Patrick's Rants



3/24/2009

CEOs Underpaid? Get Real!

Filed under: General,Money — site admin @ 8:15 am

What is it with CEOs that makes them think they should get more and more pay? Millions of dollars each and every year even as they drive their companies into the ground doesn’t sound very sustainable does it? AIG finance division employees received “retention bonuses” while the hand is out to the government to infuse the company with cash. Give me a break! You fire people who lose your company money setting it on the brink of financial collapse so big it would take down the entire world, you don’t pay them more to stay.

Forbes lists the average CEO pay at $12.8 million. $12.8 million. That’s a whole lot of zeros. And the problem is that the more they get paid, the greedier they get and then you end up with Enron, Worldcom, AIG and Bear Stearns. The usual argument for more pay is along the lines of, “if we don’t pay more then we won’t attract the best CEOs”, especially when those companies need a turnaround. But that argument is crap. Steaming, stinky crap. Look at Iacocca. He took a $1.00 per year salary until Chrysler was turned around. Further look at Warren Buffett. His salary is listed as $100,000. Add $75,000 from director’s fees that he receives from companies he has invested in and the indirect (but still taxable) benefits of $315,709 for personal and home security services. Now, the $100,000 is less than Joe the Plumber claimed he would be making if he bought the plumbing business. And Warren is listed as the world’s second richest man. So, if you want to attract intelligent people to run the biggest companies in the world maybe the pay package should be smaller instead of bigger? I mean, if you aren’t successful enough to have other income and assets why should you be given free rein to steer the company to benefit you by maximizing your stock options?

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