Europe Cuts Executive Pay Packages, If They Can Understand It So Should We

In case you haven't seen it, the New York Times wrote a ridiculous article this past Thursday about how hard it is soooo hard to live on half a million dollars in Manhattan. They concluded that with all the "necessary" expenses, a salary of $1.6 million is far more agreeable. If you get the urge to knock them the %$#& out, don't worry, you aren't alone. As much as the majority of the wealthy in America bitch and moan about Obama's decision to cap salaries of bailed out institutions, our friends on the other side of the pond clearly get it that we are in a big mess and that everyone needs to get together to help solve this crisis, even if the rich have to take a pay cut.

From (ironically) The NY Times:

“There’s no opposition to giving bonuses or high pay to people who are successful,” said Mr. Bolkestein, now a professor at the universities of Delft and Leiden in the Netherlands. “But there should be no extra money for people who have failed.”

And, in some cases, no jobs. Royal Bank of Scotland Group fired seven nonexecutive directors Friday as part of a restructuring agreement with the British government, which pumped in about $30 billion to rescue the bank.

On Friday, European governments were encouraged to follow the example of the United States by limiting executive pay at companies receiving government aid.

“The commission very much welcomes this kind of limit placed on the pay and bonuses of executives,” a European Commission spokesman, Jonathan Todd, was quoted as saying by Reuters. Such restrictions could be an extra incentive for banks to repay state bailouts.

Restrictions on financial institutions vary, from a ban on all bonuses to capping severance pay packages. It is smart and sensible for the behavior of executives to be held in check. As the article notes, many countries in Europe and the banks themselves are becoming more responsible with their money and what they are paying their employees in light of their bad business practices in recent years. I am sure there a few that protest over there as they do here, but in Europe overall, there is more seriousness in actually getting these banks to act responsibly in light of what is happening to the world economy.