Another Example of an Overpaid CEO
First, my thoughts on the whole issue of CEO compensation as a whole
Where does it end, I wonder? Exorbitant CEO pay packages, and the constant bogus justfication offered for why these big money deals are so necessary to attract highly skilled, and inventive businessmen who can drive the company into a money-making machine? These pay deals get bigger and better every year. And at whose expense? The regular workers, of course. Those who get their jobs slashed at the drop of a hat whenever the company starts to think money may be getting thinner. Those who have their jobs moved to other countries, and whose benefits get ground down to virtually nothing—that is, if benefits are even offered at all.
I've talked extensively on where regular wages and benefits have gone over the years in this country. And I can tell you the trend hasn't been up. Not when you compare what the markets did, and where corporate profits went over the period of growth after the Great Depression up to the Great Recession.
And let's face it. It's also the shareholders who pony up for these big money deals. How much bang am I really getting for my invested dollar with these guys at the helm? I'm inclined to believe, that if the truth is to be told, I'm being taken. My money is literally being pilfered, and I'm being sold a bag of goods by the boards of these companies that, "All is well. This guy'll make us all richer."
Come on. When exactly are they suggesting I fell off of the the turnip truck? Even they know that the reality of this is based on a very thin layer of proof. The shareholders are not getting nearly as rich as the CEO's are.
Are these guys really worth all that money? I mean, does anyone really believe that? Are they worth more money than the average production line worker, or the guy manning the cash register, or bagging the fries and a Coke? Yes. But worth millions upon millions of dollars more? I strongly suggest they are not.
The way I see it, CEO's are enormously over paid. I truly don't think that there is any other way of twisting that tale. The literal truth is that we've gotten to a point where even facing one of the worst of economic times since the Great Depression, CEO pay continues to be outrageous, exorbitant, and frankly ridiculous.
I've said it many times, and I'm red in the face over it. I have absolutely nothing against the rich. I am not a socialist. I am not a democrat. I do not believe in redistribution of wealth. I believe that success should be rightly rewarded. So should risk be rewarded.
Too often, however, this is not what's happening at all.
The latest example to illustrate my point
Take Mark Hurd, for example. He is the former CEO of Hewlett-Packard who will walk away from the company with somewhere around $40 million, depending on who you ask about it. In my view, he is but yet one more example of an overpaid CEO to hit the news wires. The kicker is that the $40 million is as a result of falsifying expense reports in order to hide the fact that he was screwing around with a female contractor—which was learned about after she came forward and claimed that she was being sexually harrassed by Mr. Hurd.
So, let me get this straight. You, Mr. Hurd, are esentially being paid $40 million for having broken company policy by falsifying corporate records, and for engaging in sexual harrassment? Perhaps you could elaborate on how many regular employees caught cheating on their mileage documentation, for example, might still get a nice paycheck after they are discovered, and either step down voluntarily, as you've decided to do, or been politely asked to pack up their office and leave? Perhaps you could elaborate on how many employees fired for sexual harrassment may have left the company with a big paycheck? Medical benefits? Dental benefits? Because you get those too, right, upon your departure?
You bet. $40 million, plus medical and dental benefits. That's one hell of a deal, is it not? A regular worker departing the company under similar circumstances, by most wording of the laws regarding this, would not even be entitled to receive an unemployment check.
May I just briefly sneak in a small comment here that this scandal will also cause the Hewlett-Packard stock price to fall. While shareholders are left to hold the bag, they also get to pay for the guy who brought the bag to them to hold onto.
And how much was Mr. Hurd paid in year's previous? In 2008 he made a whopping $42.5 million. In 2009 he took home another $24.2 million.
We need to be honest with ourselves about this issue
Somewhere in the grander scheme of things we simply must come back down to reality. We've got to come back to our senses. You can sit all day and make every argument in the world for why these guys are worth so much more money than the rest of us. None of it will wash from any rational perspective. What's going on with CEO compensation is just plain wrong, and we simply must admit that. Even if Mark Hurd did well for the company to justify a big paycheck in 2008, was that big paycheck really worth $42.5 million? And if it was so worth it, why did the company in 2009 suddenly decide that all salaries throughout the company had to be cut by 20%?
Well yeah, the economy happened. I think that much is clear. In any event. It doesn't mean anything less about CEO pay being over the top and ridiculous.
No government intervention, no caps
I'm not in any way suggesting we should allow a pay czar to set standards for CEO pay. I'm not suggesting that companies set caps for CEO pay. However, I do strongly believe that what we need to do is allow shareholders to have a direct opportunity to vote on all executive compensation—not the board of directors who are largely made up other company CEO's, former CEO's, and future CEO's, who all have a vested interest in keeping the money train well on its tracks. Yes. Leaving it to the shareholders does generally mean that the same guys may be making the decisions as they will likely hold the majority of shares.
Still, a lof of regular folks own shares either directly or indirectly, and their numbers could grow if they felt they were playing in a more fair game.
Last, a couple of closing thoughts
In closing I want you to consider two things. One, at $42.5 million (which I will concede is a bit higher than the norm) that means the CEO who is busting his rump at a whopping 80 hours a week is still being paid $10,216 an hour for his "good work." The average worker with overtime considered would earn around $23.17 based on an $18.54 national wage average for the same amount of hours. The CEO is really justified to earn roughly 440 times the average worker? Is he justified to get a severence package worth roughly the same—even when the severence is being paid for wrongdoing?
Two, here's a scenario for you to consider in all it's ridiculousness. Allow me to stretch things a bit here.
I have just completed my shift at my job at Coca-Cola Enterprises. Tucked in my bag I have hidden a stolen case of Coca-Cola. On my way to the time clock to punch out I fondle the breasts of one my female co-workers who's mouth immediately becomes a large letter "O." Just before I swipe my time card, a supervisor who saw me do this approaches me. "Mr. Bauer, you cannot do that. You are fired. And I know you have also taken some product as well. That will be in the report as well," he tells me, very matter-of-factly.
"Well, should I go ahead and punch out before I leave, or should I just assume you'll take care of the final punch for me?" I ask, as I begin to unload the pilfered case of Coke from my bag.
"Yes. I will take care of that. And you will also wait here, Mr. Bauer," the supervisor sternly asserts.
"What are you going to do? Call security? The Police?"
"No, Mr. Bauer. I'm going to write you a big fat check to take with you on your way out the door."
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