Limits on Executive Pay

MarketNewsVideo.com (2010). Further limits on executive pay in 2010, says Kenneth Feinberg. Retrieved March 24, 2010 from: http://www.forbes.com/2010/03/23/further-limits-on-executive-pay-in-2010-says-kenneth-feinberg-marketnewsvideo.html?feed=rss_home

This article appears on the Forbes.com Web site and reports that “Pay Czar” Kenneth Feinberg announced earlier this week that the top 25 earners of five companies that have received bailout money from the government will be forced to earn approximately 15% less than they did in 2009 and that their cash salaries will be capped at $500,000. There are other ways to compensate these executives through equity bonuses, but it does limit the companies’ ability to attract and keep top performing managers. Many people would agree that companies that have received federal aid should limit their executive’s pay; however, it is also important that companies are able to recruit and retain top-notch executives that can lead the company out of their difficult times so they can become self-reliant and no longer dependent on the government. This article points toward an important subject in management. Leaders need to take measures that will keep their company from becoming dependent of government bailouts because once they receive this type of assistance, the government ends up with a lot of control over the firm, which can lead to even further dependence and less ability for the company to work its way out of the predicament they are in.