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Executive Pay

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  • December 28, 2012
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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...