It’s a bad time for an exodus of talent
The world of executive compensation, long an ethical and practical puzzle to economists, corporate directors, legal experts, shareholders, media commentators and Marxist sympathizers, has just been solved by the Obama administration: Let the government control executive wages.
In a blizzard of moralizing twaddle and disinformation, President Barack Obama and his wide-eyed Treasury Secretary Timothy Geither established CEO pay at U.S. financial institutions receiving government funds. Zap, you’re frozen — at $500,000.
Great populist strategy, but like all government price controls, the $500,000 Obama compensation plan for bankers is guaranteed to produce a rash of destructive consequences.
Prof. Kaplan says the major U.S. institutions that have received exceptional assistance from Washington already face loss of staff. At AIG, the insurance company, there is evidence that executives at healthy branches of the company, now under de facto government control, are fleeing for other, healthy insurance firms. “You will see over time a huge exodus from the companies that take money from the government.”