Dodging the Pay Cap

President Obama’s limiting of executive compensation was mostly applauded, but the restriction on banks receiving "exceptional assistance" (aka bailout money) might not have the effect everyone desires, as some say executives will find ways to negotiate around the $500,000 salary limit imposed on senior employees. Some of the highest earners—traders, brokers, and salespeople—aren't executives at all, notes the Associated Press, and others may move to foreign firms and hedge funds, or transition to boutique firms to save their salaries. President Obama said, "What gets people upset—and rightfully so—are executives being rewarded for failure. Especially when those rewards are subsidized by U.S. taxpayers," but compensation experts say the limit will affect only five to 25 employees per bank, and David Schmidt, senior consultant on executive pay at James F. Reda & Associates, said, "There's plenty of wiggle room…There's no constraints below the senior executive level, so the question becomes, will the restrictions trickle down?"