America's fastest dying cities

[kandrathe]

This is the big discussion stopper. So whenever somebody is making more money then us, we are not allowed to criticize this person?

Sure. You can criticize and complain about it being unfair if you like, but I'm just saying it's the owners of the company that need to hold their management accountable. If you are an owner or a shareholder, you have a voice at the shareholders meetings. Otherwise if you are an employee, complain or leave the company if the company salary structure stinks. If you are merely an outside observer, then accurately "it is none of your business".

The problem I have is that they will never be held responsible when they make a mess. Before the internet bubble burst, and also now before the mortgage crisis, many CEOs that were just going with the flow of favorable economic conditions, turned out to be crap at their job. Theoretically this would have such a person fired and hold accountable, however practically they get send home with a big amount of money....without ever having taken any risk (it was not their company they just led it). This is possible because shareholders (the big ones) need quick profit and long term goals are of no interest. This can hardly be called a fair thing, and for sure doesn't have anything to do with jealousy.

Shareholders should take notice of the hiring arrangements for their upper management, including any "Golden Parachutes" and other such nonsense.

Remember the CEO of Bear Stearns (if I am correct, it could also have been another of the big investment banks) got rewarded for losing billions of dollars with 126 million dollar go-away bonus plus an office with assistant in Manhattan for 2 years.

Look, here is one case. "his contract agreement extended his employment contract through 2009, where he is guaranteed three times his base salary, plus a cash payment equal to three times the greater of his average bonus or the incentive bonus paid the previous year. Net value: $87.8 million." So, contract had 3 more years and he got 3 x base + 3 x bonus, plus the value of the shares he sold(in his case, $140 million in stock options). What gets a little out of line is that the company usually includes a large chunk of Class A stock as a signing bonus, thus inspiring the new CEO to manage wisely. After vesting, that stock is often calculated as a part of the severance, when really it was a part of the overall employment incentive. And, all that for slashing 10,900 jobs at Countrywide, and an 81% decline in Countrywide stock value over the last year. So, again, shouldn't the contract have language in it distinguishing a severance package difference for good performance, or poor performance? Was it Mazilo's fault he negotiated the deal, or the company that hired him? Do you think that contract needed board of directors approval? Shareholders elect the board to oversee the value of their investment.

This is only possible because in the higher management/board/shareholder there is no normal supply and demand and because the real value of a CEO can never be calculated (having a net loss might be a good job of the CEO because others would have lost more etc.) but often these contracts are ridiculous.

I agree. It's the contracts that are ridiculous(and the lawyers who write them), and shareholders and boards of directors should do a better job of limiting compensation for poor performance.