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Thread: CEOs lay off thousands, rake in millions

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    Re: CEOs lay off thousands, rake in millions

    Quote Originally Posted by Objective Voice View Post
    Did I say that? No, I did not. There's alot that go into a company's profitability. Part of that includes payroll. But to think of the employees as inconsequential...that's just wrong.
    Labor is a cost. You increase profitability by cutting costs where it makes fiscal sense to do so. If that's in labor, then so be it. If there isn't enough work needing to be done to justify the existence of those jobs, then they're on the chopping block.
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    Re: CEOs lay off thousands, rake in millions

    Quote Originally Posted by Objective Voice View Post
    Since folks are arguing that business exist to make money, I went back and looked at the primary entity mentioned in the OP, Hewlett Packard (HPQ), and reviewed their stock over the last year. The company's stock has a 1-year change of -9.25% since Aug 2008. They reached a high in late-March of nearly 55 points (54.75) for the 52-week period, but since then have dropped to just over 40 points (40.34) when the markets closed on Friday (9/03/10).

    Atleast where HP is concerned, the arguments for their CEO walking away with millions for underperforming does not hold water. He didn't make money for his company's shareholders. He lost them money, yet still managed to walk away with $24.2 million dollars!
    And again, that's not the point.

    Was the CEO given a discretionary bonus for causing the company's stock to drop? No, he was given a bonus per the contract that the company signed when it hired him. That's the downside of guaranteed contracts.

    Again, Pavano turned out to be a disaster for the Yanks. That doesn't mean that the arguments for paying him $10m/year "don't hold water" after his first bad year - he's got a contract.

    Another thing that people keep on glossing over is that if companies refused to provide CEO's with guaranteed contracts, they would have to pay substantially more money up front. This is just another reason why contract negotiations should be handled by businessmen and not Angry J. Public.

    Quote Originally Posted by EnigmaO01 View Post
    Other than you apparent contradiction, the fact that you're telling me the board has little if any bearing on the selection of CEO's is, shall I say -- in your own words -- ridiculous?
    I don't think it's possible to come up with a more egregious misreading of what I said if you tried.
    Last edited by RightinNYC; 09-05-10 at 01:26 PM.
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  3. #263
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    Re: CEOs lay off thousands, rake in millions

    Quote Originally Posted by Harshaw View Post
    Labor is a cost. You increase profitability by cutting costs where it makes fiscal sense to do so. If that's in labor, then so be it. If there isn't enough work needing to be done to justify the existence of those jobs, then they're on the chopping block.
    Yes labour is a cost

    A CEO provides his labour for in compensation for monetary gains.

    Cutting the salaries of CEO's and other top executives makes sense in order to increase shareholder returns. Especially for those that are not the top performers in the industry. Very few CEO's have been vital to a companies sucess, Jobs, Welch, Gates are among a few that have been vital to the compamy they work for. Most do an average job for far above average wages, especially in the US. CEO's of foreign companies of the same size with similar performance do not in general receive anything near the compensation packages that US CEO's do
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    Re: CEOs lay off thousands, rake in millions

    Quote Originally Posted by Lord Tammerlain View Post
    Yes labour is a cost

    A CEO provides his labour for in compensation for monetary gains.

    Cutting the salaries of CEO's and other top executives makes sense in order to increase shareholder returns. Especially for those that are not the top performers in the industry. Very few CEO's have been vital to a companies sucess, Jobs, Welch, Gates are among a few that have been vital to the compamy they work for. Most do an average job for far above average wages, especially in the US. CEO's of foreign companies of the same size with similar performance do not in general receive anything near the compensation packages that US CEO's do
    That's a fine argument (maybe) for future CEO contracts, if it's economically feasible to do. But it means diddly for existing contracts.
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    Re: CEOs lay off thousands, rake in millions

    Quote Originally Posted by Harshaw View Post
    That's a fine argument (maybe) for future CEO contracts, if it's economically feasible to do. But it means diddly for existing contracts.
    What is wrong with that arguement?

    A CEO provides his labour to lead the company in order to maximize shareholder returns, not to enrich himself/herself at the expense of the shareholders. I do think that CEO compensation packages in the US have been detremental to shareholder returns in the majority of cases
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    Re: CEOs lay off thousands, rake in millions

    Harshaw and RNYC,

    You both make very good points. It's why I said that if that CEO has done everything he/she could do to reduce overhead to increase profitability before laying off workers, I'm willing to cut him/her some slack depending on the details. Which lead me to RNYC's comments.

    No, we don't know the particulars of any of the contracts where these CEOs in question are concerned. That was also part of my argument herein. However, the overall tenure from my perspective is if mismanagement did take place, why reward CEOs with multi-million dollar severage package particularly in a down economy when said mismanagement cost people their jobs while rewarding the CEO's mismanagement?

    If that was not the case where these companies in the OP are concerned, i.e., they out performed the market, they reduced the company's deficit by 2/3 (using McVicchio's example, reducing a -$60M deficit to -$40M) then I'm willing to conceed that said CEO did a pretty good job under the circumstances. And if his contract stated that his tenure was for X-amount of years and he'd retain such and such severance package provided the company reached X-profit margin, then I'd have to say he deserved that money. But it's the details we don't know; just the raw data that's being presented. Therefore, based on that raw data, I'd say HP and J&J's former CEO didn't earn their severance/bonus money.

    It's all in the details...what really took place versus what's being reported. We really don't know...

    But in this economy, it certainly doesn't look good for these CEOs to be letting people go while also walking away with that kind of money.

    Quote Originally Posted by Lord Tammerlain View Post
    What is wrong with that arguement?

    A CEO provides his labour to lead the company in order to maximize shareholder returns, not to enrich himself/herself at the expense of the shareholders. I do think that CEO compensation packages in the US have been detremental to shareholder returns in the majority of cases
    Agreed. That essentially is the argument here.
    Last edited by Objective Voice; 09-05-10 at 01:55 PM.

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    Re: CEOs lay off thousands, rake in millions

    Quote Originally Posted by Lord Tammerlain View Post
    What is wrong with that arguement?

    A CEO provides his labour to lead the company in order to maximize shareholder returns, not to enrich himself/herself at the expense of the shareholders. I do think that CEO compensation packages in the US have been detremental to shareholder returns in the majority of cases
    I'm . . . pretty sure I said that it might be fine argument for later contracts.

    But existing contracts are what they are.
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    Re: CEOs lay off thousands, rake in millions

    Quote Originally Posted by Objective Voice View Post
    Harshaw and RNYC,

    You both make very good points. It's why I said that if that CEO has done everything he/she could do to reduce overhead to increase profitability before laying off workers, I'm willing to cut him/her some slack depending on the details. Which lead me to RNYC's comments.

    No, we don't know the particulars of any of the contracts where these CEOs in question are concerned. That was also part of my argument herein. However, the overall tenure from my perspective is if mismanagement did take place, why reward CEOs with multi-million dollar severage package particularly in a down economy when said mismanagement cost people their jobs while rewarding the CEO's mismanagement?
    Probably because that's what their contracts included. Again, I very much doubt that boards are running to laving huge discretionary bonuses on CEO's who are getting fired. Instead, I think that these large awards are part of the guaranteed contracts that CEO's sign.
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    Re: CEOs lay off thousands, rake in millions

    Quote Originally Posted by RightinNYC View Post
    Probably because that's what their contracts included. Again, I very much doubt that boards are running to laving huge discretionary bonuses on CEO's who are getting fired. Instead, I think that these large awards are part of the guaranteed contracts that CEO's sign.
    And that takes us right back to the same argument the President made concerning the bonuses AIG's CEOs received after they got their government bailout money. It's F'd up for sure, but that just means board members and shareholders need to place more stringent stipulations in CEO contracts where bonuses and severance pay are concerned.

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    Re: CEOs lay off thousands, rake in millions

    Quote Originally Posted by Objective Voice View Post
    And that takes us right back to the same argument the President made concerning the bonuses AIG's CEOs received after they got their government bailout money. It's F'd up for sure, but that just means board members and shareholders need to place more stringent stipulations in CEO contracts where bonuses and severance pay are concerned.
    And if board members and shareholders want to do that, they're free to do so. They always have been. The point is that they have occasionally chosen not to do that and that's a business judgment that they're qualified to make.
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