The CEO salary cap

Fortune's Andy Serwer looks at the pros and cons of Sen. McCaskill's proposal to cap CEO pay at $400,000.

There is a move afoot you may have heard this, to cap the pay of CEOs whose companies receive TARP money. Senator Claire McCaskill of Missouri has just suggested 400,000 dollars, the same amount of money that the President makes, that's all these CEOs should be taking home. And you know, I guess you can kinda understand this, some of these CEOs have been suggesting that there is TARP money over here in this pot, and then there's other money over here, and that their salaries are coming from this pot, and the money for their airplanes is coming from this pot, not from this pot over here. Well, it really doesn't wash, cause it's all the same pot of money, and of course the perception by the public is that they are getting the government bailout and then they are using it to pay themselves, a ton of money and fly around in airplanes, so, not really good.

Think about another thing, by the way, suppose you were forced to take TARP money, there were instances where various banks and institutions didn't want to get this money and the Treasury said, you know you need to take this money anyway. Umm, that, of course, now may limit the CEOs' pay which is something that these CEOs don't like, you may remember Lloyd Blankfein, the CEO of Goldman Sachs. He's capped his pay at 600,000 dollars, even that may be too much, given this new 400,000-dollar limit proposed by Senator McCaskill.

Of course, the President of the United States, gets a whole lot of other goodies besides just that 400,000 dollars, right? He got the White House, Air Force One, security, probably a lot of other perks too, so maybe not quite a fair comparison, you know, it reminds me of that old line that Babe Ruth said back in 1930, when he was paid 80,000 dollars a year, which was 5,000 dollars more than President Herbert Hoover was making--75,000 dollars a year. And some sports writers asked him and said, "So, how does it feel? How do you justify making more money than the president did?" And Babe Ruth said, "I had a better year than the president." Not clear at all that the CEOs at any of these institutions can say that, although, compared to which president? President Bush, President Obama? I don't know. It's kind of difficult to say who had a better or worse year, isn't it?

GLOSSARY

1. afoot adjective, [not before noun] being planned; happening: There are plans afoot to increase taxation. ◆ Changes were afoot but we had no idea what they would turn out to be.

2. Cap: an upper limit on an amount of money that can be spent or borrowed by a particular institution or in a particular situation: The government has placed a cap on local council spending.

3. TARP The Troubled Asset Relief Program (TARP)

4. doesn't wash spoken used to say that you do not believe or accept someone's explanation, reason, attitude etc

5. I'm sorry but all his charm just doesn't wash with me.

6. Goldman Sachs 高盛

7. goody 好处

8. perk noun, verb noun (also formal perquisite) [usually pl.] something you receive as well as your wages for doing a particular job: Perks offered by the firm include a car and free health insurance. ◆ (figurative) Not having to get up early is just one of the perks of being retired.

9. old line adj.历史悠久的,保守的

10. Babe Ruth 1895年出生于美国马里兰州巴尔地摩市，后来成为美国棒坛传奇人物，美国职棒当今最伟大的球员之一。

11. Herbert Clark Hoover (August 10, 1874 – October 20, 1964) was the 31st President of the United States (1929–1933).