Executive Pay

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Should the top executives of the major banks that received bail-out money be allowed to receive large bonuses?
My first response to this question is “Maybe?” I personally believe that I can make a convincing argument for why bank executives should have got large bonus’s and just as equally a convincing argument as why they should not have. I must start by saying the government should not have been allowed to give out exurbanite sums of tax payer dollars to these banks to begin with. Whether bank executives get big bonus’s or not, is not the concern of the taxpayer. This is because the banks are a private industry and make their own decisions and thus should live and die by them. This is the backbone that makes capitalism work and what makes the United States of America so successful. If you start to mess with some of the most basic fundamentals of capitalism, you betray every American citizen. I think trying to answer the question: Should bank executives get large bonuses funded by tax payer dollars becomes very complicated, so I will explore multiple views in an effort to simplify. This is not a situation where there is a clear cut right or wrong way to handle this, and it is hard to answer the question with out delving into many more. One of the very first questions that I ask is: Should anyone get extremely large bonuses? The inherent problem with extremely large bonuses like John A. Thain, CEO of Merrill Lynch who started in December of 2007 and received “$57,692 in salary, a $15 million signing bonus and an additional $68 million in stock options.” or Lloyd Blankfein who was president and chief executive officer for Goldman Sachs who “took home nearly $54 million in compensation last year.” referring to 2007, is compensation of this magnitude for one year’s worth of work does two things. First, once you receive compensation this large it takes away the motivation to stay successful for the following years. Secondly, it creates motivation to create a false profit and not worry about the repercussions. Once a person receives a payday of this proportion, if the company can’t take it back, who cares what happens next year or how you got it. The bank executive will never have to work again if he/she so pleases, for that matter if the money is properly invested neither will their kids or their grandchildren. The second thought I had is: If the tarp money is a loan that must be paid back, then it would be wrong to tell a private company how to spend it. Thirdly, if a bank executive made the right decisions for his/her bank and then made another good decision by buying a distressed bank that had received TARP funds for a great value, should he not receive a large bonus? The list of thoughts and questions goes on and on, making the situation more and more complex. One must also consider the word “bonus” and its definition: “a sum of money granted or given to an employee, a returned soldier, etc., in addition to regular pay, usually in appreciation for work done, length of service, accumulated favors, etc. (http://dictionary.reference.com/browse/bonus)” I completely agree with executives of large corporations getting large bonuses in accordance with the company’s performance. If executives of the large corporations are receiving money even when the business is going under then it is not a bonus, it is just part of normal pay. It is there job and ultimate responsibility to direct the company, therefore during the previous years when the companies were very successful they should have been awarded large bonuses, and when they could not foresee the financial meltdown that occurred, as a result they should receive no bonus.

One side of the argument, and I think most people faced with the question at hand would automatically respond with a resounding “No, the bank executives should not get large bonuses if they received bail-out money.” To make an argument one way or the other, certain presumptions...
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