"In the most dramatic step yet to curtail huge pay packages for executives on Wall Street and elsewhere, the Obama administration plans to slash the compensation of those running the seven biggest recipients of federal bailout money.
The action, to be announced as early as today, would on average reduce the total compensation of the 25 highest-paid executives at each company 50% from what they received last year, according to people familiar with the decision. Cash pay -- salaries plus cash bonuses -- would plunge 90% on average.Some of the lost cash pay would be replaced by grants of stock that the executives would have to hold for a set period before selling.
The plan applies to companies that have been given "exceptional" assistance -- tens of billions of dollars each -- under the Treasury's $700-billion Troubled Asset Relief Program. They are American International Group Inc., Citigroup Inc., Bank of America Corp., General Motors Co., Chrysler and the automakers' financing arms, GMAC and Chrysler Financial. Altogether, they have received $240 billion, or more than half, of the TARP money invested so far. Compensation experts described the pay cuts as
unprecedented."
Ha ha Citigroup. I hope you enjoy the squeezing as much as I enjoyed you hiking my credit card from 0% to 29.99% this month! Their decision, about a twenty year long 'relationship', coming on the heels of several other similar actions by credit card companies, on top of the evisceration of our retirement portfolios, has lead us to a decision that will help us and hurt them even more. We are taking our retirement savings, what is left, and paying off as much consumer debt as possible. Of course, along the way we discover how little of that money we can actually get our hands on, between employers hanging on to a chunk, fees, taxes, and penalties. But guess what, do the math and it is still worth it! Not only will it free up our cash flow in the most immediate way, which we can turn around and use to first pay down remaining debt, and then building a cash cushion, and then return to retirement (maybe, I am kinda leaning towards a mattress at this point) - but it will be payback time for at least four or five financial institutions, the ones who have harmed us the most. Citibank and Chase and AMEX lose us as debt serfs (bye-bye!) and TIAA-CREF, which lost about half my money, doesn't get more time to eat the rest. Vanguard gets to keep some of Markus's money. The biggest winner in this game, besides us, will be our credit union, which will probably continue to have some skin in our game, and stay our go-to people for financing if and when we need it in the future. Eat crow, suckahs.