There is a growing controversy about the hefty salaries and bonus companies are awarding the CEO’s and other C Level Executives. The controversy may have reached critical mass when the politicians climbed in on the act, decrying the bonuses to be awarded to the chief executives at Freed Mac and Fannie Mae. It’s the rare time when Republicans and Democrats seem to agree.
I have always found it odd that cheif executives are rewarded for their failures. I realize they are contracted to receive these weighty bonuses, but shouldn’t these bonuses be performance based. With Fannie Mae and Freedie Mac it is difficult to see how these guys should be rewarded for running these businesses into the ground. In this case the taxpayers are going to pay, and pay plenty, so why must they pay extra to deliver a few million bucks as the screw ups take their leave?
More than a few influential folk have categorized the bonuses and salaries of key executives as “obscene.” It is not surprising they would do so, especially when you hear stories about major layoffs of laborers and lower worker peoples while the CEO’s get their unfair share of the loot. I realize that if a CEO greatly improves the lot of the company he or she should be awarded. But when they drive it into the ground, rewarding them for their failures does seem somewhat illogical, if not insane.
The failure of Freddie and Fannie brings out the controversy between free market values and the need for government assistance. You can argue the case either way and make some decent points, although I always find it odd that the free market people are the first to ask for government aid when it is their business that is in trouble. In this case, after years of greed, corruption, fraud and mismanagement, the real estate industry is just begging for a hand out.
So then we deal with the larger concern, that of accountability. Who is accountable for their actions, anymore? And where do ethics cease to be ethics, if no one pays any attention to their general principles? In this case companies are melting down one after the other, financial institutions, real estate concerns, investment concerns, but no one seems to be around to take the heat. And for the heads of Fannie Mae and Freddie Mac, if tradition allows, we will kiss them on the way out the door.
The golden parachute is perhaps a concept whose time has come and gone. Especially in this economy. Perhap it’s time to reconsider the heft rewards of the C level offers. That appears to be what the public desires. Small wonder.
