Lose $8 billion and walk away with $160 million

[Garfield1966]

I cannot help but wonder if the fear mongering that W and his minions has not contributed to this mentality. You have thugs with a GED who prior to the TSA gig were doing who knows what. They are thrown in to a position where they have to a degree, absolute power. If you screw with one of them, they can throw you into a black hole and make your life hell. They do not seem to be held accountable. What happened to the idea of treating someone with respect till you actually have proof or at the very least a reasonable suspicion that the person has or will commit a crime?

We are giving thugs (from the White House down) power to do as they choose and we the people feel powerless to do anything to stop them. The terrorists did not win on 9/11, they won when we decided to let fear and paranoia rule our lives and when we decided to let idiots be in government and in other positions of power.

 

[Gilding the Lily]

If I had my way, I'd chuck the stock options...let them buy it like everybody else. There would be a "bonus pool" for the execs. If he achieves "shareholder value" without cutting jobs, he gets the entire pot. But...deduct $50,000 for every employee laid off to achieve this goal, and deduct $5,000 for every remaining employee who gave up pay and/or benefits. Use that money to reward the surviving employees and whatever is left gets split in the executive offices. It's a pipe dream, I know.

I agree with alot of what you said... but not with this part above. You cannot truly advocate that can you?!?! Obviously, there is a lot of fat in large companies. There is often units where 7 people do the work that one person can easily and competently handle. Should the CEO be forced to keep them or else lose his/her bonus? CEO's should be awarded when they find inefficiencies in the company, not punished.

If CEO's were ALWAYS punished for letting people go when there are inefficiencies, then the employees probably wouldn't be let go. We all know what happens after that, the companies expenses are too high, they default on their financing, they are forced into chapter 11, and then the employees are let go and they lose their pensions. Its the same rationale when Unions made agreements in the 80's that now, they are realizing, are coming back to bite them.

 

[local 12 proud]

Sure...it's stressful guiding a company thru a merger...but it ain't near as stressful as wondering if you will lose your $50k per year job tomorrow in a "cost cutting effort" and wondering where next months mortgage payment will come from. I could handle a helluva lot of stress if I knew that succeed or fail, I'm getting $160 mil at the end of the day.

Exactly right, Win or Lose the crap shoot at the end of the day your still gonna be filthy rich to me does'nt seem like the best way to fully tap the (leaderships) abilities to make the right and sometimes hard decisions.

 

[KCFlyer]

I agree with alot of what you said... but not with this part above. You cannot truly advocate that can you?!?! Obviously, there is a lot of fat in large companies. There is often units where 7 people do the work that one person can easily and competently handle. Should the CEO be forced to keep them or else lose his/her bonus? CEO's should be awarded when they find inefficiencies in the company, not punished.

HOw much fat is there in the executive suite? Let's take Jack Welch...the management genius at GE and father of the "rank and yank" methodology...where employees are ranked...and the lowest rated ones yanked. Was Jack ever evaluated that way as CEO? Nope...it would hurt "shareholder value" to have that kind of turnover in the executive suite.

If CEO's were ALWAYS punished for letting people go when there are inefficiencies, then the employees probably wouldn't be let go. We all know what happens after that, the companies expenses are too high, they default on their financing, they are forced into chapter 11, and then the employees are let go and they lose their pensions. Its the same rationale when Unions made agreements in the 80's that now, they are realizing, are coming back to bite them.

Allow me to explain...in the quest for "shareholder value"...one word comes up an awful lot....merger. And a favorite word in mergers is "synergy",. which loosely translated seems to mean "how many redundant jobs can we get rid of while doubling our size". It's great for shareholder value....but is it really so good for the rest of the company? Because Sprint is based here and impacts the Kansas City area, I'll use them again. Sprint stock was lagging. Their customer support was a joke (due in large part to letting one guy do what 7 others had been doing)....first thing out of the box...layoffs. But productivity started to lack.

Well...lucky for Sprint most of their workforce were exempt employees - step two...implement the "mandatory 50" hour work week. Oh yeah...and because they had a similar "rank and yank" program for those lowly workers, if you only worked 50 hours a week, you were pretty much a slacker. I'm sure the CEO's heart would have leapt with joy if he saw what I saw on CHRISTMAS DAY a couple of years ago...cars parked in the headquarters parking lot. Oh yeah...headquarters doesn't house the network operations group...mostly it's design engineers and marketing folks...guys that design, not operate the network. While these moves didn't do much to help "shareholder value", the executive team was richly rewarded for their "strategic planning".

What to do next....why let's merge with Nextel...a company with significantly better customer service, and a largely corporate client base...nevermind that the Nextel technology and the Sprint technology were incompatible - the merger was done, the "synergies" were laid off, and what do you know...shareholder value was boosted. And the executive team was richly rewarded.

Then it started to become clear that those one employees doing the job of 7 couldn't get the technologies to work together as fast as they'd hoped. The Nextel customer service started to suffer - in large part because those "redundant positions" were eliminated, and the stock started to falter. "Our vision is next year" said the CEO - and he was richly rewarded for his optimism.

Now...over the past few years, Sprint has eliminated almost 20,000 jobs - even today, as lean as they are, many of their engineers are wondering if today is the day they are let go - especially those guys and gals over 40 (Sprint had to pay a lawsuit because many of the "synergies" that they laid off were over 40...and among those earning higher wages). And the shareholders have had enough of the leadership. The CEO was fired....with a $50 million severance package. That's before the stock.

So my question to you is this...did that CEO deserve ANY of that bonus money? Because along with the dollar costs of that bonus, there were the number of marriages that were wrecked...the number of folks whose lifestyle was yanked out from under them...and even the increase in suicides. For the record, I haven't worked for Sprint since before their OLD CEO was ushered out of the building with hundreds of millions in ill gotten gains. I just watch that company as an interested citizen in the city that is impacted by events surrounding that company. I've been away from Sprint for 12 years. My old division was Yellow Pages. A year after I left it was sold to a competitor...many of my old friends became just another synergy and are no longer in the telecommunications industry.

 

[Gilding the Lily]

You are either asking me the wrong question, or asking the wrong person. Please read my first post where I stated that severance packages (golden parachutes) should be toned down. I also gave examples of how CEO's can be paid bonuses without enticing them to make financial transactions that effect stock price in the short term but completely ignore long-term goals. Again, see the first post.

BTW... the example you cite is lacking. The CEO didn't cut out inefficiencies, he cut out neccessaries and the financials testified to that. Completely different scenario.

 

[KCFlyer]

Completely different scenario.

Not really....just look at the airlines

An afterthought....if they didn't cut so deep that they didn't have enough people, but instead cut American's and offshored it to India (think reservations), to a person who didn't know where the hell Atlanta was and had an accent so thick (but was named "Bob) that you couldn't understand him - you kept staffing levels where they needed to be...they were just worse than dead weight...but it was a good move for shareholder value....should that exec be rewarded? Many are/were.

 

[Gilding the Lily]

Not really....just look at the airlines

An afterthought....if they didn't cut so deep that they didn't have enough people, but instead cut American's and offshored it to India (think reservations), to a person who didn't know where the hell Atlanta was and had an accent so thick (but was named "Bob) that you couldn't understand him - you kept staffing levels where they needed to be...they were just worse than dead weight...but it was a good move for shareholder value....should that exec be rewarded? Many are/were.

It is a global marketplace... get use to it. If officers do not make those decisions, then those people would lose their jobs anyways because it is impossible to compete with another company who can pay some Indians $1.25 an hour for the same job that your company is paying $17.75 an hour for (with benefits and a union contract in many cases). Hire the Indians and pay an extra $2.25 an hour to train them where Atlanta is and how to speak English with an American accent. Protectionism does more harm to the U.S. than it helps... it creates artificial bubbles than can do nothing except eventually pop, leaving the averge joes holding the bag. America was made great because we were quick to adapt to change... protectionism is nothing more than trying to hang on to the good ole days, rather than trying to make better days.

And by the way, yeah, just look at the airlines... in fact, look at any major legacy company. Blame should not only be laid upon the crappy CEOs... unions, government intervention, etc all share the blame.

 

[delta777]

The United States long has had the industrialized world's largest gap in pay between chief executives and blue-collar workers. CEO compensation swelled from 85 times what workers earned in 1990, to 209 times in 1996, and 326 times the following year. In 1999, CEO pay surged to a record 419 times the average worker's wage, according to the U.S. Bureau of Labor Statistics.

"Pay for performance", tying executive compensation to the financial success of their company, has become very popular in the past decade. In the face of the largest bull market ever, that isn't surprising. It also isn't realistic. What CEO honestly believes that all or most of the appreciation in value of their company is due to their own talent?

Comparable figures for other wealthy nations generally do not exceed the double digits.

U.S. CEOs' pay rose 313 percent from 1990 to 2003, UFE said. By contrast, the Standard & Poor's 500 stock index rose 242 percent and corporate profits gained 128 percent.

During the same period, average worker pay rose 49 percent while inflation climbed 41 percent.

Don't worry, though, all those foreign countries where CEO pay isn't as extreme as U.S. CEOs' are still fairly new to this little shell game we like to play called capitalism.

 

[MMB]

...
Don't worry, though, all those foreign countries where CEO pay isn't as extreme as U.S. CEOs' are still fairly new to this little shell game we like to play called capitalism.

You think socialism is any better?

 

[KCFlyer]

You think socialism is any better?

No, Socialism is not better. But tell me, why is it that when Bill Gates was running Microsoft, his salary was not all that much more than what his workers made? How come Warren Buffet pulls a salary of "only" $100,000 per year. Gates in particular actually FOUNDED the damn company - what have many of these CEO's pulling down tens of millions in salary done to actually DESERVE a salary that high? Everybody says "work hard and succeed"...ever wonder what some guy who took that to heart...spent his own money getting his MBA and "makes it" to mid management, only to see that the CEO STILL makes 100 times what he makes?

 

[delta777]

You think socialism is any better?

I don't think its black or white anymore. In 2005, almost one-third of American workers had a job that met all three bad criteria, (meaning they paid less than the median wage in 1979)about the same share as in 1979, according to a report by the Center for Economic and Policy Research and the Center for Social Policy at the University of Massachusetts.

"Even worse, despite substantial economic growth since the end of the 1970s, the share of bad jobs in the U.S. economy has remained essentially unchanged for over a quarter century," according to the report. Not exactly a ringing endorsement for Capitalism.

 

[MMB]

No, Socialism is not better. But tell me, why is it that when Bill Gates was running Microsoft, his salary was not all that much more than what his workers made? How come ...

Don’t have an answer, only another example.
When C.E. Woolman was running Delta, he said he had two groups that he said were a pain in his,,,, side. The first was his board of directors. Their top concern was that they weren't getting much larger salaries, bonuses, stock options, and other perks like directors of other large corporations. His response? 'If the paycheck you receive isn’t good enough, you’re free to leave. There is not one person at this company more important to its operation than any other, from the people who clean the planes to the top executives.' AND, as far as being replaceable, ‘I have to train a new cleaner or bag handler, but there are any number of fully qualified people lined up waiting for every management position we have.’
When Woolman left, the board ‘fixed’ their shortfalls.

My take? This is all a product of the 'MINE' generation. Concepts of honor, pride, etc., are bygone ideas that have been all but eliminated from our culture.

 

[Gilding the Lily]

I don't think its black or white anymore. In 2005, almost one-third of American workers had a job that met all three bad criteria, (meaning they paid less than the median wage in 1979)about the same share as in 1979, according to a report by the Center for Economic and Policy Research and the Center for Social Policy at the University of Massachusetts.

"Even worse, despite substantial economic growth since the end of the 1970s, the share of bad jobs in the U.S. economy has remained essentially unchanged for over a quarter century," according to the report. Not exactly a ringing endorsement for Capitalism.

Actually, that IS what makes capitalism great. If you want a better life for yourself or your family, you go out and get it! In other systems that are based on the social good, if you work hard, you are rewarded the same as if you didn't work hard at all. So why work hard??? If you disagree with that assertion, I suggest you take a quick look at the problems with our welfare system.

Also, take a look around... we enjoy a pretty care-free life when compared to most other countries.

 

[Gilding the Lily]

Well, it appears that O'Neal's ridiculously lavish golden parachute may reignite Congress's attempt to curb excessive CEO pay scales.

Here are the two money quotes:

Senate Banking Committee Chairman Christopher Dodd says Merrill Lynch & Co.'s $161.5 million compensation package for former Chairman and Chief Executive Officer Stan O'Neal may revive efforts in Congress to give shareholders more power to curb CEO salaries.

``I don't think it should be Congress's prerogative to get involved in the internal affairs of corporations,'' said Colorado Republican Wayne Allard, who's a member of the Senate Banking Committee, in an Oct. 30 interview. ``The boards have a definite responsibility. I don't feel like the federal government ought to be stepping in.''

Does Christopher Dodd have it wrong?

 

[KCFlyer]

Actually, that IS what makes capitalism great. If you want a better life for yourself or your family, you go out and get it! In other systems that are based on the social good, if you work hard, you are rewarded the same as if you didn't work hard at all. So why work hard??? If you disagree with that assertion, I suggest you take a quick look at the problems with our welfare system.

Also, take a look around... we enjoy a pretty care-free life when compared to most other countries.

Captialism in it's truest form is great. But as with any system, when CEO's are paid 300+ times what the average pay of those working for them are being paid, then something is amiss. The fact that they are richly rewarded for running a company into the ground is even worse. Anybody remember Stephen Wolf? Two airlines into bankruptcy...but he's got a marvelous collection of antique jags I hear.