Thinking about Canada’s economic crisis, I frequently find myself wondering: "What would Obama do?"
Today, I got his answer to the problem of self-absorbed CEOs who stick one hand out for bailouts (and tax cuts) and use the other to line their pockets with compensation packages that seemingly have no limit.
We know it as a distinctly American problem, but the same trends exist here in Canada.
President Barack Obama’s answer: The White House will set a maximum wage for CEOs whose companies are being subsidized by U.S. taxpayers.
"This is America," Obama said. "We don’t disparage wealth. But what gets people upset, and rightfully so, is executives being awarded for failure. Especially when those rewards are subsidized by U.S. taxpayers, many of whom are having a tough time themselves."
More than $18 billion in bonuses were paid out to U.S. CEOs in 2008 – yes the very year greed and shortsighted decision-making helped fuel a global market meltdown.
Now that American taxpayers are on the hook for trillion dollar deficits that their grandchildren will still be paying down many years from now, the myth of the Super CEO deserving of grandiose self-reward has come crashing down on Wall Street and may soon make its way to Canada’s own Bay Street.
"For top executives to award themselves these kinds of compensation packages in the midst of this economic crisis isn’t just bad taste; it’s bad strategy, and I will not tolerate it as president," Obama said.
For those whose tendency is to bring out the violins for the embattled CEO, their compensation is capped at healthy $500,000 U.S. To borrow a line from Evita, don’t cry for me, Argentina.
Companies receiving U.S. federal aid will also have to publicly disclose all of their perks and luxuries – which is ruffling a few well-preened feathers.
Wells Fargo & Co. received a $25 billion bailout from taxpayers yet had still planned on a lavish Vegas junket for its top employees until the public got wind of it.
"Let’s get this straight: These guys are going to Vegas to roll the dice on the taxpayer dime?" said Republican Shelley Moore Capito. "They’re tone-deaf. It’s outrageous."
This represents a sea change in how we view CEO corporate excess. We are witnessing the beginning of a new era.
As U.S. Treasury Secretary Timothy Geithner put it:
"There is a deep sense across this country that those who are not responsible for this crisis are bearing a greater burden than those who were."
It’s only a matter of time before we start making the same connections in Canada.