President Barack Obama and Treasury Secretary Timothy Geithner's strictures on the salaries of investment banks and dealers which the government had to bail out has caused the usual punditry about the best and brightest now fleeing Wall Street for more lucrative fields (manufacturing perhaps?). Terence Corcoran in the National Post, for example, foresees "an exodus of talent"!
Let's parse that idea closely. The critics apparently believe there is a magical stratum of celebrity CEOs who somehow so outstrip the talents of their rivals they can command astronomical sums, even when they completely fail at the competence for which they are rewarded . . . making sustained profit for the company or firm in such a manner as to ensure a solid return for owners (shareholders) without running afoul of regulators and leaving a legacy of a respectable reputation.
John Moore also of the National Post (while dancing around criticism of his more dogmatic colleague Terence Corcoran) put it better than me:
"Pity the bankers and brokers of America. Having run their enterprises
into the ground and gone begging for government money to avoid
bankruptcy, they're now being forced to get by on $500,000 a year.
Worse, their bonuses are being questioned. It really is scandalous that
people who aren't any good at their jobs are being publicly shamed
about how much money they paid themselves while wrecking their
This is the talent that will now flee Wall Street.
Is it possible the people who end up running these firms for $500,000 a year will be no less competent -- and possibly more humble, restrained and thankful for the hard work of their executives and line staff, and more grateful for their social 'license to operate' -- than those paid the big bucks who failed so badly? Is it not possible there is a great deal of executive talent waiting in the wings, and that many of those who failed will be relatively easily replaced? And is it also not possible this is often the case and that board compensation committees can stop being held hostage by the idea of the "celebrity" CEO?