Radio identity throws his weight behind call for cap on bank execs’ salaries

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Tom Elliott, 3AW announcer and Managing Director and co-founder of Melbourne based hedge fund MM&E Capital Limited has joined the growing throng of vocal opponents to Australia’s highly paid banking oligopoly.

In line with the Obama administration’s plan to impose a cap on executive pay for firms that take government aid money, Elliott is calling for a limit to be placed on the salaries of Australian bank executives. He argues that the multi-million dollar pay packets currently being handed out to the banking industry’s top echelon cannot be justified in these tough times.

Elliott, son of former Liberal Party president, John Elliott, maintains that bank funding and deposit government guarantees means risk is now being carried by taxpayers, which renders bank executives “public servants”.

The amount of the salary cap is at this stage irrelevant, says Elliott. “It’s more the symbolism, which says, you’re now effectively a public servant.

“The moment you don’t want to be a public servant and you reckon that your bank can wash its hands of government support you can pay yourself whatever you want.”

While Australian banks have not yet had to resort to US and UK style bailouts or nationalization Elliott argues that the Federal Government’s guarantee is a thinly disguised bailout.

Claiming that bankers spend much of their time lobbying the Federal Government and boasting about what a great job they’re doing and bemoaning the awful state of affairs in the international credit markets, Elliott declares “I think it’s wrong”.

“I’m a complete free marketer,” he says.

“I don’t have any quarrel with people earning millions of dollars.
But I do have a problem when as a taxpayer I’m the one paying for it.”

Elliott is happy to see CEOs receiving generous salaries when they’re doing a great job. But he maintains that when a company gets to the stage where it can’t function without the government propping it up it loses the right for its top executives to earn massive amounts of money.

He refers to car dealers (some of whom have been bailed out by government) and the commercial property industry (which is on the cards for a bailout) saying that the executive salary cap argument should extend to any firm that requires a government bailout.

“What the government doesn’t understand is that it’s putting banks in a privileged position and putting all the non-banks out of business,” he told Lending Central.

“When this credit crisis is over the banks will be so strong because all their competition will be gone.”

Elliott does not support the call for a ban on golden parachutes, which have been described as “indecent, excessive, unnecessary payments that foster greed or are a function of greed” by Philip Higginson, managing director of ProNed Australia, who last week launched a survey of company directors.

Arguing in favour of golden parachutes Elliott maintains that they are a valid incentive for executives to join a company that may have only a 50/50 chance of survival through no fault of theirs.

What do you think, should there be a cap on bank executives’ salaries or can you see justification in them remaining unrestricted?

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5 COMMENTS

  1. Without a doubt I agree!

    It sounds crazy that any business needing Government assistance can pay its executives whatever it likes, yet they are free to layoff workers to maintain profit levels.

    I wonder how many people from within a bank would put their hands up for the CEO role if the salary was capped at $500k. Probably plenty of qualified applicants.

    Amazing though that we are talking about so much government intervention in the year 2009, very anti free-market indeed.

  2. I’d like to start the debate with a suggestion that the top salaries be capped at say 50 times the lowest paid worker in that bank.

    Come on people, I am sure we can come up with some great packages to bring these twirps into line.

  3. Yes they should be capped, especially now they need to have the Tax Payer to hold their hand.
    When you consideer the pay at the top, you soon realise there is not enough money left to be spent on customer relations, and maintenace of the the assets of these companies.
    This Recession will not end until this problem of excessive remuneration is solved. We here so much B…..t about how good these guys are. For an example our cricket team went to South Africa with three rookies and have been very successull. Always have faith their is always talent around, and if these clowns demand so much ask them to leave and find some one else. The only problem, have the new guys/ gals learnt the bad habits.

  4. Hello! Hello! Hello! I stated to a commonwealth bank senior executive in 1991 that the changes they were bringing in( as a mirror to many other corporates)to their remuneration system was based on greed and greed was a negative motivator and would never produce long term positive outcomes for anyone – so in today’s world I have been proven correct – It is not a powerless situation. Have you become a member of the Australian Institute of Professional Brokers yet – the AIPB has the vision and is prepared to take necessary action to bring balance back into the everyday reality for a finance broker and the community they serve.

  5. I think we should make an official complaint and demand that they be treated how they treat the hands that feed them, such as the public customers and introducers and brokers in our position that send them work, they should be capped at .50% upfront and .15% trail for salary’s, and stepped down as profits drop, lets see if they will like that, and to top it we will claw back any salary paid that subsequently in future the bank has a loss of some sort. however they will scrutinize the very people that send them work from the start then cut their coms and charge more for the privilege of banking with them etc to cover up banking industry losses so it seems their bottom line has been unaffected so they justify their stupid salary’s, ‘owe shareholder we done good for you, we ripped off peter to feed Paul” their a bunch of crooks and we all should know by now it is as commercial as it has ever been. Cant you’s see, it’s the best game of monopoly, I am so done with complaining and being amazed by their actions that I rarely speak as it’s a waste of time. Even if a disc jockey voices his opinion even he is policed by his management on how far to go hence his own position would be at jeopardy if he stated further truths, the banks big boys would contact the station stating that there is a conflict of interest with the announcers discussions and they will cease advertising, equating to a lesser revenue for the station, so we are all controlled by the system and we just don’t look at it deep enough. It is politics at its best and as they say, can’t beat them than join’em.. I’m thinking about it, we’ll see what they offer, they dont care about anyone but themselves, and that’s how every man has become in the modern society we live in – eat or be eaten i guess. A saying from a movie i once watched about a warrior once before, he said, “i do not want War, But yet, I must still feed my people”
    Its very logical, but a shame they dont follow suit and look after their own supporters. They are backstabbers, traders, hypocrites, every name I can’t even think off; just wait when their back itch one day, we are certainly not going to be there to scratch it for them.
    In summary, they take from everybody but themselves to keep the masonry going. understandable, but why dont they be fare, show some solidarity to the followers, e.g., cop a loss like the better of us, even if just a little, as a symbol of sincerity, so that we can support the system that supports us, but i think my wishes are of that in a perfect world.
    A man Who Never Made Mistakes, Never Made Anything. I hope the majority are learning from this comparison to 1929 figures, because I know I am and the better of you should too, and stop complaining, just play the game and keep running.

    Regards
    Dan isaak
    http://www.redilend.com.au

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