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RandalFlagg
Stranger
Registered: 06/15/02
Posts: 15,608
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CEO's that fail
#5629911 - 05/14/06 08:22 PM (17 years, 8 months ago) |
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I am a free-market capitalist through and through. I don't like socialism. I see no problem with economic disparity. I am not bothered by the fact that an executive earns way more than a menial laborer. I am not bothered when CEO's get huge raises for doing well.
But for the life of me I cannot understand it when CEO's who fail are rewarded handsomely. They preside over the company for several years, the company loses market share and stock value, and the employees often end up being demoralized. These lackluster CEO's then are fired or forced to resign and they often receive extremely generous compensation or buyout packages. Why are they being rewarded for failing so badly? I would love to work at a job for several years, fail miserably, and be given millions as I walk out of the door.
I'm not calling for legislation or anything...I'm just expressing disgust.
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Silversoul
Rhizome


Registered: 01/01/05
Posts: 23,576
Loc: The Barricades
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Well, one problem is that a large portion of a CEO's salary often comes in the form of stock options. This means that if they know the company's going to fail, they can sell their stock first and walk away with a fortune. Obviously this practice, known as insider trading, is illegal. But I'm sure that for every time you about one of them being prosecuted for it, there's like 30 who get away with it.
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Alex213
Stranger
Registered: 08/22/05
Posts: 1,839
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I'm not calling for legislation or anything
It's going to continue then.
What else will stop them? These people arn't exactly renowned for their sense of honour.
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Vvellum
Stranger

Registered: 05/24/04
Posts: 10,920
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Quote:
Why are they being rewarded for failing so badly?
Because they can.
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zappaisgod
horrid asshole

Registered: 02/11/04
Posts: 81,741
Loc: Fractallife's gym
Last seen: 7 years, 7 months
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Re: CEO's that fail [Re: Vvellum]
#5633341 - 05/15/06 03:49 PM (17 years, 8 months ago) |
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Stockholders can be schmucks.
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TODAY
Battletoad


Registered: 09/25/03
Posts: 10,218
Loc: Metropolis City, USA
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Randal, I agree with what you say about free market capitalism and I also wonder how the owners of public companies (stockholders) allow this to happen. It seems that stockholders are way too complacent if they allow their 'business partner' to fuck them in the ass and walk away rich and free.
If you fail your business partners by running the corporation into a hole, you should have to give up those stock option earnings to repair the damage...but I guess corporate law takes away some of the CEO's liability to right damage they may have done when running the corporation. Legislation is definitely the only way to rectify this, but doesn't that undermine free market capitalism? Tricky issue.
The question is, should legislators revise the definition of what it is to be a corporate entity and redraw liability lines associated with corporate ownership and operation?
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ca'rouse (k-rouz) intr.v. To engage in boisterous, drunken merrymaking.
Edited by TODAY (05/16/06 11:48 AM)
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HagbardCeline
Student-Teacher-Student-Teacher


Registered: 05/10/03
Posts: 10,026
Loc: Overjoyed, at the bottom ...
Last seen: 19 days, 4 hours
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Re: CEO's that fail [Re: TODAY]
#5637192 - 05/16/06 12:10 PM (17 years, 8 months ago) |
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Stockholders don't allow this happen. The Board of Directors does. The vast majority of stockholders have absolutely no say in how the executives in a publicly held company are compensated because of their class of shares, among other reasons. In fact, it isn't even required to disclose these details to the stockholders or anyone for that matter.
They are considering legislation or SEC guidelines right now that would. I believe it is being referred to as the "Katie Couric clause." I believe England already has such laws on the books.
It should be a good thing. However it does present some possible problems. Competition for proven executives could send salaries even higher as companies try to entice some from their current positions. Since they will know what they are making, it will be easier for them to know where that person stood. Similarly a CEO could decide his performance warrants more and go shopping knowing what his peers are being paid. It could mean a lot more turmoil.
-------------------- I keep it real because I think it is important that a highly esteemed individual such as myself keep it real lest they experience the dreaded spontaneous non-existance of no longer keeping it real. - Hagbard Celine
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zappaisgod
horrid asshole

Registered: 02/11/04
Posts: 81,741
Loc: Fractallife's gym
Last seen: 7 years, 7 months
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If you are foolish enough to buy a nonvoting stock then you should have the right to do so. They are cheaper. Anybody who buys stock needs to do their due diligence and whatever they get, they get. The only thing the government should be involved in is fraud, which includes insider trading and filing false reports. That's it. Message to you all: Be vary wary of dabbling in the stock market on an individual share basis. Indexed funds are pretty safe. Nothing else is.
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DoctorJ


Registered: 06/30/03
Posts: 8,846
Loc: space
Last seen: 1 year, 2 months
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"all animals are equal
but some are more equal than others"
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