In an article just published which I hope you will read is a run down of the reason why I think a huge Majority oppose the Crisis bailout and one reason I feel it needs to have real teeth if I am going to suggest it must pass.
Can wild CEO pay be tamed? Probably not
Lehman Bros.’ Richard Fuld, $40 million.
Merrill Lynch’s Stanley O’Neal, $46 million.
Bear Stearns’ James Cayne, $40 million.
Freddie Mac’s Richard Syron, just shy of $20 million.
Fannie Mae’s Daniel Mudd, $12.2 million.
Here is the link http://www.msnbc.msn.com/id/26…
Whats your opinion?
Best to All
Please share widely!
I know I am saying the same thing, over and over, with reason.
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p>Part of that “restructuring” is to cap leveraging, cap the pay differential between lilne workers and CEOs at a healthy balance – and to return to actual regulation of the market. Otherwise, the only limit is “getting caught” a/k/a greed meets the meltdown.
REPOSTED – I like performance based pay myself. It always bothered me that professional athletes get paid the same whether they win or not. They put a little extra in for some players if they win the Super Bowl… but for the most part it doesn’t matter how the team does.
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p>The other issue is how performance gets defined. Much of the CEO packages I’ve heard of is tied to stock performance. They start at a company and get 1,000,000 options to buy their company stock at $10 while it is currently trading at $5/share. The profits margin of the company may drop but if the stock price goes to $15 or $25 they make a killing. The competition for these CEOs who can turn companies around must be tight. Again, I wouldn’t blame the CEOs for getting these deals anymore than you would blame Tom Brady for getting a $50 Million contract… right? And Brady would get it regardless of how the Pats finish OR if he even plays. He is injured this year so should he get paid $0?
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p>Fault the Board of Directors at companies who offer these contracts to CEOs whom they believe will increase the stock of the company.
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p>And I do not agree with limiting anyone’s salary… ever. Not Bill Gates, not Oprah, not a CEO or Professional athlete, not a salesman, not a hollywood star or stockbroker… If I started a company and did $10 million in sales and I believed hiring this “star” sales person would double my company size I might offer to pay him/her a 10% commission (believing I would pay $1M for the additional $10M in sales). If they ended up selling an additional $100M and got a $10M paycheck… who cares??? I got another $100M in sales right! If you want to be mad at people for things like this, be mad at the people who offer these people outrageous contracts/commissions.
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p>Look at this financial mess we have now. I haven’t heard ANYONE with a solution that works for me. If we could find someone with a great plan, hire the necessary people and then have strength and perseverance to implement that plan successfully… how much would that be worth? I mean relative to the numbers we are talking about and the risks, I’d HAPPILY pay that person $1B if it worked. You?
… the reason to cap would be that if a company want’s help from me, then it’d better acknowledge that it did something wrong to get into this mess in the first place. The cap is an expression of accountability for those who would sail into the shoals while heavy in the water. In theory this is something share holders should have been demanding all along. Now its my money so I don’t have a problem with making demands of accountability.
who could salvage this bailout if it saved us $700B? The answer of course would be a resounding YES! That question is what every Board of Directors “should” be asking when they hire people and are looking for maximum return on their company’s stock. If they pay a guy $300M and he increases a company’s stock by $5Billion, it’s a good deal in their eyes. If they want to keep him/her maybe he adds a parachute (or he quits) so they add the parachute which sometimes gets used. Who’s at fault…?
… are for paying people for success. We’re talking about riders on the bill that acknowledge failure. As such, these are not comparable.
I’m just trying to state why I think this occurs. I have always believed in performance based compensation. While not exactly pertinent to this discussion, I have also felt the same way about professional athletes who make tens of millions per year on teams that finish last and their personal performance is abysmal.
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p>I also think the public is not just upset about the CEO pay when they fail, I think they are upset about the amounts period! These guys do in man cases devote their lives 7×24 to these companies traveling the world on red-eye flights and making incredibly important decisions that effect thousands of people. If I were the Chairman of the board of one of these companies I would want a person who is market tested and I would be prepared to pay a lot for them. How they structure the “reward” for success is a problem. Is it based on profitability, stock price, market position… ? No doubt the CEO would drive the company towards success on those metrics for his/her personal benefit.
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p>A merit plan based on success would be great but I still say the gross compensation numbers are what the average guy on the street thinks are “gross”, not the link to success.