Comments on: Should CEOs Give Back When Their Companies Fail?

By: Lee Edgar

Lee Edgar — Fri, 13 Aug 2010 15:03:12 +0000

I was made to retire from Lucent Technologies after 30 years, I started with Bell Laboratories. All those years I was in the 40lK. The employee’s contributions should not have been lost. Banks are responsible for your savings, why shouldn’t companies be also. If you lose the company’s share, no problem, but to lose all your hard earned money should not be allowed. When the stocks started to drop we were assured over and over by the CEO that everything would be fine and things would pick up. We believed the CEO who walked away with millions! As far as I’m concerned, they stole my savings that I contributed all those years! They should be held responsible, a bank would be.

By: jak

jak — Thu, 09 Oct 2008 22:09:08 +0000

the irony is the idea of aligning the ceo’s incentives with the shareholder’s is part of what got us here. Stock options. How many times have I heard that stock options were the grand guarantee of aligned incentives?

Bottom line: so long as CEOs manage to the stock market we will have distortions. The stock market doesn’t value the things that truly make a great business. Or at least it does in the long run, with lots of misguided zigs and zags in the meantime.

Make CEOs actually have to purchase their stocks on their own. I think that would improve things a lot.

The general principle, though, I think is right. Until CEOs actually face risk on a personal level, they are driven by misguided short-term values. Last time I checked, most CEOs face no personal risk. Please fire me for 20 million, too.

By: Stu

Stu — Thu, 09 Oct 2008 02:30:27 +0000

With great risk comes great reward. The problem is that these well-paid CEOs are getting a great reward without any risk at all, let along a great risk.

By: Tim Manni

Tim Manni — Wed, 08 Oct 2008 18:01:11 +0000

Being mad that CEO’s make millions is like being agitated that half the Yankees hold $200 million contracts (or what ever they are). I agree that offering a failed CEO a hefty severance package is wrong — you’re essentially rewarding someone for failing. But look around you, that’s what the entire system is doing as a whole. The borrowers who have failed are being rewarded with loan modifications — Bank of America announced this week they’re offering loan-mods for 400K troubled homeowners. Now, it’s the homeowners that have done everything right who are the ones that are suffering — left without access to money.

You can’t gripe about one portion of the system and not the other.

Shifting gears a bit, I’m concerned over the stipulation in the new $700 billion plan that will cap CEO’s salaries for participating firms. Do you think that will discourage many firms from participating?

By: Anna

Anna — Wed, 08 Oct 2008 17:39:56 +0000

Put some real power into the hands of the stock holders. All compensation packages should be voted on annually. Too many Boards of Directors are rubber stamp show pieces.

By: Ken

Ken — Wed, 08 Oct 2008 17:28:51 +0000

@ Bill – That’s right no one is forcing anyone to do anything. And there lies the problem, attitudes like yours contribute to the problem.

If we don’t change the system we will continue to get the same results.

By: Bill

Bill — Wed, 08 Oct 2008 12:46:35 +0000

@Ken –

“Most of my portfolio is in mutual funds, so I, like yourself, don’t have the choice to choose stock with independent boards. That’s just silly.”

no one is forcing you to invest. if you are not happy with the rules, and don’t have the power to change them, then don’t invest.

@Benjamin – right on!

By: Benjamin

Benjamin — Wed, 08 Oct 2008 09:18:41 +0000

The verdict is still out on whether these CEO’s did anything Illegal.

Blaming the government and mortgage lenders for the current financial meltdown, is akin to blaming McDonalds or the candy aisle at Wal*Mart for making us fat. Yes they offer the product for sale, but ultimately we have the choice of whether or not to buy it.

With the exception of those families who truly faced financial hardships beyond their control (medical emergencies, jobloss, etc.), a significant number of American Families willingly positioned themselves within a paycheck or two of bankruptcy due to their own greed.

By: Khyron

Khyron — Wed, 08 Oct 2008 08:33:36 +0000

As I told some people last week, the place to start on executive compensation is simple, as long as shareholders are forcing boards to do what the board and comp committees are supposed to do.

1. Clawbacks.
2. Highwater marks

By: Matt

Matt — Wed, 08 Oct 2008 01:08:20 +0000

10/06 — Richard Fuld, the former head of Lehman Brothers, says he will wonder “until they put me in the ground” why the US government did not rescue the 158-year-old Wall Street firm and claims regulators knew the full scale of its condition far before its collapse.

Please. He started it!