Re: [MLUG - DISCUSSION] too much is too much for our richest CEOs

["Jonathan King" <EMAIL:PROTECTED>]

On 1/5/07, Vern Green <EMAIL:PROTECTED> wrote:
> I am not sure I totally agree with you but I think I do.
>
> The point here is these compensation packages are put together by those very
> people who are firing him. I am sure they go through a lot of negotiation to
> get to that point with a good portion of the buyout negotiation taking place
> before a contract is accepted.
>
> Of course the person claiming to be "aghast" is not one of those making that
> decision.

Indeed, and that's the whole point. As a stockholder, you have
remarkably little influence on these kinds of decisions, which are
generally made by a "Compensation Committee" whose members are
generally members of the Board of Directors. Stockholders vote for the
Board, of course, but they generally can only vote for people put
forward by a "Nominating Committee" whose members are usually...wait
for it...drawn from the Board of Directors. Members of the Board of
Directors are very often high executives and CEOs of other companies
plus influential retired politicians and maybe some other people
chosen to make it seem like the whole thing isn't an inside job.

It's really a problem, and a self-perpetuating one. Shareholders have
every right to be completely pissed off that they lost $450 million by
hiring this guy. If a company managed to drop that kind of cash doing
something careless or "strategic" or whatever, heads would roll. But
because it's just executive compensation, why, that's just the cost of
doing business.

Bollocks. Companies performed just fine back in the day when a CEO was
lucky to get only 100 times the average salary of the average worker
in the firm, not to mention when the multiple was even lower than
that. Every big company has a CEO, and they last an average of
something like six years at the top (they lasted much longer in the
old days, interestingly). Pretty much every CEO was a CEO or high
executive of a large company, so it's pretty clear that, for the S&P
500 companies, we're "producing" 80 of these guys every year with no
problem, and several hundred other people just as qualified who get
paid big salaries as executive VP of X. Executive talent is not that
rare on the ground, so the compensation packages are as high as they
are only because the market for such talent is non-competitive, with
salaries being set by the very people who are applying for these jobs.

This is, of course, just cronyism.

jking


> I really don't see the Home Depot board being all that concerned about the
> pay for the CEO, I see them being concerned with return on investment. This
> is something that every business considers. Excepting education and
> government employees, those people who are not performing their job up to
> standard are in danger of losing their job. This is what has happened with
> this CEO.
>
>
>
> On 1/4/07, Mike Miller <EMAIL:PROTECTED> wrote:
> > >From New York Times:
> >
> > - QUOTATION OF THE DAY -
> >
> > "We're aghast at the level of compensation that Nardelli is walking away
> > with. This is money directly out of shareholders pockets."
> >
> > - RICHARD FERLAUTO, director of pension investment policy for the American
> > Federation of State, County and Municipal Employees, on the $210 million
> > exit package for Robert L. Nardelli, the chairman and chief executive of
> > Home Depot.
> >
> >
> http://www.nytimes.com/2007/01/04/business/04home.html?th&emc=th
> >
> >
> > Read more here:
> >
> > http://news.google.com/news?q=nardelli
> >
> >
> > How aghast should people be?  The problem seems to be that Nardelli was
> > given a massive offer when he was hired.  He knew when he left what he
> > would be getting.  It makes me wonder if these big companies (e.g., Home
> > Depot) should be hiring someone at a lower wage.  Every company wants to
> > save by paying lower wages, just not for the CEO, I guess.
> >
> > Mike
> >
> > _______________________________________________
> > discussion mailing list
> > EMAIL:PROTECTED
> > http://mlug.missouri.edu/mailman/listinfo/discussion
> >
>
>
>
> --
> Thanks
> F Vernon Green
> _______________________________________________
> discussion mailing list
> EMAIL:PROTECTED
> http://mlug.missouri.edu/mailman/listinfo/discussion

_______________________________________________
discussion mailing list
EMAIL:PROTECTED
http://mlug.missouri.edu/mailman/listinfo/discussion