HR Undercover

So it goes like this. A new CEO is hired. He quickly appoints a number of long time “business associates” to the Board of Directors – with no industry experience – which insulates himself from any true accountability or concern of being voted off the island. The good ol boy network at work like a well oiled machine. The company is publicly traded and the message boards were buzzing for months even years but nothing happened. And that is the story. A weak CEO continually paid significantly more money than he was worth — new options replacing underwater options all the while business is dwindling down to just about nothing. And his friends on the Board receiving a chunk of change.

Bosse – regarding your last post, you’re a dreamer!

Arf, Arf….this doggie believes we need to focus on other ways of recognizing our executives than just money and perks. After the first few million dollars, I believe that executives can be motivated by more compelling, values-based rewards. What if a CEOs performance – in addition to more modest monetary compensation – was recognized with greater contributions to his or her favorite not-for-profit cause, or by re-investing money into green technologies, healthcare and solving many of the other big challenges we are facing inside the US and other places in the world. I want to believe that people are ultimately good and that at some point in time executives would choose to be rewarded in ways different than just money. Is it possible that we will see more executives voluntarily taking cuts and realizing that they can live happy and fulfilling lives without the exorbitant compensation schemes that our system and culture have propelled. If not, I am afraid the only way to make meaningful change would be to look more regulation and progressive taxation squarely in the face……

Grrrrr…..I think executive pay has increasingly been getting out of whack, and some CEOs are coming around to the same conclusion. I just read an article —yes, for a dog I am pretty clever –about the CEO of Spokane-based education travel company Ambassador Group Inc. In 2008 the CEO took a voluntary pay cut of about 65 % in the face of an announcement to lay off 20% of its work force. And he is not alone. You will find that executives in many other parts of the world are as competent/or incompetent as our US executives, but maintain their motivation with more modest compensation schemes. This whole conversation ultimately boils down to personal values and a sense of collective responsibility for the woes and challenges of human kind. Correct me if I am wrong, but didn’t corporate American thrive several decades ago when compensation levels of CEOs and other senior executives were significantly lower (adjusted for inflation of course)? Ultimately I think what executives really care about goes beyond compensation: it’s things like working for a company with a cause they can relate to, with a leadership team they respect, with a CEO that cares….I hope this is the case and that we can start a journey as a country towards re-calibration, values re-alignment and culture change…..Absent a meaningful mission, money is a poor substitute. And, because it is a poor substitute, it just takes more and more of it….this conversation is making me really hungry…

Arf, Arf.. this debate has to do with a sense of equity and responsibility to not only yourself but all our fellow human beings, and I mean this in a global sense…. It just does not make sense to me that some people through the luck of the draw and no doubt hard work – but you will find some folks making minimum wage that work extremely hard as well – should be making the kind of money we see some executives make today. I think the same holds true for sports stars, film stars and others….oh, oh….wonder if this doggie I will get hate email now…. With all the huge problems we have as a society and in the world, we need to put our own desires for materialistic rewards and consumerism – some would call it greed – aside for the collective good of all. Hrmph……I am very hungry right now…thinking some chow would be good. While fifty bucks may mean nothing to a CEO making millions of dollars, it could mean several grocery bags of food and a huge difference for someone making minimum wage. And hey, a hungry dog like me could get 300 hot dogs for that amount of money…or kibbles for several months……mmmm!!!

Seems to me like the subject of excessive CEO pay may be blown out of proportion. Take for instance, all those CEO’s of privately held companies. It is THEIR company. Often the CEO is also the founder of the company. They are the ones with the idea, who took the risk so why shouldn’t they earn whatever they deem is appropriate? And yes, they can be worth it!

On the other hand there are CEO’s in publicly traded companies. That is a different animal. Certainly more complex with SEC and other compliance standards in place for publicly traded companies. Often larger organizations by most any measure. Who can blame a CEO for negotiating the best compensation package that they can for themselves? Everyone does that. Perhaps they are just better at it than others in the organization. Often it is the variable pay component that puts the CEO comp “over the top” with hundreds of times the average worker’s wage in the organization. But if they achieved great results for the company in order to be paid a significant bonus – then that’s what it is all about, isn’t it? Instead of blaming the CEO seems to me like the Compensation Committee and the Board of Directors should be in the negative spot light. It is the Board who generally sets and approves CEO and top executive compensation. Maybe they need to improve the design of the variable pay plans. Maybe they get paid in a similar fashion and don’t want to improve the design. Regardless, executive pay is public information, and if someone does not like it, they do not have to invest in the company or work in the company. Or in today’s job market, maybe they do….

Tax loopholes and how these highly paid executives are able to protect their earnings — well that is another story!

What is the case in your organization today? Are you or your executives over paid?

In the next couple of weeks HR Undercover’s focus will be on executive compensation and the challenges of the economic downturn faced by companies and employees throughout the world. At one end of the spectrum we hear about corruption and executives that are paid astronomical amounts for running their companies into the ground. At the other end, we hear heart-warming stories about executives that are stepping up to the plate, sharing in the pain and coming up with creative ideas for their companies and employees to survive. Bosse and Casey will be yapping about these very serious issues we are facing as individuals, as companies and nations. WE REALLY WANT TO HEAR FROM ALL OF YOU, NO MATTER WHERE YOU ARE LOCATED OR WHAT KIND OF JOB YOU DO. You can post your thoughts anonymously or not. Your choice. We are ready to “YAP.” Are you?

After waiting several weeks for a new vice principal at our school, we were introduced to him one morning before classes began.  Unfortunately, most teachers were not impressed.  Later on, we knew we were right when he made the daily announcements over the  public address system.  He got right to the point by telling us that he knew that the PA System didn’t work in a lot of class rooms. So, he would fix that immediately, but he had to know which class rooms were not receiving his message.  In order to find out which class rooms were not hearing him, he requested that those teachers who could not hear him please call immediately and identify their room.