Perry Glasser

Executive Spanking

In Business, Economics, Wall Street on October 15, 2008 at 10:57 am

In today’s Wall Stret Journal, Joann S. Lublin and Aaron Lucchetti share a byline for a story that begins:

Government investments in financial institutions could crimp executive pay..and hinder firms’ ability to attract and retain top talent.

The article also tells us that the nine big-bank CEOs who “agreed” to being partially nationalized last Tueday, collectively were compensated $289 million last year.

Dollar$ is not chewing his fingernails over the prospect of this executive spanking. Does anyone expect  impoverished leadership to resign for lack of adequate compensation? People willing to earn an average of $30 million plus…not counting perks…are not in short supply. Why, for $10 million, a 66 percent discount, which Citizen would not for a year or two be willing run a multinational into the dirt before whining for government assistance? Dollar$ is willing to step up and run any bank into the ground for half that. Nay, a quarter!

One of the favorite Buccaneer myths in recent years has been that leadership is skill so rare that vast fortunes and perpetual benefits have to be paid to men (mostly men) willing to sit at the head of a table and listen to reports from other men (mostly men) paid only slightly less.  True, watching most PowerPoint presentations requires financial incentives, but millions?

  • Their decision-making talents are such that they exposed the companies to fiancial instruments they now claim they did not understand.
  • Their talent for negotiation led them to playing Monoploy for Grown-Ups, a sport also called Merger and Acquisitions. M&A makes companies bigger, and the promise of new efficiences (Dollars$ no BS Defintion =”put people out of work”) are rarely realized. Somehow, the firings never adds up to the promised money saved because the survivors all get substantial raises for accepting greater responsibility.
  • Their financial acumen when their companies were flush with cash consisted of stock buy-back programs, a tacit admission of the failure of imagination for developing or exploring new lines of business, investing in Research in a meaningful way, or (gasp!) distributing profits to shareholders as dividends. This idiocy is usually justified by claiming it increases shareholder value, a strategem that is at best short term and not-so-incidentally gooses the value of executive board options by far more percentage points than shareholders see on any brokerage statement.

Now that the Fed has made these Buccaneers an offer they cannot refuse, we can only hope Joann S. Lublin and Aaron Lucchetti have editors eager to set them out on a story to find executives resigning in protest at diminished salaries.
No more sushi, guys.


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