CEO salaries and perks

rayb · Hot Air Balloon

CEO salaries and perks

Cat Herder · Understander of unimportant things

It is indeed criminal. I'm sure they will be chained in heavy chains and forced to work as a clerk for eternity in Hell, but in a room that is ice cold.

My employer had a CEO that not only drove the company to the brink of disaster (caused a long SEC investigation), his cronies went off laughing all the way to the bank for quitting before the proverbial fecal matter hit the the air moving device. He wasn't so lucky as those who "resigned" before the lies couldn't be covered up any longer, he was luckier because he ended up getting fired by the board, and since he had essentially told them what his compensation was to be when they hired him, he walked off with his pension (an outrageous thing considering he had only been with the company like 3 or 4 years) and over $50 million in severance because he was fired before his contract had expired. Stock went from over $70 a share one day to the low teens the next day or two when the lies couldn't be covered up any more.

Turns out the jerk was a friend of the masterminds of the crapola that went on at places like Enron and Worldcom. We as a company were lucky that there were various checks and balances that previously had been in place he and the management team he brought with him were not able to entirely circumvent or remove. His days were numbered though, from the time at a stockholder's meeting he answered a major non-institutional stockholder about how he justified his compensation package when the business was doing poorly, our reputation in the industry was suffering, and major layoffs were occuring. His answer was "I have an expensive wife!" That did not go over very well, despite how "clever" and "cute" it sounded.

Anyway, the man ruined the morale at the company and the culture. Even several years later, it is not and will never be back to what it was. Used to be very much a "we're all family and on the same team" environment. It then turned into every man for himself. It has since gotten better to where it is not so much that way, but there is no more of the "we're on the same team" culture anymore

Roper · Senior Bucketkeeper

All hail Corporate America! Let us raise our voices in another inspiring hymn of praise to unfettered capitalism!

arbilad · Head Chef

Ray, I was a contractor for that same company (literally, even in the same location you worked, only later). I saw what you said. The vice president of the company where I work now used to work there for many years. He was laid off about the same time you left. He also said that company is no longer what it was.
That's why I'm glad I'm working for a small company now. I actually enjoy company meetings. I don't dread going to work every day. That's worth lower pay.
And Roper, I think it has less to do with capitalism and more to do with gadiantonism.

Roper · Senior Bucketkeeper

arbilad wrote:
And Roper, I think it has less to do with capitalism and more to do with gadiantonism.

You're right, Arbi, from a gospel perspective. However, for all it's wonderfulness, capitalism makes that kind unethical conduct easy. In some ways, it encourages it.

Last week, I gave my students a writing prompt: What would life be like if you were grown up. Every one of them, except one, wrote about how they would be a famous sports or movie star, have mansions and luxury cars, and be married to celebrities. No doctors, teachers, firefighters, or astronauts. No children. Only material wealth. When they're indoctrinated that young, it only makes sense that they would grow up to be Gadiantons.

arbilad · Head Chef

The unfortunate thing is that, unless Roper's class is a statistical fluke on the order of winning the lotter three times in a row, it is very unlikely that his whole class will grow up and marry into money. I'm curious; since they're obviously not mentally preparing right now for a normal career, how will they deal with the real world when they graduate school?

rayb · Hot Air Balloon

Interesting take, Roper/Arbi... In a way CEOs of major corporations really are the gadiantons/lotterywinners/sports stars of the business world. As their stories become the rolemodels for our children...

--Ray

Cat Herder · Understander of unimportant things

http://www.foxnews.com/story/0,2933,241680,00.html

Here is a story that should put things completely in perspective... Regardless of how much you think CEO or other Executive compensation should be based purely on free market capitalism, this will illustrate how it really is not based on that.

One aspect of the story I found interesting was the claim that there is higher demand for CEO's than there is supply.

CEO is a title on a job chart... you fill a job with a warm body... presto, you have a CEO. There is no higher demand then there is availability of people who could fill the job. For crying out loud. I used to work indirectly with a man who was just an IT account manager. He leaves the company because one of his former client's hires him to be their CIO. He now is one of my manager's clients... Was the man trained to be a CIO? No. In fact, I don't even think he had an MBA. Technically, any MBA should be able to be an executive officer in a company, because they have greater education in business than most anyone else. Experience and connections are the key components though, just like any other job. So, what is really being said if there is higher demand than supply, the supply of competent executive employees is limited... which in other words means the majority of the available pool is incompetent, and shouldn't be commanding the levels of compensation they do. After all, folks in the trenches who aren't union are nearly always paid based on performance after they have been attracted and retained by an employer.

Too many companies act and operate as if the world would collapse if they didn't have big-whig CEO's and other executive officers "at the helm". I don't agree. I do not believe any of them contribute to the success of a company to the extent they are compensated. They are not the ones down in the trenches designing the parts, selling the parts, building the parts, etc. Rather, they are the ones schmoozing left and right, spending and authorizing spending of money for things that benefit only certain echelons of the job chart food chain while not allowing for raises, bonuses, or other recognitions for those in the trenches.

Every $1MM of compensation to an executive equals the same as 20 salaried professional employees making $50K. So, is a CEO who is paid $10MM a year in base salary really worth and putting in the equivalent effort of 200 other salaried professional people? Then add on the guarantied bonuses, the stock options, and other perks that top executive officers receive...

In the case of my employer, after nearly destroying the company, the CEO was fired and was given the equivalent of 1,120 people's salaries cash to go away, all the while he had been responsible for involuntarily seperating thousands (often with no severance package), and thousands more since then have been been involuntarily seperated by the company with severance package quality varying.