Executive Pay Limits - Yes or No? (10/26/09)

Twenty five of the highest paid executives at bailed out companies will soon have their pay cut.

The AP has reported that seven large companies that were previously bailed out – and haven’t paid back the money – will now be forced to cut their top executives’ pay by one half, beginning next month.

The plan requires that cash salaries for the top 25 highest-compensated executives will be limited in most cases to $500,000. In addition, in most cases, perks will be capped at $25,000.

While this is a good way to get some of the money back, it’s unclear what it will do for the economy at large – obviously, these highly compensated individuals are paying a great deal of money in taxes as well. Without this tax money the government and its services may increasingly suffer. However, as they are being paid great deals of money for the poor decisions that put their companies into jeopardy, it is hard to disagree with this plan.

What do you think? Is this a step in the right direction, or will it do more harm than good? Should the government even be involved? Leave a comment below.

Teresa McPherson was the former Editor of Adhesives & Sealants Industry. She has held several editorial positions during her more than 20 years with BNP Media. She holds a bachelor’s degree in English and journalism from Eastern Michigan University.