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OT how about a law for company officer bonuses

Discussion in 'Uncategorized Threads' started by Big Az Al, Oct 13, 2008.

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  1. Big Az Al

    Big Az Al Well-Known Member

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    Just a thought I have had.

    Looking at company officers, CEO's, Financial, etc....... Also looking at ENRON, Worldcom, Fanny and Freddy ETC........

    Lets propose that any pay or bonuses above say 40 times the yearly wages of the lowest pay in the company, have to go into an ESCROW account for 5 years. At the end of 5 years if the company performed as promised the the exicutive is then intitled to the accout for that year, and is able to draw all moneys and interest in the escrow account. But if the company suffered a lose, or has gone bankrupt, all moneys in the escrow account return to the share holders and employees.

    I chose 40 times because it is about what a $10 an hour wage works out to, that comes to $800,000 per year.

    I chose 5 years because that is about 3 to 5 times the time it takes cooked books have gotten pretty rank.

    And I post this because of CEO's taking huge bonuses and six months to a year (maybe a little more) later it is found out that the actions the executive took to get the bonus really only hurt the company/shareholders/employees! That is looking at Texaco in the early 70's, to Enron and Worldcom, to Was Freddy or Fanny's CEO that got 290mil, only for the country to see it hit the scids, six months later!

    AL
     
  2. Brian in Oregon

    Brian in Oregon Well-Known Member

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    The biggest problem is that these bonuses are a huge ripoff of the stockholders.<br>
    <br>
    How is it fair that stockholders often see only a few pennies of return on their stocks, while a corporate chieftain gets the equivalent of a million dollars (or even much more) in those same stocks? If the stockholders had split that amount, multiplied by other corporate officers, then they may have seen a better return.
     
  3. TDB III

    TDB III TS Member

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    Too many laws on the books already. The "stockholders" need to band together and take matters into their own hands. Buyer beware....Look into the company before you buy the stock! Fannie Mae/Freddie Mac were shoved down our throats by our wonderful politicians. Where do you think the CEO's of Fannie/Freddie ended up after their golden parachutes were paid??? How about Obama's campaign!!!
     
  4. Dove Commander

    Dove Commander TS Member

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    CEO's are usually employees of a company. Board members are not. They are hired on retainer or a yearly fee. The "Board" interviews and hires the CEO, unless it is a privately held company, then the family or people that own the company hire him or her. Depending on the size of the corp, millions of dollars of assets or stock can be at stake, so the CEO has a bunch of reponsibility. In multi-national, large companies an "Exit Contact" may be included in the CEO's contract to entice him from his present position, but this is normally only the case when has been difficult to find an experienced CEO to fill the position. Often the employment contract includes bits of the company stock as an incentive to be profit oriented. THIS HAS BEEN THE BIG PROBLEM. Actual profit and projected paper profit are 2 different things. Blame the "BOARD" for hiring some one with an exit contract, not the CEO...unless he is crooked. Then, still blame the board, cause they hired the wrong dude! Most CEO's are great people. A few are crooks. Your hearing about the crooks because thats what the media wants you to hear. When was the last time you were hired by a poor person? Companies have to generate profit to stay in business. It's not a hobby, at least not for long.
     
  5. BIGDON

    BIGDON Well-Known Member

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    Let's pass a law establishing what you make. It's called socialism. Employees always hate the boss and think he makes to much. Tough crap if you don't like it become a boss. Then you can risk everything you own, work nights and week ends, get ulcers, have a heart attack at an early age and spend time away from your family trying to build a business so that you can employ some more ungrateful people. I don't think many of you could survive in the high stress of big business, let alone being the CEO of a large company. Let's do away with all corporations, of course none of you would have jobs. There are 1,000s of good CEOs but you want to change the laws because of 2 or 3, god get a life.

    Hey let's regulate how many kids you can have if you don't have a job. Let's sterilize everybody on welfare. Let's regulate that you can't have a loan if you don't have the ability to pay it back. Let's put all congressmen who took money from Fannie and Fredie and protected them on trial. Let's eliminate all pork from legislation. Let's have a law that if you don't do 80% of what you promise when running for office within 12 months you are automatically removed from office.

    Worry about something important.

    Don
     
  6. Brian in Oregon

    Brian in Oregon Well-Known Member

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    "Worry about something important." Yeah, like the Second Amendment.
     
  7. dbcook

    dbcook TS Member

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    i agree with bigdon & big az al. let,s do everything big don suggested in his 2nd paragraph.then let,s do everything big az al wants to do. & just for your information bigdon. i own a company, am everything from the ceo to the janitor. in years past i have spent as little as 12 days a year in my own home. most years average less than 30 days. i average 70 plus hours a week & have for the last 30 years. i don,t have ulcers ,never had a heart attack. am 57 years old, the bills get paid out of my checking account, i have several customers i answer to. i have no employess .no fax machine. most of my business is done by telephone, an inkpen & a writing tablet, everything is legitimate & legal. so you can stuff all the crap about ceo,s. if they can,t take the heat,then they should be the ones looking for a different line of work. maybe you are the one that should get a life.. shoot well. dwain
     
  8. Bisi

    Bisi TS Member

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    We don't need anymore laws. Do you guys get annual reports, from the companies you own stock in? Read them. Almost every company I own stock in now has a shareholder proposal regarding executive pay. These proposals almost never pass, because the average shareholder doesn't read the proposal and doesn't vote.

    I'm sicken, by the compensation some of these clowns are receiving. Getting the government involved will only make it worst.
     
  9. hunter870

    hunter870 Member

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    Actually, I was involved in a similar discussion this morning. No new laws need to be passed, but the court system should be used as it was meant to.

    If,

    A. Your company's failure costs the United States government $30 billion dollars to bail out, thus directly increasing my tax debt (along with every other person's) by $1,000, and

    B. a preponderance of evidence is established in court that your reckless behavior and/or incompetence was directly responsible,

    ...then I think you are an excellent choice as respondant in a class action suit. You may not pay everyone back, but your assets and that 10 million dollar golden parachute will go back to the taxpayers (and the attorney smart enough to put something like this together). You'll face personal bankruptcy rather than just skip out on the remainder of what you owe the plaintiffs. If it is established that you committed fraud, you no longer can discharge those debts by bankruptcy and of course now you are also facing criminal charges.

    If this standard were applied to the directorship of every one of the financial companies who needs a bailout, including those that ignored the government's attempts to keep them from crashing right up until when the bottom fell out, you'd see a little more caution on the part of the execs who got themselves and us into this mess and currently face no personal downside.

    Yeah, Mr. Executive. I know I'll get back about twenty bucks out of the thousand you cost me, but I'll also know you didn't get to keep yours while I'm busting my butt to pay the increased taxes you caused.

    And I don't think we need any new laws, just someone with the fortitude and smarts to use the ones we already have on the books. If you're an attorney reading this and want to get the ball rolling, let me know. I'll be your first plaintiff.
     
  10. Big Az Al

    Big Az Al Well-Known Member

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    hunter870

    Your post describes why I posted!

    You just described ENRON and the court battle that followed! except that the biggest snake committed suicide SO HIS his family is enjoying the golden parachute, it can no longer be touched, and everyone else effected is still screwed!

    If they go after the CEO of Fanny that took a what 290 Golden parachute 6(?)months befroe the melt down, HOW MUCH IS GOING TO BE RECOVERED?

    History says THE BIG GOOSE EGG! AGAIN!

    AL
     
  11. pendennis

    pendennis Well-Known Member

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    Corporate America is no different than political America. People have to be involved. When was the last time you read the proxy statements from the stock you own, or attend a shareholders' meeting? It's the same as being involved in the political process. Most folks don't attend local council meetings, read copies of proposed statutes, or even attend public meetings of zoning boards, boards of education, etc. Dependency is on those who are elected, and we generally close our eyes and gamble that those elected people will protect our interests. Those that keep their eyes on the elected, generally get what they want.

    The other side of the coin is that the media do such a rectal exam on potential candidates, that many qualified people just won't put up with the aggravation. Even when it doesn't matter, the person's twenty-year-ago divorce, or their speeding tickets of thirty years ago, all become part of the public discourse. Why, you just can't trust 50-year-old Joe Dokes because he got caught speeding when he was seventeen!

    We get the type of government we deserve. Every time you vote for someone who is willing to take from someone to benefit others, you are part of the problem.

    Dennis
     
  12. spitter

    spitter Well-Known Member TS Supporters

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    People who invested in Enron liked the ride while it was going on and up. Got pissed in the slide, but stayed woefully ignorant as a willing passenger. Mae/Mac shareholders will go bust also.

    Stockholders are the owners... they need to open their mouth and speak their peace, otherwise take their lickings - any shareholder can get the mic for a minute or two.

    We don't need more laws, owners need to take responsibility for watching their property.

    Jay
     
  13. Recoil Sissy

    Recoil Sissy Well-Known Member

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    Big Az Al:

    The less government is involved in our lives, the better. There is far to much federal meddling in business now. For example, anyone paying ANY attention to historical fact understands that the current financial mess was 'manufactured' by federal meddling as surely as Wheaties are manufactured by General Mills.

    Similarly, the federal tax code is one big can of guts designed by politicians to purchase votes and/or generate cash in their pockets in a variety of ways. Campaign contributions are arguably the most common but the means are only limited by imagination. Remember Hillary's $100k gain in cattle futures?

    Anyway, another law regulating compensation is just another opportunity for deliberate political mischief and unintended consequenses.

    Regarding Enron: if your suicide reference applies to the late CEO, Ken Lay, pretty much everything you wrote would be incorrect. Lay was convicted but died of natural causes very shortly thereafter. When a person is convicted of criminal charges but dies with appeals pending, the criminal conviction is set aside. That fact notwithstanding, his surviving spouse and his estate did NOT get to keep his ill gotten gains.

    Dove Commander:

    The board of directors for most American companies consist of internal and external directors. Internal directors (company employees) are virtually always senior company executives like the CEO, COO, CFO, etc. It isn't particularly uncommon for a CEO to be Chairman of the Board.

    Internal directors frequently serve on their board's compensation committee which is an obvious conflict and rarely if ever, in the best interests of shareholders. IMO compensation committees should be the sole domain of external directors.

    sissy
     
  14. g7777777

    g7777777 TS Supporters TS Supporters

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    They had laws like that in Russia-

    Maybe you could move there?

    I think you are advocating that we dont reward education, success, or anything else- no rewards usually equal small benefits.

    Sure CEOs get paid a lot sometimes - but you if you want that gig- apply for it

    regards from Iowa

    Gene
     
  15. primed

    primed Well-Known Member

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    Hunter870

    300,000,000 people times $1000 per person = 300,000,000,000. Your 30 billion bailout would cost each American $100.00 not $1,000.00. Granted if you are in a certain tax category, your share may well be $1,000.00 because the top 50% of wage earners pay 96.4% of all taxes.

    There is a lot of bad math being kicked about and this is not the worst of it. I saw one claim that was off 10,000%.

    I well understand the concerns, but check the math. All those zeroes seem to throw som folks off a little.

    If I was a CEO knocking down those mega bucks and read these proposals, I would move my company abroad. Some would have us embrace all things socialist, but I say NO THANKS.

    I think our bail out plan should have included about 20 billion for prosecution of fraud cases. Right from loan applicants, mortgage brokers, banks, hedge fund managers and on up the line. If someone lied on their mortgage application, it's fraud. And that was often the case, many times at the suggestion of the mortgage broker, sho then turned around and knowing sold the fraudulent mortgage to a bank.

    Just my personal opinion of course.

    Bob
     
  16. hunter870

    hunter870 Member

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    Big Az Al, I understand your point. However, I'd be satisfied if I didn't get all my money back as long as they didn't get to keep theirs. Suicide by the principal is an acceptable alternative.

    Primed, please accept my humble thankyou. I shouldn't do math in my head around midnight. However, be it $1000 or $100, the principal is the same. I believe that a class action suit would offer some redress, and allow for negative feedback where it counts for those executives that let the train run off the tracks.

    And if such court actions make them want to take their businesses overseas, I'm perfectly ok with that. Perhaps they can then get the government at their new location to bail them out and pass along the costs to their taxpayers.
     
  17. Joe Potosky

    Joe Potosky Well-Known Member

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    The companies would just headquarters overseas... Of course, another law would fix that...
     
  18. BIGDON

    BIGDON Well-Known Member

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    Why do you think so many companies are moving to Ireland. 7% business tax. Where would you go after seeing what Oslama is proposing along with Perlosi and Reid. How many times do you want to kill the damn Goose.

    Between the Fed and State Gov't, labor unions, EPA, IRS and OSHA telling you how to run your business why would you stay??

    Don
     
  19. comp 1

    comp 1 Well-Known Member

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    I agree withalmost all of you above,BUT the one thing a lot of you are missing is the fact that a LOT of board members of these co.'s are RELATED either by business contacts or in many cases familial ties; it's really quite incestuous at the top and they vote huge salaries for their BUDDIES/ FAMILY MEMBERS. The LAST THING I am for is socialism and re-distribution of wealth;I am however in favor of FULL disclosure of board member-c.e.o. PRIVATE relationships. This is what causes megabuck salaries. NOBODY CAN JUSTIFY HUNDRED MILLION DOLLAR SALARIES AND TINY LITTLE RETURNS TO SHAREHOLDERS. I think anybody is crazy to be in the stock market nowadys when it's just a big crapshoot anyhow--you all KNOW that co.'s aren't judged on their REAL worth today. The biggest problem in this country is that the gov't. encourages and strong arms the taxpayer into SPENDING,SPENDING ,SPENDING,and offers very little in the way of SAVING--they lower interest rates to ridiculous levels to force people into the market or into the poorhouse.
     
  20. g7777777

    g7777777 TS Supporters TS Supporters

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    Big Don and I agree here

    regards from Iowa

    Gene
     
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