Leon wrote:
"Tim Daneliuk" wrote in message
...
Leon wrote:
You can look at that way but the fact that most CEO's have a golden
parachute there is no incentive to make a company perform better.
I am not "looking at it" in any particular way. Businesses exist
solely to make money for their owners. When they fail to make money,
we who own a piece of them (as most of us with retirement funds and/or
multual funds and/or ETF postions ... i.e., Most of the working
class), should be asking *why* they are not profitable, not flogging
the anti-Capitalist Marxism so popular with the new administration,
not to mention many of th the voices here on the Wreck.
Not profitable because of **** poor management and decision making.
Almost *all* of which surrounds the question of labor costs.
The rest is just rounding error.
The reason the Big 3 are in trouble financially has *nothing* to do
with executive compensation.
Yeah, it kinda does. Had they had to balls to run a business like a
business should be run there would be fewer problems.
You've obviously never actually run a company of any size. You cannot
"run a business like a business" when every do-gooder, union wart,
anti-Capitalist, earth hugger, and various other societal bottom feeders
are demanding you do things their way even if it is irrational or, possibly
even (in the case of the UAW), insane. The Big Three are not free to run
their business to the satisfaction of their shareholders. They have
a culture full of science dropouts and closet Marxists in their face
on a regular basis telling them what to do.
It also has very little to do with the
quality of their cars or whether people like their products.
And that is BS also. Having made my living selling GM products and retired
at 40 I can assure you that the quality of the competition blows away the
Big 3 quality.
And I can tell your from immediate and recent experience that you're
dead wrong - at least for trucks. We have owned many Japanese products
in my household as well as a number of GM, I am in pretty good
position to have seen the span of quality. What you say was true 20
years ago, it's not any more. My 2008 Chev Tahoe is easily the better
of my previously owned Nissan Pathfinder. This Tahoe replaces a 1995
model that gave me 138000 miles of happy trails with only two major
mechanical malfunctions.
Cars are another matter. No one in Detroit seems to know how to
build a car worth a crap until you get into the luxury segment, and
even there, they're not incredible. Honda consistently builds
outstanding cars and if I wanted a car, that's what I'd buy.
Toyota is overrated and is starting to look like GM 20 years ago
with their maintenance problems and poor customer service. Nissan
has been fine, if a little disconnected in their customer support.
(The new 2008 Tahoe would have been a 2008 Pathfinder if the dealer
had ever called me back as he promised.)
But again, I don't think this is the major problem with the Big Three
money issues. They just can't afford to be competitive, invest in
new technology, reengineer their cars regularly, and so on when
they're paying layed off workers full salary and benefits for
life (not an exaggeration).
In actual
fact, Detroit has never built better, more reliable cars that today
are easily on par with the best of Japan or Europe.
Partially true, they have never built better, a few of their vehicles are on
par but as a whole, still way behind.
As I said, they build the best trucks in the world, and most of their cars
are uninspiring. How they can manage to get the fit and finish right on
a light truck, but not a Malibu is just beyond me.
(Despite what the
half wits in the media and those who believe them on their face say to
the contrary.) No, Detroit is in trouble because their labor costs are
out of control, and the structure of their bargaining unit labor deals
is flatly insane. If you want to blame the executives for something,
blame them for not standing down the sleazy, greedy union leadership
and membership and forcing them to live in the real world.
Well that "is" what I am blaming the executives for, **** poor management
and no balls.
Easy to say (and I agree), but hard to do. When you have closet
Marxists running the unions, the universities, the media, and now,
finally, the new Presidency, its hard to stand up and say "Everyone
has to earn their own keep." In truth, the Auto "Bailout" is a UAW
bailout promoted by the congressional pigs on the left (but I repeat
myself) and with the assent of many parts of the right as well. This
is happening because a depressing proportion of the population believes
in some version of the execrable "Labor Theory Of Value." This same
population is either to dumb or dishonest to acknowledge that the LTV
is an essentially Marxist construct.
Your or my lack of wealth is not caused by someone else having wealth.
This is a lie to its foundations, but it is subtly peddled as fact
by misbegotten threads like this. I do not begrudge anyone any amount
of wealth so long as they did not steal or defraud to get it. The
reason the corporate CEOs get these big exit packages isn't that
hard to figure out:
1) There are few people in the world with the experience and brains
to run a $100+ Billion company. Constrained supply creates high
salaries and packages.
Correct and beggs the question why we are paying these inept CEO's these
large salaries and give them golden parachures. They absolutely do not
qualify to run these companies or draw that kind of salary.
Because the alternatives are worse, and finding quality people even willing
to do it is hard. I was once an executive in a very small private firm
with visions of becoming a public company. I would *never* serve as
an exec in a public firm in today's whining political climate. I don't
need to work 70 hr weeks, and then have some smelly hippie retread tell
me I make too much money. No thanks. And I am not alone in this. I
know a good number of capable, honest, and hard working people who
have lost all taste for being in leadership roles in any public company.
2) It used to be that execs made most of their money on stock options.
Then the 1990s came along and people saw these options vault into
the stratosphere in value - mostly in the IT sector. The usual
class warrior crybabies started whining about "execessive CEO pay"
and many companies stopped handing out options and paid higher
salaries instead. This is tragic, as stock options and grants
are the best way I know to incent a leader to make the company grow.
And back then we had decent execs, pay plans these days attract the rif
raff.
You're kidding yourself. There were plenty of bad execs back in the
day (I know, I worked for some of them). But there were good ones then
as well. The difference, as I said above, is that good people are
getting leary about working for public companies because the general
culture, the government, and the regulatory environment make doing so
not worth it. (You will see the same thing happen as people exit the
medical profession when Our Lord and Savior Comrade Obama turns in
into a socialist gulag.)
3) It is the Board Of Directors that sets executive compensation. The
BOD answers to the stockholders. Guess what? Most of the stockholders
are actually fine with the current executive comp. If they were not,
they'd stage a stockholder revolt and throw out the incumbent board
and executives.
Apparently this is not true, there has been no revolt. Having a sizeable of
money in the market for the last 15 years, my little proportion has little
influnce on their decision making.
Have you ever once complained to the BOD? To your mutual fund? To anyone
associated with the companies you think are overpaying their execs
and/or badly run?
The stockholders, BTW, are mostly folks like us -
individuals who own a piece of these big companies via some kind
of fund or aggregate investment vehicle. If everyone is so upset
about executive comp, why do they not rise up and do something
about it?
Because we each probably own less than .00001% of the total shares and that
does not have much pull with the decision makers.
But together, we own an overwhelming amount of the stock. Our "together"
is expressed in collective investment vehicles which we CAN influence.
It is ironic that the execs actually should be paid MORE if we want
them to be better at what they do. Instead of paying them huge salaries,
they should own more of the companies they run. If their primary source
of income was determined based on their company's long term performance,
they'd do a much better job. But, as I said, the class warrior whiners
made sure that stock options with long vesting cycles got more-or-less
eliminated.
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Tim Daneliuk
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