When I worked for Fair, Isaac (you know, the FICO score company), they hired Anderson Consulting to do a search for a new CEO.
Surprise, surprise, we got some a-hole VP from Anderson itself as our new boss.
His first day on the job, to meet all the employees, the moron wore an Anderson shirt. Way to show loyalty to your new company!
Monthly layoffs after monthly layoffs, to drive up the stock price throughout 2000 and 2001. CEO made a fortune.
Fired longtime people, hired his cronies.
Chased off long-time board members to install his cronies.
Was hired with the agreement that he would move to San Rafael. Ultimately refused to do and relocated HQ here.
Had them lease a corporate jet to fly him back and forth to CA, because of course, flying first class was too much of a bother.
Driving clear across town to the offices was too hard, so leased expensive space downtown for just his executive offices. Away from all the schlubbs.
Driving people to work 70+ hours a week on threat to layoffs, then laying them off anyway.
Promising each month (during good times) that we were done with layoffs, then coming up with more a week later. Repeat every damned month.
A year or two after I left, he resigned under pressure.
A few months later, the new CEO had to publicly apologize to the customer base for the company’s lack of people skills and gutting of new research.
Tolstoy described this very well in “War and Peace”. History is shaped by the millions, and some events are unavoidable. Napoleon was just a person who was a the right place at the right time, ultimatly replaceable.
What a strange argument. The exec gets a ton of stock options as part of a huge pay package. The company loses billions of dollars while he is running it , and the drop in stock value should be seen as a paycut? I think not.
Besides ,the stock is worth what you sell it for. If it drops in price, you sit on it and sell it later. If the next exec stabilizes the company, you will make big money in stock.
They make millions in salary when the company loses billions. Then ,if a change is made, they get a huge severance and retirement. They win/win/win. They can never lose. They set it up that way.
No one is claiming that no CEO is ever worth it. Jobs is - but I think he gets $1 a year. All his money is from stock or maybe incentive bonuses, and he has indeed earned every penny.
The problem is Joe CEO who is positive he is just as good as Jobs and that he deserves as much money, and the chickenshit boards who won’t tell him otherwise. They are the problem.
Nitpick, it is (or was) spelled Andersen Consulting.
I find it strange that people care so much about what CEOs make. If Coca-Cola or P&G or U.S. Steel or whoever wants to pay their CEO millions of dollars, what is that to me? It’s their company and they can run it as they see fit. If people don’t like it, they can choose not to buy their stock,purchase their products or work for that company.
Not too many of them. Most, and by most, I mean nearly all, CEO’s are pretty hadrworking lot at companies you never hear about.
Moreover, I don’t particularly see the problem. If they blow company money and wreck things up, I don’t really care. It’s not my money as long as the government keeps out of it. End of the day another company takes over form the fat, lazy losers.
That is so 1950s. At one time an exec tried to grow his company and expand. Now they get paid in jobs. If they cut hundreds of jobs they have a short term hugely positive balance sheet. The exec gets a huge bonus and salary. The company is in trouble because R & D and future product lines suffer. The company is weaker, less flexible and less competitive. But today it shows huge profits. The stock gets a big lift ,the exec gets multi millions. when the damaging effects are being felt , the exec has been lured to another company for more money. He washes, rinses and repeats.
The average CFO stays at a company 3 years. The execs care less about long term sustainability. They get rich, get huge respect ,and are gone.
The workers pay with lost jobs. The economy pays with shrinking purchasing power and more unemployment. We have less future development and less innovation. We don’t want to waste money on those things.
It’s not their company. It’s the people who own the stock’s company. The stockholders are not the primary deciders of the compensation, and that’s the problem.
Corporations are created by the government so I dont see why they should not be able to have their stock voting procedures more democratized in return for the privleges of being a corporation.
Corporations aren’t “created by” the government. They are chartered by the government, upon application by people called incorporators. Anyone who submits an application and pays the filing fee to the government can be an incorporator, the same way anyone who fills out an application and pays the filing fee can obtain a fishing license.
CEOs of companies that have $10 million in sales are not the problem.
It’s not your money? Do you own any mutual funds? If you own stock in any of these companies - and I’m betting you do - it is your problem. The perqs the CEOs are getting are coming out of your bottom line. Stock options represent a real pool of stock, and affects earnings also. Plus, if you are in a company for the long term, the short term tricks a CEO will play for his own benefit will hurt you in the long run.
There have also been plenty of cases where companies have misstated earnings or pulled in revenue to boost short term results. Lucent was one particularly bad example. I also expect getting a CEO in who is in it for the company not just to line his own pockets will produce better results also. How many of us would work our best if we knew were guaranteed a good review and a fat raise so long as we didn’t blow up our building?
Instablammo, I just created a corporation right now. Now no one can sue me and the taxes will acrrue to the corporation. Wait, you say it doesnt work that way, that the government needs to sanction it? Then I guess I shouldn’t undertake a conspiracy with my friends to defraud shareholders of their money unless I have lawmakers in my pocket.
In case we have forgotten already. They get the bonuses even if they bankrupt the company through poor decisions and risky adventures. They are entitled to them. They are far too important not to get a lot of money.
That’s certainly true. WHich is nwhy, if I wish to punish that behavior, I can dump my stock and go to other companies. On the other hand, if the stock price increase works in the long run, it’s because the layoffs worked just fine, and CEo deserves his pay.
Remember back when downsizing was a dirty word? Yet employment stayed high, because while company after company was focusing and trimming it let them become more effective and efficient. Most of those CEO’s did their job right. Those who leapt onto the bandwagon failed, and the companies failed or weakened, and life went on.
Yes, people, this is not a bug, it’s a feature. Punish the foolish, reward the excellent.
Yes, and you’ll note that CEO’s can be taken to court or go to jail if they do this. I encourage public humiliation and imprisoning those who break the law.
You see, I dont’ want my CEO fat and happy. I want them hungry and terrified, desperately clawing each other for the tiniest morsel of delicious, savory profit. I want them to become lean hunters coldly eyeing each other while fingering their carving knives. Let CHAOS REIGN! Blood for the BLOOD GOD! War for the WAR GOD!
A related story in the UK; British Airways is asking its employees to work for nothing. Initially I thought this was some kind of joke:
"BA’s chief executive Willie Walsh has already agreed to work unpaid in July, forgoing his month’s salary of £61,000. "
Fair play to him for doing it, but if he earns £732, 000 PA one wonders how effective snipping the wages of the lower runs would have, compared to simply snipping the wages of the higher-ups.
The stock price going down implies that plenty of people are doing exactly this. However, you’ve lost money, unless you are really quick, and my point was that CEOs whose stockholders are abandoning them are not being punished.
There have been studies showing that companies which downsize don’t do as well as those who don’t on average - but that might be because they are weaker anyhow. But you have to distinguish downsizing due to changes in the business, which is unfortunate but necessary, and downsizing to run up the stock price, which can make the company less able to react to an improved markets. Firing people and then hiring them back is very expensive.
Which is all we’re asking for. Right now we’re rewarding the foolish also.
It is hard to convict in many of these cases, except for seriously flagrant cases like Tyco and Enron. It is clearly not working to prevent bad behavior.
BA had wages + social security costs of £1.62bn for fiscal 2009, so if everyone worked for free for a month, that would save £135m. Doing the same thing for a couple of dozen executives would save maybe 1% of that.