Justification for Compensation

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  • Topic: Executive compensation, Barack Obama, Salary
  • Pages : 4 (1458 words )
  • Download(s) : 115
  • Published : April 21, 2011
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February 04, 2009 President Barack Obama imposed a $500,000 cap on senior executive pay. People talked about whether it is good or not because it never happened before. I hold the opinion that we couldn’t limit the executives’ compensation by code law because it will kill the senior managers’ motivation. In the meantime people only saw their salaries but have no ideas about how much effort they had made for the company and economy. Opinion

February 04, 2009 President Barack Obama imposed a $500,000 cap on senior executive pay for the most distressed financial institutions receiving taxpayer bailout money and promised new steps to end a system of “executives being rewarded for failure.” Obama announced the unusual government intervention into corporate America at the White House, with Treasury Secretary Timothy Geithner at his side. The president said the executive-pay limits are a first step, to be followed by the unveiling next week of a sweeping new framework for spending what remains of the $700 billion financial industry bailout that Congress created last year. Why it is necessary and justified?

People were angry about that executives being rewarded for failure. Especially when those rewards are subsidized by U.S. taxpayers. The pay limit comes amid a national outcry over huge bonuses to executives who head companies that seek taxpayer dollars to remain afloat. The demand for limits was reinforced by revelations that Wall Street firms paid more than $18 billion in bonuses in 2008 amid the economic downturn and the massive infusion of taxpayer dollars. Whether it should be limited?

1.Social process
In my opinion the executives compensation should not be limited. In capitalism what will motivate people to work? It is profit. In modern economic theory people are selfish. It is true that people only work it hard when they can maximum the profit now days. Think about this if your boss won’t give you money or food when you work...
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