In "Bear's World" bonuses and stock options

[bear]

There would not exist:
bonuses or stock options....incentives too often achieved at the expense of other employees. Certainly enough participate on some level so as to guarantee their continued use....BUT
Greed at the highest levels in corporate America has allowed the powerful to dictate their pay.....profits rise as Americans lose jobs through downsizing,... global competition...my ass...(slave labor is more like it). Power mongers can do what they want with layoffs, benefit reductions...salaries..increased demands for productivity (60+ hour workweeks) because if you don't like it someone else will do it cuz their job is overseas now..
I railed on this topic a few years ago and there were many who thought that Wal-Mart was the greatest thing cuz families could save so much by shopping there.. Well, it's my opinion that Wal-Mart has done MORE than ANY other American corp. to grow the economy of Communist China
while at the same time....Helping to close down American factories, create poverty in the working class and monopolize whatever they can through the use of slave labor (or the equivalent therof)
Power tends to corrupt at all levels!

bear

 

[dawgball]

Take away bonuses? So how exactly would you incentivise sales people, etc. Commissions don't work in every situation.

Power tends to corrupt at all levels!

So I think it would only be fair to include in your post the despictable nature of people who abuse power in Labor Unions. There are hundreds of good companies to every one bad company. But the way our mass media portrays it, there is no wonder why the general public blames so much on executives.

The scumbags at Enron, Worldcom, etc. should rot in a ****ing jail cell and have every possession taken away from them and their families because of what they did to the employees of those companies. But those companies are the EXCEPTION not the rule. I know it is hard to believe because when a scandal hits, we are so infiltrated with story after story, but it is simply not productive to lump all companies and executives into one pile. Just like it would be idiotic to think every Union is corrupt. The majority of Unions are very effective. The problem is, like Wal-Mart, we only hear about the biggest of the big. And the biggest of the big hasn't exactly been helping their organization, its members, or this country by contributing (along with corporate decision makers) to the demise of our automobile industry.

I know this post probably comes off as an attack because I am not a highly skilled writer. I am very passionate about American industry, and I just don't like seeing blanket statements that I feel are very inaccurate when considering all companies.

There are certain points in your post that may be true, but to state that bonuses and stock options should be eliminated has far more downside than up. Regulation of both of these is needed and, in my opinion, is being corrected as we speak with some positive results. But these things take time just as the abuse didn't start happening overnight.

 

[djv]

It does seem strange when companies get in trouble they hit the little guy First to be layed off. As for Wall Mart been down that road many times. Sure they provide jobs. But it is funny when places like Berger King and McDonald's pay more.
Commission sales is a great way to go. Or small salary with commission.You decide what your efforts produce. It is sad that Wall Mart has over 60% of it's items come from China. Throw in 20% from rest of Asia and you can find lots of old American jobs.

 

[dawgball]

Yeah. The whole Wal-Mart situation is a very tough one. The same people that are losing their jobs to them are probably their #1 consumer market.

I think it was CNBC that had a very interesting documentary series on Wal-Mart. One show in the series was about people who basically leverage their entire worth on trying to get a product into Wal-Mart.

djv--I agree. The two areas where jobs are cut most are on the floor and the fat of middle management. But that makes sense to me. There are, in most cases, many bodies on the floor to one body in corporate. I would like to see some numbers on a historical basis of job cuts showing the ratio of job cuts on each level compared to the number of employees at each level. Obviously, if you fire every CEO of the company, in 99% of cases that is only 1 job. Granted it is 1 job that substantially effects the bottom line more so than a "little guy". But every ship has to have a captain. And the simple fact is that not every captain is a good one.

 

[bear]

OK.........

1. Not all Corporations are bad corporations! I do not want to imply that. just hell bent on competing and winning and boosting profits always... (even at the expense of the working class)

2. I stand by my my call for eliminating the bonus and the stock option packages...They disguise true remuneration for a job and the disparity between lowest and highest paid in the company widens and is a mystery.. The use is common but much of todays bonuses have little to do with being in sales or on commissions. (I know that indirectly all bonuses relate to sales and profit)....I believe that the RICH take GOOD CARE of themselves while proportionately the working stiff does NOT share equally in company profits and has not for years.. and the GAP between rich and working poor widens....

3.Just my view that Large packages of stock options are a HUGE INCENTIVE to raise the bottom line and stock price to add value to option packages..One way is to eliminate the expensive American worker.........WHERE IN AMERICA ARE WE BUILDING FACTORIES for Americans to work in? China sure is!

4. The playing field......... IS NOT LEVEL....and the problem is complex....American autos..Worker insurance costs per car are higher than the cost of steel per car. BUT.........I hope and trust that we can make a good car cuz I'm buying AMERICAN from now on ..........everything I can.....

5. Unions came into existance to protect the worker because the powerful were calling all the shots and there were rampant abuses in the workplace ...sweatshops etc...(putting it simply) Unions helped the worker receive treatment that was fair, safe and better....of course there were abuses in unions as well... Where is their power today? In China? Indonesia? Mexico?

I do NOT condemn all American corporations or white collar workers.
Most who are fortunate to be in the position simply work their fannies off and receive just or very good compensation...When compensation practices hurt the American worker (and I believe they do) then change is necessary

bear

 

[JCDunkDogs]

the way our mass media portrays it, there is no wonder why the general public blames so much on executives.

Your writing is fine, Dawg. And that's a good question: Is it media hype that has over-dramatized the size of the problem, or is the greed of the American executive really that big and that widespread?

When you look at the actual numbers, it turns out that American executive compensation rates are WAY beyond those of any other nation, and are quite different from even those of the rest of the developed world.

According to The Economist, in Japan, a typical executive makes eleven times what a typical worker brings home; in Britain, 22 times. In America, 475 times.

But I don't have a problem with that if the shareholders don't. A good executive should be able to reap the fruits of his or her labors. That's what made America great, right?

But alot of shareholders are moaning about it. Each company is different, so generalizing is unfair, but the issue has come up on the government's "to do list" to try to find a solution. The SEC has been working to put some guidelines in place, but any real reform has met strong resistance in Congress.

To quote a line from a great 80's movie, "How many yachts can you water ski behind...? (Guess the movie for five points)

 

[Chadman]

Of course, our President wants to present these CEO's with their tax cuts to help them out further. I think we all agree that the people we are talking about are pretty much in the upper % that are benefitting from the cuts. And it's under the guise of how much they do for the country and how many people they put to work, who then buy products and the country actually makes more tax revenue.

I guess this is before those people get layed off or their company stock price goes down and they have to increase profits by taking away pensions and cutting benefits. Thus resulting in a nice bonus and less taxes for the CEO's to pay.

Nice system.

 

[bear]

Well said Chad!

And those CEOs do put people to work...just not in America
Good thing House prices went up..
We can continue to consume...by using equity as an ATM card.
negative savings rate...What the hell happens when housing goes down ...interest rates up, homes don't sell and people, overextended on interest only loans, get layed off????

bear

 

[Chadman]

What the hell happens when housing goes down ...interest rates up, homes don't sell and people, overextended on interest only loans, get layed off????

It will be Clinton's fault. Of course.

 

[MrChristo]

Of course, our President wants to present these CEO's with their tax cuts to help them out further.

Not too sure about in the US, but in Australia there is a direct link between the amount a CEO gets paid and their company's profits....
...The more the CEO gets paid, the lower the profit. Absolute fact.

(Just sayin! )

 

[smurphy]

According to The Economist, in Japan, a typical executive makes eleven times what a typical worker brings home; in Britain, 22 times. In America, 475 times.

This is an absolutely amazing statistic. Thank you for mentioning it. Yet, I am absolutely amazed at how many of the middle class hard working people of this country will fight tooth and nail in defense of our overpaid top echelant executives.

The old company I left a decade ago just made an 'executive' decision to lay off most of it's cartographers and have all of it's map updates and new maps done in India. I'm sure the top executives of this company will receive bonuses this year for trimming costs. But their maps are gonna suck ass. Jokes on the consumer though, becuase in many cases there really will be no other choice.

The company I'm talking about is Thomas Bros. Maps. Those on the West Coast - especially So Cal are I'm sure very familiar with their maps. They were bought out by Rand McNally a few years ago, and have been in a quality downward spiral ever since. If any of you have been noticing or will notice a decline in craftsmanship, this is why.

 

[dawgball]

I will try to address each point here that I see worthy of posting. Bush bashing will not be one of them .> Simple political rhetoric....again.

According to The Economist, in Japan, a typical executive makes eleven times what a typical worker brings home; in Britain, 22 times. In America, 475 times.

This is the average across every American corporation? I would take that as the defniition of "typical". Or is is the average across the companies they targeted. I would need to see mroe evidence on this before jumping on the bashing bandwagon. I just don't see this as possible when you take into effect, every little mom and pop business, small and medium businesses, and on up to Fortune 500 (some form of corporation unless it is an LLP).

Pick up any issue of Inc. magazine, Business 2.0, Entrepreneuer. You will begin to see that there are people in this country attempting to revitalize our wrok forces here. Our economy is from a past generation, and we have to change things. We are in the beginning of those changes. Much of our system is out-dated. Old boy's club exectuvie committees, the outdated Union system that we use (greatly served this country, but it too needs an overhaul), even the mindset of the American worker itself.

Delphi is a company that I had extensive experience with as a Tier 1 supplier to them. I spent the majority of my time in their plants on the line with their laborers. I predicted 6 years ago when I left that job that there is no way they can continue to pander to their Union like that and survive. Now, ultimately, this is a management flaw (both of the company and of the union). If you can't work towards a common goal, then there is NO chance of survival. The rest of my time with this job was spent in Totyota and Isuzu plants. It was as different from the Delphi and one Ford plant that I had as you can get. My estimate was that there were 4-5 workers at the Delphi plant performing the same work as 1 worker at the Toyota plant. And the craziest thing is all the Delphi employee did was bitch about how hard they worked. I'm not sure if it was in between naps or poker games behind the parts bins, but I very rarely saw people working hard there.

Good thing House prices went up..

This is only controlled by supply and demand.

We can continue to consume...by using equity as an ATM card.
negative savings rate...What the hell happens when housing goes down ...interest rates up, homes don't sell and people, overextended on interest only loans, get layed off????

This will bring up actually my favorite theory. What I believe is the main difference in the people in America today and the people here 50-75 years ago is our attitude. We are privelaged (sp?) people. That has now turned into very spoiled people. How many people complain about how much money they make, negative savings, it's the government's fault, and are in debt that they will probably never get out of -- and have new cars, CABLE TV in 3-4 rooms of their house, brand name clothes for their kids, etc.?

Our attitude that we deserve everything everyone else has is ridiculous. Did my grandparents (grandfather was a brick mason, grandmother obviously didn't work, and they had 10 kids) think that just because the richest man in town had a new car that they needed one, too? HELL NO! They lived within their means (meaning they didn't get everything they wanted) and kept their personal economy in check.

Why can't we live like that today? Everyone in the lower income range, and the lower and middle class think that they should have everything and they want everything RIGHT NOW. This is the single biggest reason for many of our economic problems. The lower class wants to live like the middle class. The middle class wants to live like the upper middle class. And the upper middle class wants to live like.....The Bush family??? (making sure this stays somewhat light!)

Now what has caused this escalating problem is (I regret to say) a corporation that has made a LOT of money of it. I believe it was Bank of America (different name back then) who invented the Visa card. One of the reasons why our grandparents kept themselves in check is that they did not the option of buying many things on credit. Now with this temptation out there, it is a very hard one to deny oneself and their family. But it MUST be done if we are going to straighten our economy out. No amount of government policies is going to save YOUR checkbook.

But alot of shareholders are moaning about it.

Shareholders hold the most powerful tool if they want to make change in a company. They can take their money and invest it in another company that they believe will do a better job.

I'm sure there will be some interesting responses here, but I am tired of typing. I will no doubt be chastised with some of the easier points to be disputed (incorrectly, of course ) but I can't get all of my thoughts in one post.

 

[bear]

dawgball,

Good points........topic is enormous and needs to be discussed ..1 point at a time. Regarding the escalation of house prices, negative savings, the use of home equity as an ATM card, and adjustable debt where only interest is paid,..............my point is, in 1 sense, that the health of our economy is an illusion fed by continued consumption,(enabled by debt and a housing bubble) in an environment of negative savings. Our economy has been undermined by job loss in the production of goods (using ultra-cheap labor overseas). REAL economic growth is exploding along with good jobs, personal wealth and savings ...... and newly built factories, in CHINA, India, Mexico...etc. They produce now what we (the ultimate consumer) consumes....(it used to be vice-versa)
What are we going to be left with..???after the SOB's finish selling this country out to the lowest bidders overseas..
As far as economic data is concerned..I do not believe any...I believe what I see and pay. Good grief...hasn't it been great with virtually no price inflation for so many years..lol
Of course supply and demand relate to housing...it related to cabbage patch dolls as well...for a time..

bear

 

[dawgball]

Completely agree about the fact that we are consuming what is being made overseas. There is one fact that we will never be able to avoid again: products can be made and delivered cheaper overseas than they are here. We, as a consumer, still have a choice to buy foreign or domestic goods. But the truth of the matter is that if we choose to consume domestic goods, then we must consume less of it (unless we continue down the path of negative savings). And we, as Americans, are not very good at all at keeping our consumption in check. This is probably the worst quality of Americans, in general.

Corporations, due to their nature, make decisions based on what the consumer is willing to purchase and for what price. If Americans decide to support domestic goods, then I guarantee that corporations will make the decision (due to necessity) to produce goods domestically. Their costs will ultimately go up due to higher wages and benefit packages, so the cost to consume goes up. If we are willing to accept this increase, then we are truly ready to help bring jobs back to the states.

So who's ready?

 

[dawgball]

And the above post is predicated on products ACTUALLY made here. Not a label (probably made in China) that proclaims Made in the USA.

 

[djv]

The quick way some CEO's take or new CEO's is what I don't understand. Come into a company get stock price up say the board. First thing done is shoot a bunch of folks. Some times in the thousands. So many other thing in cost reduction could be tried first. But they take longer to show on bottom line. So lay-em off and stock goes up. However some times if they waited to long to fix other internal problems, and cut other cost. That quick fix takes longer to help. Thats when you say good by to the CEO.

 

[bear]

djv,

Fast Fix...cut costs ..layoffs..overseas production
Stock up, earnings support
Stock options become very valuable......YAY for the big holders of those options.

bear