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What Do You Think of Treasury's 'Cap' on Golden Parachutes?

As The Post's Lori Montgomery reported last week and as can be read here, as well, Treasury is putting a cap on "golden parachutes" for executives whose companies participate in the $700 billion Wall Street bailout/rescue plan.

One of the most hotly contested issues during the entire financial crisis is this: Why should executives at companies that dragged us into this mess get nice big fat paychecks to go away?

To that end, Treasury has put a cap on the so-called golden parachutes at three times a fired executive's annual pay as reported on their W-2.

To many people that sounds outrageous, even if an executive's annual salary is $1.

Executive pay is tricky, and it's tricky on purpose: the idea is to minimize the tax payments of millionaires.

To that end, many executives have (for them) low annual salaries, typically right at or less than $1 million.

Executives make their real money in bonuses and stock compensation. The average annual compensation of the chief executives of the nine big banks participating in the first round of the partial nationalization is $22 million.

So that means, under the Treasury rules, a golden parachute for one of these fellows would be limited to...$66 million.

How does that play in Peoria?

You tell us.

Is the three-times limit too little? Or too much?

Would you get a check for three times your total yearly compensation if you got the axe? Or would you get a nice, "Don't let the door hit you on the way out?"

-- Frank Ahrens

By Frank Ahrens  |  October 20, 2008; 1:18 PM ET
Categories:  The Ticker  
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Comments

On principle the Government should not be involved in deciding what anyone is payed. Politicians and unionized bueracrats are not qualified to make those decisions.

This crisis was caused by a Government distortion in the housing market and the failure of the Government to account for the systemic risk caused by that distortion. We should not respond to this crisis with more unaccounted for distortions and intrusions in the marketplace.

Posted by: Anonymous | October 20, 2008 3:47 PM | Report abuse

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