Here is a link to a MSNBC article about the former CEO of Home Depot getting a $210 million dollar compensation package. If you have watched any tv or read any financial magazines lately, this will likely be old news to you as people are coming out of the woodwork complaining about the "obscene" compensation. My question is, why do they care? The only people who should be concerned and have a say in this issue, are stockholders and employees of Home Depot. It doesn't matter if the news anchor thinks it is crazy, unless he/she holds stock in the company they have no say in the issue and should stay out. Do I think it is crazy, of course but since I don't own any stock I will stay out of other people's business. Anyone else think people need to shut-up unless they are actually stockholders or employees of the company(mainly referring to the Board of Directors)? If the stockholders are outraged, they will act on it. If they don't, then why should anyone else care? (Just tired of the "obscene" coverage on this issue and people taking offense to something that does not concern them).
Employees having a say in this? That's a joke. In Australia, many of the CEOs in major banks leave with massive payouts. The public outcry is linked to the fact that many bank branches are being closed, staff are being retrenched, payouts for employees and new Industrial Regulation laws in the country are tipping the balance in favour of employers. Just one industry example. Bonus schemes, options etc. are only given above a certain job grade in companies, staff are being told that they're over budget for things like stationery yet the CEO is getting $xxx million dollars for a few years heading the company? Just doesn't make sense nor is it justifiable. The stockholders don't have a say in who runs a company, they can only affect the Board of Directors and even this happens periodically. Stockholders also tend to be the 'layman', mum/dad investors who are just happy to get dividends on a regular basis and want to see a profit at the end of the day. Businesses need to be regulated not only internally but by the media, the public, government etc.
And it's the job of the CEO to ensure that they do. If the job was as easy as you seem to think, then anyone could do it and they wouldn't get paid so much. I think finding someone who knows how to make a massive business turn a muilt-million profit is pretty rare, that's why they're so valuable. I'm self employed... should the government be telling me how much of my business income I should be putting into my salary, how much I should spend on gear, how much I should charge my clients? I'd be out of work in no time. Since when are the media and the government adept at running a business? And most businesses are already regulated by the public. If their product is no good, the public doesn't buy it. End of business.
It doesn't have to make sense, and the only people it has to be "justifiable" to is the owners of the banks...The people who are in essense paying the CEO's... Stockholders DO have the ability to regulate the company, if they are "layman" and choose not to exercise that ability then they have no one to blame but themselves. Businesses do need to be regulated externally, however the salaries and compensation packages should not(unless they are found to be illegal). If the Board of Directors are fine with the compensation, and the shareholders do not exercise their abilities then there is nothing wrong.
Yeah the only dumber thing is people who take offense at people taking offense to obscene corporate payouts.
Hahahahahaha Slip Apotheosis - heya! I agree with you to a point but still think its ridiculous medi - I never implied it was easy to run a multinational. In Australia, our Industrial Regulation laws cover both small businesses and large multinationals, different regulations apply.
Big difference being I'm not getting paid to babble, nor am I trying to make a huge deal out of it(I for one am not saying this is similar to pornography or completely obscene) But yea, I see your point. Not trying to make a big deal out of it by taking offense to other people taking offense to CEO compensation, just trying to see if I am the only one out there thinking this way.
When factories are being closed, and entry level jobs being offshored to make the corporation more profitable solely to enrich the very few at the top, it is obscene. When corporation now routinely 'revise' past earnings, usually downward, you have to wonder as to why these earnings were inflated in the first place. It's usually to award bonuses to the Board.
I don't see what the problem is. If this guy earned loads of money for they company, why shouldn't he get loads of money from them?
If you've ever wondered what this argument looks like in a graphical manner, here it is. Not every CEO is covered in the graph, but it's clear that there are many instances of those espousing free markets when their pay is anything but. It's good to be CEO....nepotism, ethics violations, loading up boardrooms with their pals, etc. Is stacking the deck in the manner which many of these folks do legal thievery or just simply fair play in a 'competitive' society? A Cozy Arrangement NYT Published: April 13, 2006 To fix something, first you have to understand what went wrong. That's especially true for a problem as complex yet pervasive as sky-high executive compensation. Last Sunday The Times reported that in 2004, the average top executive at a big company earned 170 times the average worker's pay. These executives receive a dizzying combination of salaries, bonuses and stock grants. And their perks can go far beyond the use of a company car to even include infusions of cash to offset the taxes everyone else is expected to pay. In many cases, the process that led to these out-of-kilter salaries has a chilling resemblance to corporate scandals in Wall Street stock research and accounting industry audits. In an era of bigger-is-better consolidation, the goal for many businesses was to find synergies, to provide so-called integrated solutions or one-stop shopping. But when one of the services being purchased requires impartial advice, conflicts arise. If a firm that promises to do objective financial statements is also attempting to woo the client it is auditing into other kinds of deals, the temptations are obvious. It is just as true for human resources. To make the decisions on executive pay, many companies create compensation committees, drawn from the board of directors. That committee in turn is advised by outside consultants, experts in how much others in the field are getting paid. It looks quite logical at first glance. It is in the details that the value of closer scrutiny becomes clear. Earlier this week Gretchen Morgenson explained in this newspaper how just one company, Verizon Communications, decides what to reward its chief executive, Ivan Seidenberg. It offers an illuminating look at a system gone completely haywire. The outside consultants who advise Verizon, Hewitt Associates, do loads of other business for the company. Among other things, Hewitt operates Verizon's employee benefits Web sites and performs actuarial work for three of the company's pension plans. The company has racked up more than half a billion dollars in revenue from Verizon and its predecessors since 1997. Though the company says it has strict policies to maintain objectivity, Hewitt has a strong incentive not to rock the boat by offending Verizon executives. The end result is predictable. Mr. Seidenberg received a package worth $19.4 million last year, as his shareholders felt the pinch of a stock that fell 26 percent. Runaway pay matters because top executives are snatching more than their fair share of corporate proceeds. More important, it also means that the board of directors is not performing its function as internal guardian of the company's health.
I think what people tend to object to is when an executive LOSES a company loads of money and still gets a massive pay-off.
Which is exactly why so many people moan about this issue. Many companies are running at a loss... in debt by millions, defaulting to creditors - and the mega-buck earning CEO's are being be payed 'obscene' sums as salaries and stock options and God know's what else... many times they're being paid this to leave. There was another AP newswire story this week (International Herald Tribune?) that highlighted several of these type of CEO's and CFO's who ran companies into the ground over the course of several years while still managing to walk away with tens of millions of dollars worth of salary, severance and stock options... again God only knows what wasn't disclosed. How does that translate down to the man on the street? He gets squeezed even more... people lose jobs because work goes elsewhere... smaller and midsize companies take a hit because companies go bankrupt and don't pay their bills. Once again the dark side of corporate culture rears it's ugly head. For anyone who wonders why this is a problem... try running your own small or midsized company and then getting burnt by a larger company when it goes under. It matters little what you have in writing because that can take years - sometimes decades to get any money back... in the meantime you've got employee's, taxes and expenses to pay. I'm sure we could look at the Enron scandle and find many of the same issues discussed in this thread. If any of you are old enough I'm sure you'll remember the Michael Milken junk bond scandel that first brought to light the sheer size of corporate crime.
It doesn't surprise me one bit that most people don't understand the inherent danger in a large societal income inequality. Bush: Link exec salaries to performance By BEN FELLER, Associated Press Writer 41 minutes ago http://news.yahoo.com/s/ap/20070131...QMDW7oF;_ylu=X3oDMTBhZDhxNDFzBHNlYwNtZW5ld3M- NEW YORK - President Bush took aim Wednesday at lavish salaries and bonuses for corporate executives, standing on Wall Street to issue a sharp warning for corporate boards to "step up to their responsibilities" and tie compensation packages to performance. "The fact is that income inequality is real. It has been rising for more than 25 years," the president said. "The earnings gap is now twice as wide as it was in 1980," Bush said, adding that more education and training can lift peoples' salaries. Huge salaries and other perks for CEO have drawn investor ire and made splashy headlines. Anger over executive compensation unrelated to performance, even as companies stumble, lay off employees or renege on billions of dollars in pension obligations for workers' retirement, has spread from shareholders to union activists and buttoned-down mutual fund trustees. The chasm between executives' salaries and the pay of rank-and-file employees continues to widen. Home Depot chief executive Bob Nardelli was earning an average of $25.7 million a year — excluding stock options — before he was forced out in a furor over his hefty pay. He left with a severance package worth about $210 million. In 2001, General Electric Co. paid chief executive Jack Welch $16.25 million. Welch was replaced that year with Jeffrey Immelt, who earned $3.4 million in total annual compensation in 2005. The New York Stock Exchange faced an uproar over former CEO Richard Grasso's $187.5 million severance package. Former New York Attorney General Eliot Spitzer, now governor, sued members of the NYSE board over the package given to Grasso when he quit as chairman in 2003.
Don't forget that a lot of peoples pensions are tied up in these companies too, and other people may depend on those companies indirectly for their living. So CEO does a crap job, profits fall, so they give him/her a golden handshake and wave goodbye. Where's the good in that? One example in my industry is Hewlett Packard, where most people think that Carly Fiorina did an awful job, but she's walked away with a handsome payout. But as a result of her poor leadership, a number of people have seen their jobs go, customer service has been severely degraded, and dependent industries have suffered. A once excellent company is now just another member of the pack.
