Control Executive pay, Good or Bad?
78How much is enough?
No solutions here!
Let's change gears for a while and ponder what this administration is doing to the bailout recipients and how they are planning to control compensation. Is it good or bad? I would imagine that it is both good and bad but where is it that you draw the line.
As a member of society, paying my taxes and wondering how much more can be taken from me, I feel that there has been an abuse by corporate America as it relates to bonuses and compensation. AIG, as an example, gets billions of dollars worth of bail out money that the tax payer gets stuck with.. Is a company like this deserving of such high perks, salaries, bonuses, etc? General Motors, Chrysler, the BANKS. There is plenty of fault to go around here why this happened but this is not the point I am trying to make. Is it the right decision at this stage of our faltering economy to make these huge payouts, and further why so much?
I understand the point that obtaining the pick of the litter for executives requires incentives to attract them. But who pays for these incentives? Are they so profitable that it can be afforded or are they leveraging themselves so much that it will eventually destroy them? Is it greed or just plain stupidity? Should there be some sort of limit on the compensation or regulation to monitor excessive bonuses when in fact the company has accumulated tremendous debt and makes no attempt to curtail the extreme compensation.
Now the other point is why is government intruding in the private sector. If you received bailout money, you are now under their control and they can pretty much dictate what you can and cannot do. This to me is also unacceptable. Would it have been better to have these companies fail? Regardless of the reason (and there is wide range of opinions regarding that), the end result was they failed.
So like with so many problems when the government is involved, where and how do we strike a balance that will avoid government intervention, promote capitalism but yet avoid the excessive abuse of the corporate giants, and others in the area of bonuses, compensation, and perks. Who's business is it to dictate what a person makes and how much is enough? On the other hand, don't screw me so that you can buy your yacht! You work hard, you bring innovative product and services to the market, you should benefit from it, but don't expect society to bail you out if you over indulged yourself because of greed or stupidity and still expect to live your life on the backs of the tax payers.
Once again, how do we balance this. I am sure there are many things we can think of but we can also think of many reasons why we shouldn't. I guess when society decides what is acceptable or not, then, maybe we can come up with a solution.
- Special Report: Executive pay - USATODAY.com
Executive Pay Report: The interactive chart lets you sort CEO compensation for 387 companies by industry, company, CEO name and amount...
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Comments
I understand that a deal is a deal and I don't know the facts if the deal included limitations on compensation. My sentiments is don't screw me and expect me (us) to bail you out and how to avoid this happening in the future? Can there be some consequences or conditions that can be looked at or some criteria that will avoid companies being so loose with their compensations packages? If so, no bail-out. Thanks for your comment.
I'm against bailouts with tax payer money. They bailed out the car companies than picked the dealerships that would be allowed to remain open. People that had owned dealership for 50 years were suddenly out of business perhaps because of their political persuasion.
I do think if the government bails anyone out in the future they ought to set the standards of the agreement up front as to bonuses, etc. Yes, a deal is a deal but I don't want my tax money given to an executive that didn't do his job.
For me the bottom line is this. They should have let the marketplace decide who wins and who fails. Since that did not happen, make sure the companies that received the bailouts pay back the taxpayers before awarding huge bonuses. Beyond that point, keep the government out of it. Great, thought provoking hub.
Very simple, They will try, these guys will quit and move to an other company that will pay them what they are worth. It will never work, and the company will lose the expertise in those high level jobs that make the company the money. It will be a failure. Wait, maybe that what BO wants. He wants them to fail more so he can take them over. Never thought about that, Hum?
Keep on hubbing!
Pamela, I appreciate your view point and I am against government intervention, but if there is a deal then the terms of agreement must be kept if you accept tax dollars. I must say though, I would love to see the AIG, or the GM agreement so that we can determine what the REAl DEAL is. Should a distinction be made regarding privately owned and publicly owned companies? Should shareholders be involved in determining what is acceptable compensation?
Pop, thanks for stopping by. As I said I don't want government involved in the free marketplace either but I don't want companies getting huge compensations then have the government bail them out. Chrysler was bailed out once before and they came out of it. Do we let iconic companies like GM go belly up and what are the consequences if we do? Can we ever recover loosing our three main automakers and what implications will that have on that industry in America?
eovery, I don't disagree with your point of view, it may well be and considering everything this administration is doing, it is possible. My point is do these compensation packages reach a point where it is detremental to the company paying them and to the stockholders that are left holding the bag?
Dear ehern,
Gm could have restructured on their own. I'm not sure what the bailouts accomplished. It seems that it's just business as usual. The FHA is guaranteeing bad loans to risky people as we speak and Wall Street is still conducting risky business but not giving out loans to businesses who need them.. I still say, pay back the taxpayers first, then take your money.
Pop. "Supposedly" the bail-out avoided a financial meltdown. I truly can't believe that as the banks started to hoard all that cash and really didn't make it available to the public as it was meant.
Much as I think many including our President and our legislators are overpaid, I think it is wrong for Government to interfer with Private Business, if there still is such a thing.. Stock holders in big corporations need to oversee the salary of executives.. Welcome to Socialist America.. We are now Them, We are now like everyone else.. Change Sucks!!!
greatamerican, it really does!!
To regulate corporate pay all you need to do is require that total compensation can not exceed a certain multiple of the lowest paid employee in the company.
Publicly traded companies need to be held to a higher standard than privately held companies.
Most people do not even realize that in Corporate America the rules are bent specifically by industry to feed corporate monopolies. In fact there are actually laws on the books that protect health insurance companies so they can continue anti-competitive practices.
Pay yourself as much as you want in a private company, but as soon as you go public you should adhere to a set of rules that are in the interest of the American People.
GM at the time of their Bankruptcy Proceedings was 90 Billion with a big ole "B" in the whole. There is no way they could have restructured on their own. No one would touch them. No way! They should have let them die as they will just die in the future. They run mediocre Ads for cars that people still don't want.
Corporate America is not a "Free Marketplace".
Thanks for stopping by. I asked a question as to stockholders having a say in the public companies compensation package for executives. Of course many details would need to be worked out so they could still attract the best talent, otherwise they will seek out the competition that has a better package. It is a fine line that needs to be walked.
Ethically, Executives should not be paid any more than seven times what their lowest paid employee are.
Hi-Jinks, playing the devil's advocate, who decides what is ethical? The stockholders,government regulations, or some revised GAAP? Why seven and not 10 times the amount, or for that matter 5 times the amount. The reason I ask is because I have a hard time wrapping myself around the concept of limiting the amount BUT, with that said, I have trouble wrapping myself around the concept of the exhorbitant compensations some CEO's get. Most of these companies have pay grades and determine your worth by the type of job you perform, the education you have and the experience you bring to the table. I am strickly referring to public companies. I hope I am making my indecision clear? You want to pay them so that you get top talent but at what point do you say enough is enough. If it is a private company, the the rules change in my mind, but with public companies there is a duty to protect the stockholders interests.
Hi ehern,
We can make anything complicated. I live in the lower middle class situation. I see the owners of business pay part time wages keeping poor people poor, while they own 300 to 400 thousand dollar homes and we won't get into their style of 2009 auto. And then they complain that they can't get good help!
To pay their help better and equal health care Unthinkable to many people.
But nice to be in the same club.
Hi-Jinks, life is complicated and being human is complicated just because it is in our nature. Different characters, ideology, etc, etc, etc. Different life experiences and opportunities lead us in different paths. I can understand completely that some business owners could care less about their employees and I have seen a few in my times, but I have also seen many generous ones and yet others actually can't be more generous without putting the business at risk. I have worked for all three types of companies and all I could do is seek the one that is more friendly and generous. Sometimes it took a while to find it, but in my experience, eventually those that don't care find it hard to find good employees and loose the competitive edge. It doesn't always work out but it is their money and their risk so I have no business telling them how to run their business or how much money they can make. I can only advise them on the wrongs and rights, but it is up to them to make that decsion. I could also advise you on some specific problem, but it would be up to you to take the advise or not. Now when it comes to a public company, my views start becoming more cloudy.
We may not agree on this point but I surely can understand where you are coming from.
Tom Whitworth says:
2 months ago
Question 1. Yes we should have let them fail.
Question 2. If it was part of the original deal with the government to control compensation then it's OK, but if it wasn't part of the original deal then I think its too late. A deal's a deal!!!!!!!!!