On Wall Street, Skepticsm On Exec Pay Cap
MELISSA BLOCK, Host:
One of the most provocative suggestions for the bailout package is a cap on executive salaries. This week, John McCain said executives who take the bailout money shouldn't be paid more than the highest paid government employee. That is the president, with a salary of $400,000. As NPR's Robert Smith reports, that salary has some New Yorkers chuckling.
ROBERT SMITH: Four hundred thousand dollars a year may sound like a lot of money. But for a corporate executive living in New York, I mean, that's pocket change. I did the math and found that at that salary, these guys could only afford a mortgage on an apartment for about $1.5 million. I'm standing in front of a real estate bulletin board with all the listings in front of it, and there's a fellow New Yorker here, Jimmy Chalk(ph), who's going to help us decode this. What are they going to get? They're not going to be able to afford this penthouse.
BLOCK: No penthouse. No Tribeca condo penthouse, no West Chelsea penthouse.
SMITH: Now, this right here is a one bedroom for 1.1 million, but that seems too small.
BLOCK: It seems a little out of the way, though it looks like a nice enough place.
SMITH: So, what's an executive to do?
BLOCK: I guess, get used to it. They made some mistakes, and I guess they have to pay for it. We've probably got a room in our house in Harlem, so they can move in there.
SMITH: New Yorkers have been known to look on with glee as the mighty fall. But even those who spend their life under that $400,000-a-year salary cap, they can't imagine these guys taking a pay cut. Fritz Tucker(ph) and Paulina Trecheck(ph) were spending their lunch hour discussing the financial crisis.
BLOCK: These are, like, the most powerful people in the world. So, I don't really think any, like, legal thing is going to stand in their way of making as much money as they possibly can.
SMITH: If they had to downsize from, let's say, $30 million a year to $400,000 a year, what would be the first thing they should cut out of the budget?
BLOCK: Private jets probably have to go. They probably spend a lot of money on gas. Like, Puff Daddy recently had to put away his private jet because he couldn't afford the gas anymore.
BLOCK: I have gotten by on less than that for many years so...
SMITH: But you live in Brooklyn.
BLOCK: Yes, that's true. I'm sorry. I'm sorry.
SMITH: They admit that they don't really know enough about the lifestyles of the rich and bankerly to know how executives will react to the salary caps. But I met Joan DeStefano(ph), a stained-glass artist. And she says in some ways, these executives might not even notice.
BLOCK: If you have a greedy personality, it wouldn't matter how much money you could make, you would always want more and always find a reason why it was never enough.
SMITH: So they'd be just as resentful on 400,000 as they are on 30 million?
BLOCK: Yeah. If they made 20 million, they'd say, you know, life would be fine if only I had another 10 million.
SMITH: Let's just say that the heads of investment banks aren't the most sympathetic figures in New York City these days. But how about Brian Hocousser(ph)? He's just a poor business-school student at NYU. And frankly, he was hoping to grab one of those vastly overinflated executive salaries one day.
BLOCK: I mean, that's the dream. That's what we're all looking for.
SMITH: So if you found out you could only make $400,000 at the very top of a firm, what? You're going to change professions?
BLOCK: I mean, it's too late for that now. But maybe if I knew that ahead of time, I would not be in business because - maybe I'd pursue acting or something, I don't know.
SMITH: And these days, that might be a safer investment. Robert Smith, NPR News, New York.
NPR transcripts are created on a rush deadline by a contractor for NPR, and accuracy and availability may vary. This text may not be in its final form and may be updated or revised in the future. Please be aware that the authoritative record of NPR's programming is the audio.