The CEO hating continues
America as a whole has had a long disagreement with CEO pay, amongst a wide array of other high paid members of society. The baseball player, the entertainer, and the corporate executive, the million dollar a year salaries are abound and even higher in 2007. With the economy lagging, businesses failing, and severance pay higher than ever for failed CEOs, is America justified with its hatred for the corporate elite?
It appears that the CEO hatred isn’t for their high earnings, but the high earning executives at failed corporations. Why, when the company fails do executives get huge severance packages as a parting gift. Much of this is due to the contract that they sign into when taking the position, they are practically entitled to millions even when the company goes bust.
Financial companies have it the hardest. The big bets that were made on real estate via subprime mortgages haven’t paid off in nearly every circumstance. The reason people continued to make payments was because the rapidly growing market provided income in the way of HELOCs which were magically tapped even as the bubble burst. A home that appreciated $100,000 was likely to be tapped for all its extra liquidity after the original mortgage. $100,000 pays a lot of mortgage payments.
The problem today is that CEOs have a disconnect between themselves and their respective companies. Very few CEOs take the $1 salary that many startups give, and some CEOs have little interest in the performance of the company. Backdated stock options are instant cash for most CEOs, certainly the price was always lower for their companies stock 20 years ago. J
The top 10 highest paid CEOs took home half a billion dollars in pay in 2007 alone. Reason enough to hate them, maybe not, but let’s look at the companies they represent:
Merrill Lynch
Morgan Stanley
American Express
Credit crunch much? A CEO for KB Home took home $24 Million even as the company lost money. Who’s to blame here?
