Prophetic: Maximum Wage

In a country that is based upon the rule of law how is it that President B-Rock and his ilk can come up with a plan to cut compensation for executives that work for companies that have received federal bailout monies.

I wrote about a maximum wage initiative in January, February and April. Now it has come that it will probably happen. A clear assault on success and capitalism.

B-Rock's pay czar, Kenneth Feinberg, indicates that he will propose cutting the contractual salaries and total compensation for these executives. If the tax payers are to ever be paid back for the money given to these companies, General Motors, AIG, Citigroup, Chrysler and others then you will want the most successful business leaders leading these companies. But that will never happen if any executive and for that matter any employee has fear of their compensation being regulated by a government bureaucrat.

Because of these regulations and interference all of these companies will have leaders running them that are not focused on increasing shareholder value but on doing whatever they can to stay off a government noncompliance list. No business leader or executive will want to go to work for a company where their hands are tied behind their back and asked to brush their teeth. These companies will not succeed and the taxpayers will never be paid back. All because of government interference and regulation.

While some Americans support this policy because of class warfare these are some of the same people that never say a word about the money that Brad Pitt, Madonna, LeBron James or Tom Brady and other athletes and entertainers earn from their work. The reason I listed entertainers and athletes is because they are not responsible for creating jobs and contributing to the overall health of the economy yet they make millions of dollars for their work.

If we are a country based upon the rule of law then the Obama administration is seeking to be above that law. They are seeking to void contracts that are negotiated in good faith and agreed to by both the executive and the executive compensation committee at those companies. All because of government intervention into free market and the assault on capitalism.

Based upon the reasoning of receiving government bailout money how soon will it extend to companies that will have their compensation regulated because they do contract work or business with the federal government. What is preventing the administration from extending this regulation to the hourly employee with the reasoning that you may be making more per hour than a comparable government employee? Look out it is coming to your company!

If we are going to continue as a republic then we have to rein in our government. Enough of the attacks on success. Enough of governing by polls and public opinion. Whatever happened to common sense?

These are my words! Please post yours!

Pay For Performance; Maximum Wages Are Here!

Pay For Performance Act of 2009
"To Prohibit Unreasonable and Excessive Compensation and Compensation Not Based on Performance Standards"

Back in January and early February I railed about a Maximum Wage Initiative that was coming to America. Am I prophetic? I would like to think so, but in reality with our Democratically controlled Congress and President I felt that it would be easy to predict. Now Barney "Sylvester Da Fat Cat" Frank (he sounds like the cartoon cat) and his ilk have passed a bill that would set pay for performance standards in companies receiving bailout monies for ALL employees not just executives (yes it would include the janitor and secretary too). And we know that it won't stop there. The next extension will be any company with a federal government contract then ALL companies in America. It will spread because of the sheep that constantly attack achievement and success of others. Always looking at their neighbors and saying that they don't deserve that boat, that car, that house nor that salary saying "something ought to be done."

This bill will be applied retroactively to compensation that is already in place and once again seeks to punish rather than encourage. It would give Turbo Tax Tim the authority to determine pay and to decide what is 'excessive' and 'unreasonable.' He that was tripped up by tax software that is almost idiot proof, will also come up with the method to evaluate the performance of the executive or employee receiving payments.

This comes on the heels of the failed attempt to retroactively legislate 90% taxes on the AIG executive bonuses. Since when has our federal government been able to tell any company what performance is. The government does not even know what the concept of performance looks like nor can it be able to determine how to measure it. "Sylvester" Frank wants to be able to recover money from ANY worker that he deems has not been worthy of taxpayer supported wages. In other words did not meet the performance standards set by Congress or Turbo Tax Tim. And you and I know that these standards will be a moving target and random in enforcement. This bill passed with 247 in favor and 171 in opposition with 12 abstaining. See how your congressional representative voted.

If you cannot recognize that our Congress is seeking to place a Maximum Wage for all workers in this country then you have fallen asleep and should not be shocked when your pay is adjusted down because you have not met performance standards. American business has always had a performance standard. If you do a good job you get to keep your job and you receive a modest pay increase. If you do a great job, you get to keep your job and you get a great pay increase or promotion. If you do a lousy job then you get promoted to customer except if you are a member of a repressive union.

O.K. Mr Frank all I did was give a rant but where is the solution. Here is the beginning.

Let's start with you and the rest of Congress. Your performance has not been up to standard (my measures) for quite some time and you are not worthy of your taxpayer supported salary. You work a relatively part-time job with vacation perks, meals, parking, expenses, office staff and allowance, etc. yet you get paid a healthy salary for this work. You are a public servant and should serve the public. All of you should work for $51, 000 per year. Because of all the perks you get in D.C. you really would not need any more than that. Giving back the $123, 000 to the taxpayers would go a long way to feeling the pain and spreading the wealth. Kruella D' Pelosi would be harder hit with a return of $173,000 to the taxpayers. This would also cut down on the professional politician if they knew that their salary would be equal to the average guy they claim to represent.

How did I come to the $51,000 amount? Brain fart! Just the same way the President and Congress has said that no executive should earn more than $500,000 annually. No rhyme, no reason just plain brain fart! Barney Frank and Congress put your money where your mouth is. Lower your salary, since my expectations are higher and you have not met them thus you are not worthy of your $174,000 annual salary. Give it back or go get a private sector job. The closest you have come to running one is when your lover was running a prostitution ring out of your D.C. apartment.

The 2010 elections must usher in some immediate changes in our country or this country that we have loved and lived in will disappear. People you have to be afraid. Be very afraid. This is going to doom our competitive spirit and destroy our country.

That's my word. Please post yours!

The Maximum Wage II

“For top executives to award themselves these kinds of compensation packages in the midst of this economic crisis is not only in bad taste, it’s a bad strategy, and I will not tolerate it as president.” President Barack Obama

Will someone please inform the President that with great risk comes great responsibility, then comes great rewards. If you are challenged with performing a task and in the performance of that task you meet or exceed those expectations then there just might be some sort of reward in place. Bonuses are not just awarded because a corporation decides it wants to do so. The merits and the criteria are spelled out at the beginning of the fiscal year, quarter or month. If this then that. In many cases these rewards (bonuses) are contractual.

Let's use fictional company, IRun Enterprises, Inc. They have been losing money for the past 4 quarters and are projected to lose $6 million this fiscal year. The board of directors fire the current CEO, Imma Screwup. They initiate a CEO search for a true turn-around manager and find a candidate, Mr. Ican Dooit. Mr. Dooit studies the business of IRun Enterprises and presents a plan to the board of directors. The plan does not include returning to profitability this year but does show that he can reverse most losses and finish the year at a loss of $3 million dollars and return to profitability by end of year 2. The board prepares a hiring contract for Mr. Dooit. His representative negotiates that if he meets his target objective then he will be paid $500,000 base salary and a bonus 30% of the savings (That's $900K for the math challenged.) The board agrees and along comes Mr. Dooit and his plan. By the end of the first year, Mr. Dooit and his team of executives have not only met their plan but exceeded it and Irun Enterprises has only lost $1 million dollars. So Mr. Dooit's contract calls for a payout of 30% of savings as a bonus, which in this case would be $1.5 million dollars.

Now should you be outraged? Yes, if you are a wealth envy nut job. You see the stockholders would not have a problem with this because Mr. Dewit just increased their shareholder value by turning the company around. Many of the employees will not have a problem with this as because a worse case senario would have meant greater layoffs. The board of directors would be elated since they made a good decision and their shares of this company have been improved as well.

But Barack Obama would have you believe that any company which receives any "exceptional" assistance from the government then their executives should be paid a Maximum wage of $500,000 annually. While the average American is somewhere around $50K a year this does seem like a great amount of cash. Would any top notch CEO looking to advance his/her career want to do this job where there will be tons of government interference and oversight? Long answer is NO! So if he is successful in implementing this Maximum wage then companies that really need a top notch executive will end up with an mediocre CEO at the helm. The talent will go where they can be compensated on a comensurate scale with other CEO's and with no government intervention.

I commend Goldman Sach's and J.P. Morgan for initiating their own version of a poision pill. That pill is to pay back the TARP money early. Goldman Sachs indicated that their financial condition was sound. JP Morgan said they didn't need nor did they ask for any bailout.

"White House spokesman Robert Gibbs said the rules weren’t intended to be “overly punitive,” while a senior administration officials said their primary goal is to align the interests of top executives at bailed-out firms with those of shareholders, who now include U.S. taxpayers.

I thought that the Treasury Department purchases preferred stock and warrants from these troubled financial institutions. That would ensure that the US Treasury would receive payment before common equity shareholders would. And since it is non-voting preferred stock how does the Treasury get to vote on how a company operates?

I hope that these financial institutions get back to the business of lending and freeing up credit so that they can began to pay back the American taxpayer quickly and get government out of of the business of running corporations. And for the rest of you.....Don't do it! Just Don't do it!

That's my word. Post yours.