for these firms, they somehow convinced the Treasury to rethink the guidelines that were set and no longer imposed the tight parameters: "“In 2012, these three TARP companies convinced Treasury to roll back its guidelines by approving multimillion-dollar pay packages, high cash salaries, huge pay raises and removing compensation tied to meeting performance metrics,” Christy Romero, the special inspector general, said in a statement."
What are your thoughts on the Treasury changing their policy and allowing big bonuses and raises to firms that were recently bailed out?
Link: http://www.nytimes.com/2013/01/29/business/generous-executive-pay-at-bailed-out-companies-treasury-watchdog-says.html?hp&_r=0
Official Report from the special inspector general: http://www.sigtarp.gov/Misc/2013_SIGTARP_Bailout_Pay_Report.pdf
2 comments:
I honestly don't mind whether the government allows firms to pay CEOs exorbitant salaries. The main goal of the government is to ensure that the firms are not properly regulated to maintain stability in the market. While this cannot be a good sign (just another indication that big firms exert significant influence in policy-making), I am not yet inclined to say that the government is not doing its job at this point.
So you don't mind if a company that recently failed and had to be bailed out and is still facing uncertainty, in addition to law suits, should be allowed to pay their CEOs and top management enormous salaries/bonuses?
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