Bye Bye Banks and Wall Street

[Ghoulish Delight]

Originally Posted by Kevy Baby

Something I was thinking about on the drive in this morning: can anything LEGALLY be done to limit the golden parachute payouts? Are these considered employment contracts? If so, CAn they be restricted?

If congress passes a version of the bailout plan with restrictions, then yes. Basically it would be in the form of, "If your company accepts money from the bailout fund, you will agree to these restrictions on executive compensation."

The argument in favor of those restrictions is that the executives at the companies in most need of help do not deserve to cash out on whatever compensation contracts they have seeing as they failed to do what they were contracted to do. They shouldn't be allowed to accept a bailout and then profit from it.

The argument against it is that it'll defeat the purpose of the bailout. Institutions that aren't in dire shape won't want to agree to the restrictions so they won't take the money. That leaves only the ones that are in absolute dire straits who might be willing to take it. But then taking it would be a sure sign that they're in bad shape, so people are going to be reluctant to invest in them, bailout or no, so THEY'LL be reluctant to buy into the program also.

[Kevy Baby]

Originally Posted by Ghoulish Delight

If congress passes a version of the bailout plan with restrictions, then yes. Basically it would be in the form of, "If your company accepts money from the bailout fund, you will agree to these restrictions on executive compensation."

Thanks for the explanation. Although I wouldn't be surprised down the road if someone who ends up not getting their golden parachute sues to get it anyways.