The AP is reporting that at the financial firms that have received taxpayer bailout money, the top 600 executives have received a total of $1.6 billion in salaries, bonuses and perks. That's an average of $2.6MM each.
Normally, I'm not a fan of government interference in executive pay. I find multimillion dollar pay packages as distasteful and excessive as anyone else does, and knowing that a company pays its executives outrageous sums makes me less likely to invest. But under normal circumstances, I don't think the government does anyone any favors by mandating salary caps. It's shareholders, not the government, who should be demanding sane and reasonable compensation packages. Executive compensation should always be oriented strongly towards performance, and in a year like this, in which the decisions these executives made were responsible not only for the systemic failure of their own businesses, but also for bringing the American economy to its knees, it's inconceivable that any investor would think these executives' contributions were worth anywhere near $1.6 billion. But it's shareholders, not the government, who should normally demand change.
In this situation, however, I think the government does have a legitimate reason to call these companies' compensation committees to task. These executives have had to come, hat in hand, to the taxpayers, asking for money: in other words, they're being paid, not with money earned legitimately in the open market, but with my tax dollars. And I don't like it. I supported the original bailout bill, and I still do, but only with fairly stringent conditions attached. Before it approves the second half of the $700 billion bailout, Congress should demand reasonable executive compensation as a condition for any company that wants to participate in any aspect of the program. (Not just the asset purchase part, now scrapped.)
I thought it was stupid that General Motors spent $20,000 to fly their chief executive to Washington to ask for a bailout. I think it's really stupid that these financial companies collectively spent 80,000 times that much on compensation for executives who were clearly asleep at the wheel. And before these companies get any more of my money, whether as an investor or as a taxpayer, I want to see that number lowered significantly.