CEO Compensation

Everything from the housing market to the auto industry took a hard economically hit last year. One of the biggest issues was the compensation of CEOs and the amount of money they took home, in spite the major losses their companies took. More recently the vibe has changed some CEOs and their company’s are taking drastic steps to turn this problem around by reducing their salaries as much as ninety nine percent. I think it’s very noble of them to take such extremely big pays cuts, to help their companies. But how could they have been that greedy and thoughtless to abuse their company like that in the first place? I don’t blame them as much as I blame their companies for letting them do it. They spent millions of dollars on useless things such as, new décor for their offices, expensive spa trips, and bonuses while your company’s was losing billions.

CEO compensation is a combination of salary, bonuses and other rewards; such vested restricted stock grants; and stock gains. And, of course there are the extra perks such as expense accounts fro personal use, allowance for moving expense, automotive allowance, and club membership, and, of course, the use of the company jet.

In 2008 AIG and Goldman Sachs CEO’s paychecks surpassed 10’s of millions of dollars; and their companies had to ask the government for bail out money to keep them from going under. AIG, spent bail out money on bonuses and spay treatments, while its CEO Martin Sullivan took home over $13 million last year plus perks and other incentives. Lloyd Blankfein, CEO for Goldman Sachs, took home over $70 millions in 2008. An outrageous amount when the company you’re leading is in serious financial trouble. The way I see it, seems like to me you got paid for doing nothing but riding on the company’s jet and taking expensive vacations while your company’s was going under.

It’s one thing to get paid for doing your jobs, but to indulge in luxury vacations, and spa treatments on the company’s dime; and to use the companies Gulf Stream like its your own private jet, that wrong and unethical. Now there are those who would care to argue with me on the subject. What I don’t agree with is excessive sending when your company is in financial trouble, and to top off you spend bail out money that you need to save your company. The CEO’s are paid to do a job like the rest of us, not to take advantage of their company by splurging on expensive trips and memberships to exclusive clubs. If you want to be a member of the mile high clubs, pay for them yourself instead of having the company fir the bill.

Before I go I can’t help but talk about those wonderful stock options that the CEO’s get, the biggest moneymaker among a CEO’s compensation package. Most CEO’s allotted a certain amount of the companies’ stock and also given the option to purchase the same amount at market values. J&J Snack recently bought back 400,000 shares from its CEO; Gerald B. Shreiber 3.9 millions shares of the company stock. There should be a restriction to amount of stock the CEO can own of his company he or she works for, instead of buying as much as you want whenever you want.

The CEO is the one who makes major decision in a company along with other executives. He or she should be compensated for, but there is a fine line as to how much compensation is enough. If you are traveling for the company and doing official business then it’s cool to use the company jet. But when you take the jet and the company’s credit card to St. Bart’s for you birthday, then we’ve got major problems. No matter how you look at it, it’s wrong. I have no problem with the CEO getting paid and being compensated for. The problem I have is spending excess company money when your company is failing. What sense does it make to keep spending millions of dollars when the stock in the company has dropped below market value? Yes the CEO is supposed to get paid for the job he or she does and they even should get the perks that come along with the job. I don’t disagree with that. Like I said, it’s unethical to spend millions when you are already in a financial bind. You’re the chief executive officer; you should be setting good business standards to follow, not making the rules as you go.