The Pay For Performance Bill passed the House on April 2nd. For those of you that are kind of confused of the implications, this is a very serious issue.
http://www.housingwire.com/2009/04/02/pay-for-per…
As a side note, I urge everyone on this board, especially students of Finance and industry professionals, to each out to their government representatives and explain your thoughts on the issue. Believe it or not, your opinion should matter. Stop whining and take action. If we sit by and let the government continue to destroy the American financial system, we are going to seriously regret it.
“The taxpayers now have an ownership stake in these companies. And owners of companies set salaries for their employees,” Grayson said in a media statement. “Any company bent on paying its employees unreasonable and excessive compensation can do so after the American taxpayers get their money back.”
Stupidest thing I've ever heard. Unless you're a majority shareholder, good luck with setting compensation in the real world.
For those who voted for Obama, be careful what you wish for. Our Government is heading rapidly toward socialism and away from capitalism. They give "bailout" money and then expect to run the companies. It would be far better to allow some companies to fail, pick up the pieces and go on.
Do we really want the government to own banks, auto companies etc. We are going to be in serious trouble with Obama and this Congress. Wake up voters, you can undue some of this next election. We need more balance in Congress.
A lot of people don't realize that a large amount of bonus money is actually a payment for the large number of hours that financial people put in.
A first year financial analyst working 80 hours a week is earning $14.42/hour or the equivalent of $30,000 per year for a 40 hour week. A bonus eqwual to annual salary only brings this person to $28.84/hour or the equivalent of $60,000 for a 40 hour week - a little over the average starting salary of a college graduate. This is hardly being overpaid.
Keep in mind you are not taking into account the PV of your expected future cash flows. With the upside potential earnings that you get after being an analyst for a couple of years, then one can argue that we are overpaid. Also, we get 25 bucks a day for dinner, free gym membership, etc that a lot of other professions dont.
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