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The Cost of TalentThe Cost of Talent

The Cost of Talent

Under Obama's plan, top executives at firms receiving extraordinary help from U.S. taxpayers will have their compensation capped at $500,000 US. If they receive any additional compensation in the form of stock, it can't be cashed in until taxpayers are paid back. If top dollar execs do actually bring a return thanks to better management, and if boards actually offer a measure of accountability, should there be a cap on the rate we'd pay if there is a net gain overall? And with the bailout in mind, will we see the sharpest leaders in companies who are suffering take better compensation elsewhere and leave potentially lesser hands to the hard tasks that face us? Is Obama creating a brain drain in recession ground zero? With CEO turnover rates already high, will this just make things more unstable? .

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The Cost of Talent February 4, 2009  |  By Robert Joustra
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The CBC published an article today on Obama's plans to cap the compensation packages for executives of companies receiving bailout aid.

Under Obama's plan, top executives at firms receiving extraordinary help from U.S. taxpayers will have their compensation capped at $500,000 US. If they receive any additional compensation in the form of stock, it can't be cashed in until taxpayers are paid back.

This brings a few thoughts to mind. First, how did Obama decide that $500,000 US is the right number? What is the real value of attracting top-level managerial talent? I know many balk at the $130,000 salaries we pay Canadian MPs, but given their high task, I've often thought we'd do well to double them. Given the impact of the decisions made, don't we want to draw in our best and brightest?

If top dollar execs do actually bring a return thanks to better management, and if boards actually offer a measure of accountability, should there be a cap on the rate we'd pay if there is a net gain overall? And with the bailout in mind, will we see the sharpest leaders in companies who are suffering take better compensation elsewhere and leave potentially lesser hands to the hard tasks that face us? Is Obama creating a brain drain in recession ground zero? With CEO turnover rates already high, will this just make things more unstable?

Ottawa Brian, I'd especially love to hear your thoughts on this.

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