Why are these CEOs making millions....

[mefordis]

So why should the guy be obligated to follow the Iacocca model and make a token PR move to "cut" his pay/bonuses when he can also look at working someplace else and save himself a bunch of grief???

Uh, because some people like CHALLENGES, and don't need a carrot held in front of them for everything they do. Lee Iacoca KNEW he could turn around chrysler, and when he did he saw the riches that come with working your tail off and being successful and talented enough to be paid millions. He wasn't content to get a huge bonus while jobs were being cut.

Lee Iacocas are not easy to find in this country, but as a stockholder that is who I want running these companies.

I think a lot of people support paying top $$ for mediocrity to keep the hope alive that they in turn can be eligible to become millionaires some day, at some company.

 

[S. C.]

You forgot to add though, that when the CEO takes the money and runs, the company ends up in bankruptcy AND.........the little guys lose everything, including their pension.
I have to tell you that hurt a LOT watching several of the top guys at DH's company walk away with pockets overflowing with money while we sat here stunned and stripped of a 30 yr pension. It's horrible and I blame the CEO's not the unions.

Well said!

 

[Geoff_M]

where do you think they are going to get another job if they'd screwed up so bad?

Here's the problem... you're assuming that the CEO and executives in question have "screwed up badly". As I've pointed out, the headlines are being generated by Chrysler. The position that the company finds itself in today is not entirely of its making. They were recently spun off from Daimler into a down-market and haven't had time to try and get their feet under them. If the Chrysler board thinks that they have a good management team on-board, but need a healthy dose of money to try and get back on their feet... then why wouldn't the board want to try and keep top management on-board and try and to prevent the type of organizational chaos in leadership that a revolving door brings that could threaten a turnaround???

Uh, because some people like CHALLENGES, and don't need a carrot held in front of them for everything they do. Lee Iacoca KNEW he could turn around chrysler, and when he did he saw the riches that come with working your tail off and being successful and talented enough to be paid millions. He wasn't content to get a huge bonus while jobs were being cut.

Well, others may not prefer such challenges. If you happen to think your CEO is working in the right direction... would you work to try and retain him, or hope that he's Lee Iacoca Jr.?

It was nice that Iacoca took the token pay cut, but don't think that any jobs were saved because of it or that it played a tangible part in the company's turnaround.

 

[MouseJunkie]

As the daughter of a 40 year Chrysler Employee, I can tell you things went downhill when Daimler came in the picture. Prior to Daimler, Chrysler was doing well (Lee Iacoca days...late 90's) and the employees were rewarded with nice profit sharing checks. Daimler was the start of the downfall and then in comes Cerberus and well you see how that's all turned out for Chrysler.

I agree whole heartedly on the CEO and the golden parachute thing also. I think it's disgraceful these CEO's get rewarded for driving companies into the ground while employees take pay cuts and loose their pensions. Look at the airlines...another great example of mismanagement and CEO's who got big bonuses while their employees got laid off, lost wages, and pensions. It's insane!!! These CEO's should absolutely be held accountable for their part in destroying these companies. Off my soap box now...

 

[bsnyder]

An owner of a sports team can do whatever he wishes. Sports teams are not publicly traded.

But most of these teams are playing in facilities that were built and paid for by local taxpayers. So, there is public money in the mix.

 

[MouseJunkie]

I just found this 2007 article:

DaimlerChrysler News
Iacocca reflects on Chrysler downfall, merger, possible sale
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Former Ford president and Chrysler chairman Lee Iacocca discusses the “sad state of leadership” in the United States today — and within the American auto industry — in a book titled “Where Have All the Leaders Gone?”

Iacocca is highly critical of the merger between Daimler-Benz and Chrysler, which he feels has lead to Chrysler’s troubled position today.

“I’ll always believe that if I hadn’t chosen Bob Eaton to succeed me as chief executive at Chrysler, it would still be a strong, profitable, American car company,” Iacocca writes. He blames Eaton and Juergen Schrempp, the former head of Daimler-Benz for the ill-conceived marriage.

Iacocca describes the moment he found out about the merger in 1998 as “the lowest low” of his life. “I gave 15 years of my life to saving that company and now I wondered if it was worth it.”

On the other hand, he has concerns about the possible sale of Chrysler. If the company “is kicked to the curb, it will be as a shattered remnant of the great American car company it once was.”

Iacocca’s criticisms go beyond the auto industry, with harsh critiques of today’s politicians and their lack of leadership.

“We’ve got a gang of clueless bozos steering our ship of state right over a cliff, we’ve got corporate gangsters stealing us blind, and we can’t even clean up after a hurricane much less build a hybrid car,” Iacocca writes.

BTW I'm not saying the employees and the union members shouldn't make sacrifices to keep the company afloat. I'm just saying it's not right that management never seems to make their own sacrifices. They get richer and richer why their employees lose out on a company they helped build. I think it's morally and ethically wrong!

 

[golfgal]

An owner of a sports team can do whatever he wishes. Sports teams are not publicly traded. These companies paying their CEO's unreasonable salaries and bonuses for leading underperforming companies are publicly traded and need to be responsible.

If a CEO is confident in his ability to lead a company to success, his high compensation should be delayed until he meets success markers. I wouldn't bail out these companies with salaries and bonuses that unreasonable. Lowering them would be a contingency.

Just because a company is publicly traded doesn't mean it is "public" money. These companies are still owned by stockholders who CHOSE to buy stock in these companies. Buying stocks is not without risk, but they can also have great rewards too. Stockholders have the right to elect board members who then are the ones that hire the CEO's etc. The stockholders are the owners of the company and if they have elected that BOD, there is no one to blame but themselves.

Here's the problem... you're assuming that the CEO and executives in question have "screwed up badly". As I've pointed out, the headlines are being generated by Chrysler. The position that the company finds itself in today is not entirely of its making. They were recently spun off from Daimler into a down-market and haven't had time to try and get their feet under them. If the Chrysler board thinks that they have a good management team on-board, but need a healthy dose of money to try and get back on their feet... then why wouldn't the board want to try and keep top management on-board and try and to prevent the type of organizational chaos in leadership that a revolving door brings that could threaten a turnaround???

Well, others may not prefer such challenges. If you happen to think your CEO is working in the right direction... would you work to try and retain him, or hope that he's Lee Iacoca Jr.?

It was nice that Iacoca took the token pay cut, but don't think that any jobs were saved because of it or that it played a tangible part in the company's turnaround.

Typically in this kind of situation a company would do a new stock offering to raise capital to overcome these kinds of hardships but given the market today, that is not an option. I would agree that GM's situation has more to do with their "little guys" then their CEO because GM's position is largely the result of the UAW and their lack of concessions, too high of pay/compensation for the job done, plain and simple.

 

[minnie61650]

If they couldn't run the company successfully, who cares if they go. How can they turn the company around if they've done nothing to keep it successful?

If the company is failing, it's their own fault. They obviously need some new and better blood to keep the company running a hopefully prospering.

All indictions are that the auto companies would have survied without a bailout if the cridit crunch had not happened.

The greed of the banking industry caused the credit crunch. The credit crunch is why the car companies are in finanical trouble.

"The problems in the auto industry are a direct result of the credit crisis," Wagoner said. "The U.S. government's actions to help stabilize the credit markets and eventually ease the credit crunch are an essential first step to the economy's and the auto industry's recovery, but further strong action is required."

Link to full article:

http://www.freep.com/article/20081108/BUSINESS01/811080331

 

[mirmartinez]

I like it when the CEO is also Chairman of the Board.

That is a red flag, when we are looking to invest.

 

[MALE*RN*777]

And so that is the reason I was against the bail-outs to begin with and just emailed my congressman to continue as he did before to vote no on bail-outs. Less government, more self responsibility.

 

[Purseval]

You also assume that just anyone can step up and run a multinational corporation with thousand of employees. Apparently the talent pool for that particular line of expertise is pretty small. Sure, I could run it into the ground for 1/100th the salary but it would be virtually guaranteed that I would do it. CEOs get millions because few people can do what they do, simple supply and demand. It's also not a job one steps into right out of high school, most of these CEOs worked their way up the ladder and had years of success. All you are seeing now is the failures but if the job was so easy you would be doing it, not grousing over it.

 

[Purseval]

Probably the same reason the dealership my DH works at has laid off close to 30 people so far yet the owner has his own private jet.

Let's assume your husband is an accountant. The company folds, he loses his job. Odds are that if he's reasonably competent he can find another job to replace his income. If you're in Michigan you may have to move but your chances are still pretty good, even in this economy.

Where do you think the owner is going to go to get a job that will maintain the lifestyle necessary to pay for a private jet? No more money is coming in through the business. He had better hope that he invested well for a rainy day or else what is an inconvenience for you will be a disaster for him.

You see it's all relative. If you are making millions you are probably spending millions and it's not easy keeping up $50,000/month expenses when you lose your job, even if you walk away with millions. That is why over half of professional athletes end up in financial trouble when their careers end. Once you get the lifestyle you have to maintain it, it's not as easy as it looks.

We go to auctions every month, it's a hobby. You won't believe the stuff that is getting consigned for sale now. Rare artwork, expensive jewelry, fancy cars, furniture. It's all being sold for pennies on the dollar and it's all coming from people you were probably jealous of at one time or another.