It is the clear intent of the US Government to limit the pay of those who have received federal money. Now the devil is in the details, as each corporation plots and schemes to weasel out of the restrictions. The Cable Gamer will be paying particular attention, of course, to General Electric, since it is both an enormous recipient of bailout money AND an enormous media company.
And so, to name one flagrant example, how can NBC-Universal, a subsidiary of GE, continue to pay high salaries and bonuses in the teeth of these restrictions? GE CEO Jeff Immelt might have saved his own job through adroit playing of the bailout game, but it's going to be hard for NBC-Universal to function in such a regulated and salary-capped environment--the sins of the corporate parent are going to be visited on the corporate children.
So TCG repeats her longstanding prediction: NBC-U will be spun off.
But let's take a step back.
Two weeks ago, the Obama Administration put a theoretical cap of $500,000 on the pay of top executives for bailed out companies. TCG wrote about that Obama initiative in three posts, on February 5-6. These restrictions seemed perfectly fair to The Cable Gamer: If you are willing to take huge risks in the entrepreneurial business world, and you succeed, then you ought to be hugely rewarded. But if you fail, well, you ought to fail. Unfortunately, as well all know the big banks, including GE Capital, didn't to fail--they wanted to be bailed out by the government, AND they wanted to keep their multi-multi-million-dollar compensation packages. So fie on them!
But critics quickly pointed out that the Obama caps, as written by Treasury Secretary Tim Geithner--a total tool of his past and future employers on Wall Street--were easy to evade, because salary could be called "bonuses" instead.
So, reacting to completely justifiable public outrage, Congress went further on Friday; now the lobbyists are going to have to scramble even more to find loopholes--and maybe, just maybe, there won't be any, and the clear will of the people will be obeyed. This article, in The Washington Post on Saturday morning, byTomoeh Murakami Tse, would seem to be clear enough: The new stimulus package "imposes new limits on executive compensation that could significantly curb multimillion dollar pay packages on Wall Street and goes much further than restrictions proposed by the Obama administration last week."
How much further? Bonuses can only be a third of the salary, so if the maximum salary is $500,000, the maximum bonus would be just $167,000. And here's another kicker: the bonus caps are retroactive. Here's the WaPo:
Unlike the rules issued by the White House, the limits in the stimulus bill would apply to top executives and the highest-paid employees at all 359 banks that have already received government aid.
Now one of those "banks," of course, is GE Capital, which, as The New York Times reported last year, is benefiting from TWO different programs--a $139 billion loan guarantee from the Federal Deposit Insurance Corporation, and also, "a new Federal Reserve program aimed at reviving demand for the commercial paper for a wide variety of companies."
So GE Capital is pretty hooked onto the government IV. And that means that the rest of GE is hooked, too, because funds are fungible.
So it is the clear intent of Congress--and the President will, of course, sign this bill--to severely limit top pay at bailed-out firms.
Here's more from the Post:
At firms getting more than half a billion dollars, which would include all of the Wall Street giants, the rules would apply to the top five executives and the 20 highest-paid employees.
There you have it: "top five executives and the 20 highest-paid employees."
Now who does that include, for example? How 'bout Tina Fey, of "30 Rock" and the occasional "Saturday Night Live"? She probably makes a lot of money, but she would undoubtedly argue that she is "talent," and not an executive (and yes, there is, indeed, a wide gap between talented people at NBC and executives at NBC!). Ditto with Jay Leno and the folks at "The Office," or "Heroes." All of them are no doubt working for independent production companies, get a lot of their money in royalties and residuals, and so on.
But what about, say, Keith Olbermann? Surely he is simply an employee of MSNBC, or of its parent, NBC. And he makes a reported $7 million a year. And Brian Williams, and Matt Lauer and that enormous talent, Jeff Zucker? So quick question: Do any of these folks get bonuses, for, say, good ratings? Such incentive provisions in TV contracts are routine; I guess now it will be the mission of corporate watchdogs and muckrakers to go through the public filings of corporations in order to verify that the bailed-out bigs are abiding by these restrictions.
The Cable Gamer can see two scenarios here: First, GE and its NBC-U subsid simply find a bunch of loopholes and ignore the rules. Frankly, that's the most likely scenario.
Second, the government proves to be a lot tougher on these newly regulated companies, and NBC-U realizes that it can no longer function as a subsidiary of GE and its incompetent management.
And that means spinoff, or selloff, or going private.
