WHIP THOSE EXECUTIVES

Notes of Concern…
…Jackson Blair


Let’s Whip Those CEOs


In an article in The New York Times in early October, Stephen Labaton wrote:

Responding to the growing furor over the paychecks of executives at companies that received billions of dollars in the government’s financial rescue, the Obama administration will order the companies that received the most aid to deeply slash the compensation to their highest paid executives..

He went on to report that the pay cut for the executives running the big companies that received taxpayer bailouts would be about 90% of their salary.

I am sure cheers went up all over the land. The predicted reaction to David taking a shot at Goliath would be a happy populace. This assumes the government in the role of David. We could mount an argument that the government is really Goliath but why bother.

Be careful before you celebrate. Here is what this really means.

1. Some major American companies got into trouble.
Rather than let them go out of business, which would have seriously harmed our country’s economy, the president and the congress found a way to provide them money so they could keep operating and, hopefully, return to profitability.

2. This essentially made all Americans “hidden shareholders” in these companies.

3.Many of these companies did improve and some are showing signs of improving.

4.So to reward the good performance or the promise of a good future, the government is taking 90% of the pay for the executives who lead these organizations.

Now, I didn’t major in people motivation in college but I am pretty sure that if you take 90% of the pay away from a guy who brought your bad company back to profitability, he is not going to be happy.

Chances are if he is not happy he places a call to an executive recruiter, finds another high paying job better than the one he has, and resigns.

That would leave the shareholders (including the hidden shareholders-us) in a new quandary. How do you recruit talent to a company where the senior executives get this kind of treatment?

The answer is you don’t. You get the kind of person who needs a job so bad he will take one where his predecessor took a 90% pay cut!

So the government proves once again that they have not even the most basic idea of how things really run.

For those of the public who find pleasure in seeing these high flying execs take a whack, temper your joy in the thought that we have just encouraged everyone who was responsible for a successful turnaround to take a hike!

With this kind of leadership and planning we should reach “banana republic” status in a couple of decades.