Vikram Pandit to take pay cut?

It's supposed to happen this afternoon. Uncle Vik, along with several others, should be taking a pay cut. The Treasury Department is set to order compensation reductions for top executives of firms which have not paid back last year's government bailouts. Citi is among those that have not repaid the TARP money so Vikram Pandit and other top Citi executives should be on the list.

The guys over at Powerline Blog have an in-depth opinion here about this latest move from the federal government.

I'm ambivalent about this one. While I dislike government intrusion in the private sector as a general rule most of these executives salaries are quite obscene in their size and have been for a very long time. The argument is that these positions are complex and deserve compensation commensurate with their complexity. This is quite true, not everyone becomes the CEO, CFO or COO of a large, multinational organization with multiple business lines, products and geographies for a simple reason. These are tough jobs and in theory the incumbent should be uniquely qualified to fill that role, thus deserving the compensation that comes as a reward for their preparation AND performing that role effectively.

The problem is that these guys, for the most part, have not performed their roles effectively. They have run their companies into the ground and at least in Citi's case have not been able to turn the situation around. I still don't like the government intervening in this, but since none of these companies run their business on an altruistic basis, neither the executives themselves, nor their boards have seen fit to limit their pay and that is just plain wrong.

The whole idea behind meritocracy is pay for performance and this is the culture these companies say they are trying to instill. It should come from the top. If the company has lousy results, has to get bailed out by the federal government and doesn't pay the money back in a reasonable timeframe, then the top brass should get lousy pay. And I guess when you don't walk the talk, in these trying economic times the administration does it for you.

Update: Here it is.