You guys are forgetting if the stock price tumbles, sometimes due to outside influences, who gets sued? Yep, the CEO. DD
enron is a bad example because they willfully lied. what's going on with BP and the plant explosion in Texas City is a much better one
I agreew witht the first two paras. The last para is flawed. THe shareholder franchise is a pretty toothless mechanism in practice due to the incredibly limitied scope of legal powers granted to shareholders. People frequently confuse "free" markets with efficient ones. A market with extremely disproportionate information among participants (such as one litterd with insiders who have a dispropotionate amount of influence and substantial voting power) is not really that free and certainly not going to produce the most efficient outcomes which is how you have Angelo Mozillo making zillions of dollars or Stan O'Neal playing golf while Merrill destroyed its shareholders value.
In that case it was not due to outside influences. If you do things that are so bad that you destroy the company, then you do not deserve indemnity.
CEO's that get paid based on stocks options are fine and dandy imo. Only getting paid when company grows in value is exactly what you're looking for in the pay structure for the top. I am not as much of a fan of golden parachutes and such, but also for most top executives, that's likely his last professional position so I can see why some would want some sort of backup plan. Business needs to take risks to innovate,improve and sometimes survive. It doesn't work out all the time, but if you make the punishment for risk taking severely outweigh the benefit, that's not necessarily something you want either.
If a CEO is taking a lot of risk then he/she should get well compensated..... I think anyone that has ever owned a company would understand the pressures.....at least to some degree. Working for the man is entirely different than being the man...... IMHO, everyone should get whatever they can as form of compensation....... We are all individual contractors .... DD
a ceo doesn't necessarily own the company and i'm pretty sure the thread starter isn't talking about business owners.
My point is that business owners are CEOs.....there is a parallel. They have similar pressures....and may be able to relate better. DD
Here's a question, DD: Is there any amount that would be too much for CEO's to be paid or is the sky the limit? Also, should a CEO that presides over the failure of a company, resulting in massive layoffs and loss of benefits, receive a multi-million (or even billion) dollar golden parachute? The Enron example was, as pointed out, particularly bad. By making it you seemed to be suggesting that CEO's should be paid a lot in case they are later sued, even for their own bad or illegal behavior. I'm sure you didn't mean it to come across that way.
Oh, I think there are certainly some that are aggregiously overpaid, especially when leaving the company. But I think those are probably more the exception than the rule, but you hear about them because the monies are so great. I have had Golden Parachutes at a couple of places, and they were mean as a way to keep you from fielding other lucrative offers. I honestly have very little problem with people getting what they can, if the board approves a compensation package that is HORRID for the company upon exit they should be held accountable...with the following caveat. If the package is only so good because the compensation is from stock, that the CEO has had a hand in making more valuable, then that is less than actual cash. Stock grants cost the company very little, and motivate a lot......who wouldn't want an opportunity to make millions? DD
No it isn't....in both cases you have to set compensation for yourself and others....... A Business owner is a CEO...... DD
WE'RE NOT TALKING ABOUT BUSINESS OWNERS we're talking about ceos of public companies, and they aren't owners, the shareholders are.
<object width="425" height="344"><param name="movie" value="http://www.youtube.com/v/JaKkuJVy2YA&hl=en"></param><embed src="http://www.youtube.com/v/JaKkuJVy2YA&hl=en" type="application/x-shockwave-flash" width="425" height="344"></embed></object> All together, these men sitting up here [Teldar management] own less than 3 percent of the company. And where does Mr. Cromwell put his million-dollar salary? Not in Teldar stock; he owns less than 1 percent. You own the company. That's right -- you, the stockholder. And you are all being royally screwed over by these, these bureaucrats, with their steak lunches, their hunting and fishing trips, their corporate jets and golden parachutes. Teldar Paper, Mr. Cromwell, Teldar Paper has 33 different vice presidents, each earning over 200 thousand dollars a year. Now, I have spent the last two months analyzing what all these guys do, and I still can't figure it out. One thing I do know is that our paper company lost 110 million dollars last year, and I'll bet that half of that was spent in all the paperwork going back and forth between all these vice presidents.
prime example http://ap.google.com/article/ALeqM5g291gQOSQ2h4XMvxv85yZGbu19BwD922PAV00 Lawmakers move to curb Fannie Mae, Freddie Mac pay By JULIE HIRSCHFELD DAVIS – 10 hours ago WASHINGTON (AP) — Democrats and Republicans queasy about a federal rescue of mortgage giants Fannie Mae and Freddie Mac are coalescing around the idea of letting the government slap limits on the multimillion-dollar pay packages of their executives. Key lawmakers — puzzling over how to explain to constituents why they voted to bail out the troubled government-sponsored firms — see new curbs on compensation for the top officers as a crucial measure to cut down on the cringe factor. At a time when Fannie Mae's and Freddie Mac's troubles have investors worried and the government ready to jump in with untold sums of cash, the lavish pay of the two companies' executives is increasingly difficult to defend, they say. Sen. Bob Casey, D-Pa., says Fannie and Freddie "have had their hard-won credibility undermined in recent weeks," on the heels of major accounting scandals at the firms in 2003 and 2004. "While the subprime mortgage crisis is hardly the fault of these companies, past practices of awarding huge bonuses and higher executive salaries calls into question the prudence of extending an unlimited credit line of taxpayer money to the companies whose management practices have been questionable over recent years," Casey said in a letter to Treasury Secretary Henry M. Paulson. Casey called for capping the companies' executive pay "at reasonable levels" if they used the line of credit or need Treasury to step in and buy their stock. Casey also said their boards should sue to recover recent bonuses. Last year, Freddie Mac paid Chairman and Chief Executive Richard Syron nearly $19.8 million in compensation even though the mortgage company's stock lost half its value. During the same period, Fannie Mae President and Chief Executive Daniel Mudd got compensation valued by the company at $12.2 million, including a $2.2 million bonus. "I would like to know why taxpayers should extend Fannie and Freddie an unlimited line of credit at a time when their stock and investor confidence has fallen precipitously and their CEOs continue to make multimillion-dollar salaries and bonuses," Sen. Chuck Hagel, R-Neb., told Paulson in a letter last week. Critics of Fannie Mae and Freddie Mac, including Republicans who question the very existence of government-sponsored mortgage companies, have long denounced the firms for richly compensating shareholders and executives in good times while relying on taxpayers and the government to prop them up should they falter. With the request for a federal lifeline, though, even their biggest boosters are embracing the idea of scrutinizing pay packages. Rep. Barney Frank, D-Mass., the House Financial Services Committee chairman, said a new regulator for Fannie Mae and Freddie Mac should have the power to approve executive compensation. Frank and Sen. Christopher J. Dodd, D-Conn., the Senate Banking Committee chairman, want to add the controls to a broad housing package that creates a new regulator. The House could vote on the bill, which also includes a foreclosure rescue for 400,000 strapped homeowners, as early as Wednesday. Fannie Mae and Freddie Mac together hold or guarantee $5 trillion in mortgages — almost half the nation's total. Their stocks have plummeted on fears about their financial stability in a chaotic housing market where falling home values and rising defaults have contributed to large losses at the companies. Paulson's request for a government lifeline to them has shone an uncomfortable spotlight on the workings of the companies. Both wield armies of lobbyists and shower lawmakers with campaign cash — prompting critics to charge that their financial problems are of their own making. Frank said the housing legislation already includes "any reasonable control over Fannie and Freddie," but that he now believes Congress should explicitly give the regulator power to approve pay packages. The agency that oversees Fannie Mae and Freddie Mac already has the authority to bar them from awarding executives "excessive" compensation that's out of whack with what similar firms' top people receive. But the law expressly forbids capping Fannie and Freddie executives' compensation. Both versions of the housing bill give the new regulator more latitude to decide what constitutes excessive pay, including taking into account wrongdoing by an executive. The Senate-passed bill also gives the government the power to limit or ban "golden parachute" payments for executives if either company becomes financially unstable, goes belly up or needed a federal bailout.
Managers, to one degree are another, are all scumbag leaches that profit from the work of others. A manager is not measured by how hard he works, but the results of his underlings, whether he has much to do with the results or not. Managers justify their huge salaries by the number of bodies under them and the amount of money they bring in the door (unless you're in government, where power is decided by not how much money you bring in, but how much you spend!). CEOs are just King Managers. They get paid the most because they benefit from the work of the whole corporation. Being the figurehead of a huge hierarchy of thousands of workers and billions in revenue means that you get a royal share of the profits.
Yes, but a CEO is not necessarily a business owner. And specifically in the cases being discussed here, they are definitely NOT business owners in any substantial way. A business owner takes risk because his/her own capital is in there and he/she incurs substantial liability and potentially personal debt. A CEO of a public company does no such thing.
