[quote=UCGal]
I do have an issue with a CEO taking millions out of a company at a time when revenues are shrinking and quarterly earnings are actually quarterly losses. Unfortunately, that is what happening at many large companies – including the one I work at. At a time when employees have been told that raises are on hold indefinitely (last 2 years have been 0%), 401k match is gone, workforce cut by 25%… but the CEO bonuses and RSUs keep increasing. It really is obscene. It’s on a scale not seen in the public sector. The money being transfered from the stock holders to the CEO and his cronies is NOT helping the overall economy. (Share price is a fraction of what it was).[/quote]
Of course it is not on the scale of the public sector nor should it be. The public sector does not generate wealth. Why is it so hard to factor that difference in? Often times, a vast majority of the CEOs income is tied to the success of the company, but you seem to be arguing that the board should not honor his employment contract if he does a bad job. That’s not how it works and a company would be poorly run and at a disadvantage if they said, “Well Bob, we’re not going to pay you if we’re not profitable this year.” That’s not how it works for any employee or we would all be seeking government jobs. He can certainly get fired and if the board continually rewards failure the company will tank. That happens and that is OK in the private sector. There are bad apples and bad companies that fail…a company must provide value to the free market or that is what happens. If the market feels that the company is exercising poor judgment , including executive compensation, then the market will not invest and the practices of the company will play out in the free market economy.
