AMosely

If you'd like to watch some undeservingly wealthy mortgage bank CEO's take a grilling over their multi-billion dollar bonuses coming in during what is justifiably being called a mortgage crisis, you can tune in today:
http://www.cnn.com/video/live/live.html?stream=stream1

Interesting Salon article on Countrywide CEO Mozilo's comments:
http://www.salon.com/tech/htww/2008/...yed/index.html

I am consistently failing to understand why executive pay in this country is growing exponentially - on average American CEO's took a 54% raise in 2004 according to Forbes. The fact that these trends are continuing for the CEOs of banks and lenders that have so clearly failed is beyond me.

xTYBALTx

Ryan Leaf, arguably the worst starting QB in the history of football. Paid several million dollars even though he sucked. Why? Because he signed a contract.

Gigli, one of the biggest busts in recent movie history. $54M production cost, hauled in just shy of $7M. Should Ben Affleck not have received payment?

How are these mortgage companies and their contractual obligations towards their CEOs any different?

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Gillespie

Ever edit Wikipedia articles and see how long your ridiculous additions last? Some of them last for days, while others seemingly are corrected within minutes.

Yeah... it can get boring while you're deployed.

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xTYBALTx

From Gigli I went to Wikipedias' Box Office Bombs page, where I found Zyzzyx Road, the lowest grossing US film of all time! Total take: "$30 from exactly six patrons" (!!!??) And with a production cost of over $1,000,000. Sheesh.

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AMosely

I'd argue that sports and other forms of entertainment (including gambling and lottery) are in an entirely different class of business, and therefore profit-taking, than banks and financial institutions. People depend on banks to be honest, they depend on their government to keep them honest, and in terms of the sub-prime mortgage market, the banks were not honest. To continue to reward their executives during this period is particularly disturbing, to me anyway.

TheFatKidDeath

Ha. Ha. I love the "left-wing anti-business press" comment. Wow, I didn't realize the news business divisions of CNN, FOX, NBC, CBS, New York Times, LA Times, Wall Street Weekly, Washington Post and thousands of other local news stations and papers were a bunch of socialists! I'll be on the look out for their anti-business bias.

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Kerostasis

@Tybalt: Lets try a slightly different example. Suppose Ryan Leaf signs a contract that entitles him to $1M for showing up, and an additional $1M bonus for every game his team wins. Then he goes out and loses every game that season. At the end of the season, the coach calls him over and says, "I know you lost every game, but I like you, so we're gonna give you a $5M bonus on top of your $1M salary anyway. Also, you'll put in a good word for me when I come up for a raise this year, right?"

Thats more like the situation with these CEOs. They are entitled to their salary, yes. But what's being complained about here isn't their salary, it's their performance-based bonuses, which are usually approved individually every year by the board.

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Steeler

Well, most of the board has been or plans on being a CEO at some point, so it's in their best interests to approve raises and massive contracts for each other. That's called "being competetive." Or a circle jerk.

I'm less bothered about contracts paid out to poor performing execs than I am with the distribution of resources within such an organization. How can you seriously justify paying an executive the equivalent sum of a company-wide dental plan? Or a new distribution center in Tuscon? Or a renovation of human resource facilities? Many companies (and execs in particular) are so thoroughly insulated against the market forces one associates with poor management that they can get away with that kind of crap until they ride a golden parachute to the next job.

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xTYBALTx

Sounds like the owner of the team is being had! Maybe he should fire his coach and quarterback. Or in the case of the Fortune 500, the shareholders should fire their boards and by extension CEOs. Not as easy to do as it used to be, though, is it? Maybe enough shareholders will declare they've had enough and publicly owned companies will go the way of the Do-Do Bird. Quite unlikely though.

I dunno. I'm not saying that these CEOs are "worth the money." Just that I don't really care - so long as no fraud is involved. Some people get good deals (like the Chargers' initial deals with Antonio Gates and Michael Turner), and some people get bad deals (like the Chargers' deal with Ryan Leaf). Some movies make bank for no unexpected reasons, like The Blair Witch Project, whilst others like Gigli go bust. As long as no fraud is involved, then executive compensation - be it high or low - is of little concern to me.

Why should I care? I'm not an owner of these companies.

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Kerostasis

I'll agree with you on one point: The only people who really have a right to complain are the shareholders. It's of no concern to the front line worker whether the CEO is making 10 times his salary vs 1000 times his salary, as long as the shareholders are satisfied they're getting what they paid for.

But are the shareholders actually getting what they pay for here? It seems the shareholders are getting a pretty raw deal when the board votes a $150 million bonus to the guy who just oversaw a huge drop in your stock value.

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xTYBALTx

But shouldn't the expectation of that sort of compensation have already been priced into the stock price?

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RandomGuy

Are you sure you didn't have some retirement savings that held mutual funds that in turn held positions in any these companies at the time in question?

xTYBALTx

That's a good point :]

I'm not entirely certain.

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Kerostasis

The fact that your stock price reflects the CEO's pay rate is poor consolation when your stock price is half of what it was last year. At that point you wonder if the stock price would be better if the company just kept all that bonus money, or perhaps sent it out as dividends, rather than paying this guy with it.

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xTYBALTx

I mean that the stock price would have incorporated an expectation of obscene CEO pay when you originally bought it. I don't know. I'm just throwing stuff out there :]

I certainly DO agree with you though! I'm definitely not trying to say that those CEOs necessarily "deserve" their pay packages.

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