CEO's very concerned ?

Discussion in 'Politics' started by transformer_99, Feb 15, 2009.

  1. transformer_99

    Gold Member

    Joined:
    Aug 5, 2006
    Messages:
    2,466
    Likes Received:
    1
    Gender:
    Male
    Stimulus amendment puts tough limits on executive pay - CNN.com

    Personally, I think it's high time it happened ! I like the concept of no "golden parachutes", nobody should get paid that kind of money to leave their job. Let them go, start them somewhere else in the mail room or a cubicle if they need to earn a living. Chances are they can always get a director's level job or better elsewhere.

    I disagree with this logic:

    ""Basically, this is encouraging the sales force -- the lifeblood of any company -- to look for work elsewhere, to leave [TARP-backed companies] for healthier companies where they can make more money," said Scott Talbott, senior vice president of government affairs for the Washington-based Financial Services Roundtable, a trade association representing 100 of the largest financial firms in the country.

    "If the goal of TARP is to make companies stronger, to get them back on their feet so they can stand on their own, and this drives away key executives, this is a problem," he told CNN in a telephone interview."


    So the healthier companies are going to hire away the employee's from the TARP bailed-out firms ? Good luck with that concept. It doesn't work that way in professional sports why is it going to work that way in the financial industry. Think of it this way, a TARP bailed-out firm is like the Detroit Lions. While there may be some decent individual players on the Lions, it's highly doubtful the Pittsburgh Steelers or non-TARP bailed-out firms are going to raid the employee or managerial talent of a TARP bailed-out firm.

    And the latter statement is even a bigger joke, "drive away key executives" ? They are TARP bailed-out for a reason. Again back to professional sports analogy. After the Miami Dolphins went 1-15, they went to one of the better performing teams (Dallas Cowboys) to raid key executive personnel, not vice versa. A TARP bailout on/during tenure on an executives resume is a key signal for other hiring firms, this executive trashed the corporation they were in charge of, poor performer and whatever else you can think of. There are key signals for hiring anyone, these should be for executives as well.

    It's funny, at these level of employees, they will tell you accountability and responsibility is the reason to compensate them accordingly, but when it really comes down to the real bottom line truth of it, not one of them stands behind their work.

    ""It's not good for taxpayers to have [TARP] money in organizations where the executives are leaving or the company is weakened," Reda told CNN.

    "My suspicion is that there are a lot of loopholes in this, " Reda said. "What it accomplishes is that it really confuses everybody.""

    "Executives are leaving" ? That's actually a good thing in some cases ? Again they are TARP bailed-out for a reason. Where would these executives go ? It's not like a healthy firm would pick them up for being a better addition to their organization ? Take Carly Fiorina, anyone actually believe Apple improved by picking her up off waivers after she left HP/Compaq ? Same holds here for Wall Street. I suspect the one's in it for the fast money that do leave, good riddance, they are more than likely the one's that drug the firm down to a TARP bailout in the first place.

    Loopholes ? If anyone will find them, it's this type of CEO. Confusion ? No, the only confusion here is that CEO's for TARP bailouts now won't be getting fabulous compensation packages and will have rules laid out for them, instead of receiving the bailout money, announcing more layoffs and then awarding/rewarding themselves with a bonus ?
     
  2. Gl3nn

    Gold Member

    Joined:
    Jul 24, 2008
    Messages:
    1,457
    Likes Received:
    2
    Gender:
    Male
    Location:
    Somewhere in the universe
    I disagree.

    If something goes wrong, it's the CEO's fault, so he gets blaimed. Also, when people get fired, they can get up to 2 years pay (at least here), so CEO's deserve the same. And since they earn more, they get more of course. They have more responisbility and therefore deserve more money.

    I hate it when people go: oh, they earn way too much. Yeah, well they have way more responsibilty than those people and if something goes wrong, it's the CEO's fault, not theirs.
     
  3. Deno

    Gold Member

    Joined:
    Apr 19, 2006
    Messages:
    4,771
    Albums:
    1
    Likes Received:
    27
    No CEO should make more money then the company profits, thats just crazy. How can you say you lost x million dollars a quarter and still accept 100 million bonus. How fn crazy is that?
     
  4. houtx48

    Gold Member

    Joined:
    Sep 13, 2006
    Messages:
    7,095
    Likes Received:
    35
    Gender:
    Male
    compensation should hinge on company profit you make the company money get paid accordingly, get axed get the standard two weeks pay just like the peons.
     
  5. lucky8

    Gold Member

    Joined:
    Oct 30, 2006
    Messages:
    3,716
    Likes Received:
    17
    Gender:
    Male
    Maybe that's the whole idea behind it. Get these shitty CEO's who fucked their companies up out, and get someone with actual talent in...needless to say, most of these execs do not deserve excessive compensation considering they aren't making profits. They have done a decent job of proving themselves to have little value in their companies. Mind you, the average life of a CEO at any given company is like 3 years, so who gives a fuck if they leave? It's not like it's going to send them to the poor house, maybe they'll have to, you know, live within their means, like everyone else on this planet
     
  6. JustAsking

    Gold Member

    Joined:
    Nov 23, 2004
    Messages:
    3,249
    Likes Received:
    3
    Gender:
    Male
    Location:
    Ohio
    Do you feel this way about TARP bailed-out companies or all companies? If all, whatever happened to the wisdom of the free market?
     
  7. Gl3nn

    Gold Member

    Joined:
    Jul 24, 2008
    Messages:
    1,457
    Likes Received:
    2
    Gender:
    Male
    Location:
    Somewhere in the universe

    I do agree with that.
     
  8. lucky8

    Gold Member

    Joined:
    Oct 30, 2006
    Messages:
    3,716
    Likes Received:
    17
    Gender:
    Male
    The free market does an excellent job at determining the winners and losers of an industry...however in this instance, the free market was not allowed to do its job correctly. America is a mixed economy, not a free market economy...it's a free market until the big corporations need nationalizing. Has always been that way, will always be that way.

    If a company is succeeding and making record profits, I'm all for CEOs reaping the benefits. But if the company is going bankrupt, the CEO obviously is not as valuable as he/she suggests they are. You gota look at it this way, if it wasn't for the TARP, the free market would have told these CEOs to fuck off months ago, and they would be nothing more than another unemployment statistic right now. We could bannish these fuckers to the South Pole for all I care, they've proven themselves inadequate at their jobs; they do not deserve my money, they are not working any harder than I am right now, that I can guarentee you.

    I'm pretty sure their idea of "hard work" is sitting in a leather chair in a nice big office room discussing how to solve this problem...please, that's not work, I do that every weekend when I get drunk with my friends...can I have $20 million?...I mean, I did suggest the only way to begin stopping this crisis is by STOPPING bank foreclosures on houses...and I said this back in October...and that's what they've finally decided to do as of last week...seems these "experienced" execs are doing exactly what my inexperienced ass said needed to be done 4 months ago...valuable "assets" my ass
     
  9. faceking

    faceking Well-Known Member

    Joined:
    Nov 14, 2004
    Messages:
    7,535
    Albums:
    1
    Likes Received:
    110
    Gender:
    Male
    Location:
    Mavs, NOR * CAL
    I think this thread belongs in the Funny, Etc... sub-forum.

    Please, continue.
     
  10. D_Gunther Snotpole

    D_Gunther Snotpole Account Disabled

    Joined:
    Oct 3, 2005
    Messages:
    14,610
    Likes Received:
    5
    How do you know that a company wasn't on track to lose, say, $2.5 billion in a given quarter ... and an executive's brilliant intervention reduces that to $130 million?
    If you could know, and that did happen (and it's not inconceivable) ... wouldn't a rich bonus of many tens of millions be deserved?
    S/he would have improved the balance sheet for that quarter by $2.37 billion.
    But there still would be a $130 million loss. Some peeps would still be horrified, even though the CEO's performance had actually been stellar.
    (I'm being a bit facetious here, but surely there is a point to consider.)
     
  11. JustAsking

    Gold Member

    Joined:
    Nov 23, 2004
    Messages:
    3,249
    Likes Received:
    3
    Gender:
    Male
    Location:
    Ohio
    I believe that the CEOs did exactly what they were hired to do, which is to maximize stockholder value. In America, since the tenure of a CEO is usually just a few years, what this means is to exploit every avenue that is available to maximize profit in the short term. Stockholders want high P/Es quarter after quarter or they sell and find something else.

    This compels CEOs to sanction practices such as packaging and selling packaged loans to others and use CDOs as guarantees. The assumption at the time was that RE values would rise at 5 to 6% per year, which is enough to assuage the risk of pricing the loan packages wrong.

    If you were a CEO at Lehman Bros and you didn't participate in that process while your competitors were, then you were going to be left in the dust and your stockholders would abandon you. If you had a suspicion that the RE prices were inflated, you figured it would not be a problem until you were off to another job.

    I say that the CEOs did exactly what they were hired to do, which is to do whatever is legal to maximize stockholder value in the short term, possibly at the expense of the long term.
     
  12. D_Gunther Snotpole

    D_Gunther Snotpole Account Disabled

    Joined:
    Oct 3, 2005
    Messages:
    14,610
    Likes Received:
    5
    Yup.:tongue:
     
  13. lucky8

    Gold Member

    Joined:
    Oct 30, 2006
    Messages:
    3,716
    Likes Received:
    17
    Gender:
    Male
    Well then we can agree to disagree because most of these companies are trading below $5 a share...more like shareholder wealth minimization. The assumption that RE values would just keep rising forever is a sure fire sign that these people are not as bright as they claim to be. I understand what you're saying though, I'm just not entirely convinced it was necessary to invest in these risky financial instruments to stay viable as a competitive organization
     
  14. transformer_99

    Gold Member

    Joined:
    Aug 5, 2006
    Messages:
    2,466
    Likes Received:
    1
    Gender:
    Male
    See that's where I disagree, the accountability and responsibility falls on individuals up and down the corporate ladder just the same. How do you explain that there are far more layoffs & firings of employees than CEO's. and other execs. And as for severance pay, employees get no where near the severance (golden parachute) an exec would get. At a certain point of income, unemployment doesn't amount to what anyone makes as a real paycheck and is hardly 2 years of pay. In most cases it would hardly be 39 weeks of pay for flipping burgers. Even what UAW labor is being offered isn't even a year as a buyout ($ 20K buyout and a $ 25K voucher for a new car). Every time I see a new advertisement I think of it as a bad joke, GM advertising their new car line up of better fuel economy vehicles, yet they are pushing out the very workforce and innovation behind that new & improved product lineup. There's no money for labor, yet there's plenty to build the product and retain the highest level executives. Even worse are the ads for the new WaMu and Wachovia, the advertisements there sound like they joined forces to create a better service organization for their customers. What a spin, you'd never know it from Madison Avenues little feel good advertisement that these banks were in any kind of trouble before these mergers/acquisitions ?

    At any rate, if a CEO doesn't get enough for severance to maintain a CEO's lifestyle ? Well like everyone else, sell it for what you can unload it for and sometimes that is a major loss or bargain in the liquidation process. The burden of not owning and having to maintain the payments and maintenance is a lifted burden. Why would they need that anyway ? Can't afford it, shouldn't have bought it in the first place. And that holds for anyone, we all have to do the math on what we could carry for a specified period if the income stopped coming in. Often times it entails doing without and not acquiring it in the times of prosperity. That's accountability and responsibility, not getting any and everything along the way and then expecting to keep all of it even when the CEO is ousted. Far more that aren't nearly as well compensated raise families on far less, why shouldn't the CEO & their family have to tighten the belts in harder times ?
     
    #14 transformer_99, Feb 15, 2009
    Last edited: Feb 15, 2009
  15. D_Gunther Snotpole

    D_Gunther Snotpole Account Disabled

    Joined:
    Oct 3, 2005
    Messages:
    14,610
    Likes Received:
    5
    But no one really made that assumption.
    You probably could not have found a single CEO who would affirm the notion that values would rise forever.
    They simply bought into the idea that no downturn seemed imminent or likely to arrive on their watch.
    That kind of crazy optimism is all too human.
    It would be nice to say that intelligence is a surefire counter against it ... but these were highly intelligent peeps.
    The fact is that homo economicus, while often intelligent, is simply not particularly rational.
    Rationality and intelligence fly pretty independently of each other.
     
  16. lucky8

    Gold Member

    Joined:
    Oct 30, 2006
    Messages:
    3,716
    Likes Received:
    17
    Gender:
    Male
    Oh and I think the market speaks for itself regarding the financial risk associated with these companies brought on by management and the value (or lack there of) they really have
     
  17. lucky8

    Gold Member

    Joined:
    Oct 30, 2006
    Messages:
    3,716
    Likes Received:
    17
    Gender:
    Male
    Just working with what he gives me
     
  18. B_VinylBoy

    B_VinylBoy New Member

    Joined:
    Nov 30, 2007
    Messages:
    10,516
    Likes Received:
    7
    Gender:
    Male
    Location:
    Boston, MA / New York, NY
    And how so? What lucky8 makes perfect sense.
    What's funny is how people support the idea of a free market as long as they're making profits. But as soon as the money wears thin they want the government to bail them out. We can argue that most CEOs are technically the best for their jobs because they went to college, got their degrees and have a framed piece of paper that tells the world that they are the experts. But even an expert isn't 100% correct all the time. And what happens when someone with that piece of paper gets appointed to oversee the work affairs of a company like Lehman Brothers, a company that has been around since 1850, then allows things to get screwed up so badly that the company has to file bankruptcy and be sold in just 14 years?

    It takes a LOT of mismanagement to bring down a company with nearly 160 years of existence in a timeframe that is barely a tenth of its run. Believe me, I would love to be the first one in line get Richard Fuld and all of his second hand men together, rip up their Degrees and tell him that they don't know jack shit. Because it doesn't take an "expert" or a College Degree to figure out what went wrong here.
     
  19. JustAsking

    Gold Member

    Joined:
    Nov 23, 2004
    Messages:
    3,249
    Likes Received:
    3
    Gender:
    Male
    Location:
    Ohio
    Yes, I see where we are disagreeing. I am not saying that I admire these CEOs. I just have been in so many board rooms and executive committee meetings that I know how businessmen think and what motivates their decisions. Whenever the practices start to border on something that is ill advised, you can bet your bippy that the first thing that is said to justify it is "Our first responsibility is to our shareholders."

    But this doesn't actually mean what it says. It is a euphemism for "Our first responsiblity is to keep our stock price high." And the only way to do that is make short term decisions that usually compromise the long term.

    This is what happened to the US steel industry and the auto industry, for example. The executives in the steel industry deferred retooling their 19th century processes as long as they possibly could so as to not have the massive capital investment of retooling hit the bottom line during their particular tenure.

    The auto industry made the same tradeoffs towards the short term. Since SUVs were highly profitable, they just kept making them and not investing in technologies that they knew full well they would need in the future.

    Japanese companies, on the other hand, have the advantage that their long term efforts are funded by their banking partners as much as they are by their stock market. This is because Japanese save about 30% of their income in banks where our savings rate is almost negative.

    When a Japanese company wants to make a long term play that they know will be successful (front wheel drive, hybrid cars, earth moving equipment, etc), they play golf with their bankers and form a partnership. The bankers have a much longer risk horizon than fickle stock market investors. So together they might embark on a project that won't be profitable for ten years. Earth moving equipment is a good example. Did you ever wonder where all those Mitsubishi machines came from on a construction site.

    A totally free market is no different than a totally unmanaged ecosystem. Some organisms thrive at the expense of others. Sometimes they do it by overspecialization and end up getting screwed when the environment changes too quickly. When you demand a free market in the USA, because of the fickle nature of stockholders, you are demanding short term thinking at the expense of long term thinking.

    Those CEOs were doing exactly what they were hired to do, and exactly what the market was rewarding them to do. They are like crack addicts in that respect, and they cannot help themselves. The only way to get them off their crack is to provide just enough regulation to keep things from collapsing.
     
  20. D_Gunther Snotpole

    D_Gunther Snotpole Account Disabled

    Joined:
    Oct 3, 2005
    Messages:
    14,610
    Likes Received:
    5
    I don't think any CEO who refused to join that march of folly would have lasted.
    For the reasons, basically, that JustAsking gave several posts above.
    They were producing enormous runups in share value.
    To do other than what the other investment bankers were doing would be safer over the long term (we say, with the knowledge that comes from hindsight), but your company would not have been keeping up with the competition and your board and shareholders would have been crying for your head.
     
    #20 D_Gunther Snotpole, Feb 15, 2009
    Last edited: Feb 15, 2009
Draft saved Draft deleted