More CEO Excessive pay

Discussion in 'Current Events' started by ezmoney5150, Jan 11, 2008.

  1. ezmoney5150

    ezmoney5150 Active Member

    This is why too much corporate control is a bad thing. If I screw up bad enough at UPS I just get fired. No severence. At Countrywide if you take the stock from $75 to $5 you just sell the company to Bank of America and walk away with a golden parachute of $36,000,000. Not to mention selling your stocks.

    So much for the market taking care of everything like Ron Paul and all the republicans think. The only thing the market will take care of is the executives that are fleecing our country.

    http://www.salon.com/tech/htww/2008/01/11/countrywide/index.html

    Bank of Countrywide America

    Like one out of every six other mortgage-paying Americans, How the World Works woke up today and discovered that his mortgage would shortly be owned by the Bank of America, instead of Countrywide. But I shed no tears. Wells-Fargo originated my loan and then immediately sold it to Countrywide. I never asked for the pleasure of writing checks that would pad out Countrywide CEO Angelo Mozilo's bank account, and so I bear no grudge for now being forced to send them to Ken Lewis, CEO of Bank of America.
    I am a little alarmed however to learn that, should the deal go through, Bank of America will control more than 10 percent of all U.S. deposits. Federal law supposedly forbids any single bank-holding company from breaching the 10 percent barrier, but according to the Wall Street Journal, there's a loophole that exempts federally chartered thrifts, and Countrywide's subsidiary, Countywide Bank, is a federally insured thrift. So Bank of America now apparently has a pretty good shot at being the bank of all America. Is this prudent? What happens if Bank of America runs into troubled waters? The words "too big to fail" come to mind.
    In the annals of what is increasingly being referred to as the worst housing bust of all time, the sale of Countrywide for a paltry four billion in stock is undoubtedly a major historical event. For Angelo Mozilo, one suspects that the debacle must be a trifle humiliating, even if he is likely, reports the Journal, to add a $36 million dollar severance payment to the hundreds of millions of dollars of cashed-out stock options he's stashed away in the past couple of years.
    So what now for Mozilo?
    During the conference call announcing the deal analyst Nancy Bush of NAB Research asked whether Mozilo would have a role in the company, post-merger.
    "I would want him to stay until the deal gets done and then probably I would guess that he would want to go have some fun," said Ken Lewis, as reported by the Journal's David Gaffen, who live-blogged the call, "but l'll talk to him next week about his personal desires."
    That's right Angelo. Go have some fun. The well-wishes of thousands of laid off Countrywide employees and many thousands more Americans struggling through Countrywide's unforgiving foreclosure procedures will no doubt speed you on your way.
    -- Andrew Leonard
     
  2. av8torntn

    av8torntn Well-Known Member


    You obvisiously did not listen to what Ron Paul said about this in the debate last night. The Government is keeping interest rates low and this is what he feels is causing this problem. This is the opposite of a free market.
     
  3. brett636

    brett636 Well-Known Member

    While it doesn't seem all that fair, that is the deal Countrywide signed with him when they brought him on as CEO. Just like our contract CEO's have contracts that cover compensation, benefits, and the like. He is simple exercising his contractual rights, and perhaps other BOD's will be less likely to sign such contracts with future CEOs. Government has no place in determining people's wages despite their position in a company.
     
  4. ezmoney5150

    ezmoney5150 Active Member

    I don't think the government should set wages, but CEO pay should be comparable to what the common employee makes. Not 450% more.
     
  5. ezmoney5150

    ezmoney5150 Active Member

    Ron Paul is a libertarian first off. Libertarians and republicans think that corporate america is the panacea for every woe in this country. Well you see how well this worked. Some regulation is good.
     
  6. brett636

    brett636 Well-Known Member

    Its actually worked quite well. Consumers are spending more as well as earning more. If you read my thread on the middle class you would see that the middle class is getting richer, not poorer. Despite a tax cut government tax revenues are at an all time high because as people and businesses earn more the government makes more money. I will agree that some regulation is necessary, but only to help guide the free market, not to control it.
     
  7. brett636

    brett636 Well-Known Member

    Why not? The entire company relies on that CEO for guidance. Every common employee job out there relies on a CEO doing what is right for a company. Now not all CEOs do this well, but 99% of them do what is right for the company. They have a level of responsibility much higher than that of your common employee, therefore they should earn more.
     
  8. ezmoney5150

    ezmoney5150 Active Member

    I don't know what you're reading but you should stay out of the comic book isle.

    The middle class has more debt because of stagnating wages. The only way people buy things is with credit cards. The amont that people save are at an all time low. How you figure the the middle class is getting richer is beyond me. More and more good paying jobs go to China and are replaced with wal mart jobs. Gas prices are high, food prices are high.

    And because the US governmet only spent 45 billion on the taxpayer credit card instead of 50 billion, you can extrapolate that tax revenues are at an all time high?

    It's your story.
     
  9. tieguy

    tieguy Banned

    Just think a working stiff who studies and reads up on the market , who learns to recognize the signs of overvalued companies could have shorted their stock and made a killing off this CEO incompetence. America is the land of opportunity. I'm sorry I missed this one. Someone told me about this one a couple of years ago and I didn't listen...:happy-very:
    But theres a certain feeder driver on the east coast right now grinning from ear to ear.:happy-very:
     
  10. tieguy

    tieguy Banned

    Their biggest debt is still their house. Many of these homes have not stagnated but increased significantly in value.

    While there probably are some middle class members forced to borrow to make ends meet many do not have the spending discipline to control their debt. They buy today rather then save up and buy tommorrow.

    Do also think pro atheletes should not make more then the average working man?
     
  11. ezmoney5150

    ezmoney5150 Active Member

    You missed my quote about credit card debt. People are making ends meet with credit cards. Thats not right. Not to mention the home equity loans.

    If the average wage went up along with executive pay these problems wouldn't be going on. But in our plutocratic society its "I made mine now how are you going to make yours."

    The athlete pay is one of the reasons I don't go to professional sporting events anymore. But the apathy of Americans of what is a priority, like paying attenion to what's going on in their government will always be there. People know how many touchdowns a favorite quarterback has thrown but can't tell you who their Congressman is. And that Congressman is making policy to send their good paying job overseas.

    It'll take a depression for people to wake up. Were almost there.
     
  12. tieguy

    tieguy Banned

     
  13. brett636

    brett636 Well-Known Member

    5 myths of the middle class


    I'm still trying to find it, but I've also read that once you take personal assets into consideration the median household credit card debt is zero. Personal assets still have a greater value than people's personal debt proving that in the real world people are not as bad off as you would like us to believe.
     
    Last edited: Jan 17, 2008
  14. wkmac

    wkmac Well-Known Member

    ezmoney,

    The real danger of having the gov't set wage/salary values by points to a certain class of worker, in this cases high dollar CEO's, is dangerous. Why? OK, if a little bit is good a whole lot more is better or in other words, CEO's have gov't approved salary structure so now it's time for the trickle down effect and for gov't to regulate the rest of us. You're thinking the good gov't overseerer will side with you and take some of that excess monies and filter it down our way and yes that could happen. But who owns the lobbyist and pays the big bucks in campaign contributions? Who in the end is likely to get screwed and have their pay regulated down while the "better half" may not see the actual salary go up but rather a change in tax law granting such perks at tax exempt stock options of other means come into play.

    The 401k (actual IRS code section) that came into play in the 1978' (during a democrat WH and Congress I might add) was a tax means intended to allow a high paid executive a means of non-taxed salary deferrment to a future date. What this in effect did was allow a high paid executive defer into the future some portion of his pay in order to reduce himself/herself to a lower tax bracket or in other words, a tax shelter. The idea being in later years when he/she withdrew that money, they would no longer be making that high salary and again qualify for a lower tax rate. It was a tax shelter or tax dodge if you want to look at it that way. Of course, the 401k came to be a tool of the common man now as it also helps to reduce our tax bill while building a retirement savings. The point being, regulate away but they will find a way around and we might find ourselves with a reduced pay and those very CEO's you want to slam down may in fact reap an even higher reward in the way of stock vlaues or dividend checks and even those in the right situation can be deferred as it pertains to taxes.

    As for the CEO windfall as he parachuted out? Well contracts are written that list what we call cardinal sins and they call terms of the contract. Violate those terms and the contract is void and you would think not making money and making decisions that bankrupt a company would be in there but that is not true. A CEO is smart enough to know that market forces and even gov't public policy can radically alter the landscape so he/she would never sign to something they have little control over. Unless a specific term is identified as a violation, then any early contract termination by either party has certain specifics as to a buyout clause. End your cellphone contract early and you may have to pay an exit fee, or your cable or whatever. A football team owner decides the team record of 1-12 requires a new direction so the coach is released (fired) but no terms were violated so the coach still gets his pay. How many times have you heard this one and scratched your head? Me too! Countrywide, as goofy as it is, violated no terms of the contract so he still get the pay. Bob Nardelli of ex-Home Depot CEO fame got a $50mil parachute out of his job and all but about killing that company. You might say, they just have a better union at the contract tables that we do!
    :happy-very:

    As for there being no gov't regulation and thus all this is the result? Seems like a convient way to look at it and a bit lazy and hey, I'm all about lazy too where I can but if you look across time and the actual gov't record, regulatory law and legislation passed over the years, you'll see real quickly this is not the case. We've not been in a free market for decades and in some respects I'd argue back to the early 1800's. Why then for pete's sake? Because the first rule of a free market is the moral acknowledgment of property rights and the acceptance of what was local custom to identify who owned that property to begin with. My point? The American Indians of that day as our genetic makeup of empire from our European roots overcame our baptism and birth into Individual rights of the Declaration of Independence and we crossed the first line to liberty and that is property rights.

    The old precept of the "sins of the father are visited upon the sons for 7 gnerations" and how true that truism has turned out to be in out case. It's called blowback by others.

    Nice little piece on the free market from a Catholic website:
    http://insidecatholic.com/Joomla/index.php?option=com_content&task=view&id=2111&Itemid=48

    I have nothing to do with organized religion so the link to a Catholic website is not an endorsement of Catholism nor do I offer any condemnation of those who are Catholic, Baptist or whatever. Knock ya'self out but I just found appreciated and the article none the less.

    Take care!

    BTW: You want to sign a "bust the union" card. My law firm will represent you for free!

    "you know if I work this right I might can sell him beach front property in Kansas by the weekend too!"

    As my hero Bugs Bunny would say, "Ain't I a stinker!"
    :happy-very:
     
  15. diesel96

    diesel96 New Member

     
  16. ezmoney5150

    ezmoney5150 Active Member

     
  17. ezmoney5150

    ezmoney5150 Active Member

    Be a cold day in hell when that happens. I have a conscience.
     
  18. ezmoney5150

    ezmoney5150 Active Member

     
  19. wkmac

    wkmac Well-Known Member

    EZ,

    Going back to your original concerns from this thread, I found this piece at a libertarian website concerning more on the mortgage meltdown crisis. No mention or slamming of gov't programs so it's not about that but give it a read as I think you'll still find it interesting as it does take head on the fraud and abuse with the corp. world. What may also surprise you is who these libertarians say a company should be loyal to first and foremost and had they, ths crisis in their case would have been avoided.

    http://www.lewrockwell.com/englund/englund44.html
     
  20. ezmoney5150

    ezmoney5150 Active Member

    Good article. I do believe in some libertarian views just not all of them. Just like I do believe in some but not all republican and democratic ideas.

    You take these smoking bans in bars all over the country. I don't feel government should be telling a business owner how to run his/her business when a customer has many choices to not do business there. If I don't like the smoke in a bar I don't go in. And I have left a few times. And I smoke cigars.