AIG chief threatens to quit because of the obama administration

#3
#3
He'll start an avalanche. Then we'll har a bunch of midsize bank presidents trying to run companies. That will be sweet.
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#5
#5
As far as I'm concerned, the run up in pay for CEO's has been excessive since the 90's much the same as the pay for star athletes. I'm all for free enterprise but if it doesn't level off soon, pay for executives in the 21st century could be the equivalent of union pay in the 20th century relative to the impact on profitability of a company.
 
#6
#6
IBlvNTmWrk said:
As far as I'm concerned, the run up in pay for CEO's has been excessive since the 90's much the same as the pay for star athletes. I'm all for free enterprise but if it doesn't level off soon, pay for executives in the 21st century could be the equivalent of union pay in the 20th century relative to the impact on profitability of a company.
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Never. Exec pay relative to income is tiny, even for egregiosly paid guys. Additionally, it's always tied to performance. Union pay just was and is a huge portion of operating expense.
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#7
#7
at citi, a company a lot of people consider a company that overpaid it's executives, the overwelmning majority of executive pay was in stock and they were not allowed to sell most of it when they worked there. i know a lot of citi execs that have lost their life savings. the mistake made is giving stock that has already vested or stock options that are already well in the money. as for employees, they are by and large paid for their individual performance and thefore a combination of bonuses AND deffered comp is appropriate.
 
#8
#8
If market forces dictate that these top execs get paid what they are, then I'm fine with it. It's none of my business. But all this complaining about only getting paid $10 million instead of $20 million seems kind of shallow.

What does it really mean when CEO's are getting paid 500-1000 times what the regular employee is? Are we really to assume they have 500-1000 times the talent?
 
#9
#9
obama cut salaries by 90%. not many execs are getting paid $10 mil in salary. none i can think of at least.

and some execs are unquestionably worth 500-1000 times the average employee. jamie dimon is exhibit a. as was welsh at GE. and i doubt berkshire's shareholders would be upset if buffett received that kind of money.
 
#10
#10
BigPapaVol said:
Never. Exec pay relative to income is tiny, even for egregiosly paid guys. Additionally, it's always tied to performance. Union pay just was and is a huge portion of operating expense.
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Yes it is... and in many cases it is the key executives along with the board that determine what the targeted performance levels are. You should read up on Washington Mutual. The top executives made a killing in bonuses by generating high volumes of sub-prime mortgages, and then tried to change the performance targets to continue to receive large bonuses while recovering from the mess they helped create. I'm sure there are many other companies that have done the same.
 
#11
#11
IBlvNTmWrk said:
Yes it is... and in many cases it is the key executives along with the board that determine what the targeted performance levels are. You should read up on Washington Mutual. The top executives made a killing in bonuses by generating high volumes of sub-prime mortgages, and then tried to change the performance targets to continue to receive large bonuses while recovering from the mess they helped create. I'm sure there are many other companies that have done the same.
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I'm sure none of that is overstated regarding WAMU.

Those guys were, unfortunately, paid for volume. The CEO is not involved in the process of determining his pay unless the comp committee is weak.
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#12
#12
droski said:
obama cut salaries by 90%. not many execs are getting paid $10 mil in salary. none i can think of at least.

and some execs are unquestionably worth 500-1000 times the average employee. jamie dimon is exhibit a. as was welsh at GE. and i doubt berkshire's shareholders would be upset if buffett received that kind of money.
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I'm not talking about salaries, I'm talking about total compensation. Of the top 10 paid CEO's of 2008, not a single compensation package was less than $40 Million, in a single year.
 
#13
#13
BigPapaVol said:
I'm sure none of that is overstated regarding WAMU.

Those guys were, unfortunately, paid for volume. The CEO is not involved in the process of determining his pay unless the comp committee is weak.
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If this were brought up last year, would you have considered those WAMU guys involved with the subprime business the "talent" of that firm?

I only ask because I think a lot of this talk about "talent" is relative. I'm not denying these guys know what they are doing and are good at their jobs...but I think a large part of their success is dependent on how the market is performing and their "talent" is dependent on that.
 
#14
#14
rjd970 said:
If this were brought up last year, would you have considered those WAMU guys involved with the subprime business the "talent" of that firm?

I only ask because I think a lot of this talk about "talent" is relative. I'm not denying these guys know what they are doing and are good at their jobs...but I think a large part of their success is dependent on how the market is performing and their "talent" is dependent on that.
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No. I don't view a huge mortgage firm as loaded with talent. They're the private version of Fannie and Freddie. Citi and AIG are altogether different companies. Huge difference in investment banks and mortgage aggregators.
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#15
#15
rjd970 said:
If this were brought up last year, would you have considered those WAMU guys involved with the subprime business the "talent" of that firm?

I only ask because I think a lot of this talk about "talent" is relative. I'm not denying these guys know what they are doing and are good at their jobs...but I think a large part of their success is dependent on how the market is performing and their "talent" is dependent on that.
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100% true. there are always examples of guys who make way more money then they should because hte market is just going their way and they are taking too much risk. but i've found these guys don't last long term though (just like the wamu mortgage guys who all got fired). most investment professionals i know (and i'm one of them) want to be doing this for 40 years and don't want to risk losing their jobs. all of us have seen guys make big money for a year or even two or three and eventually get fired and have big problems getting hired elsewhere. the rational people would rather make less money and still be employed 10 years later. though part of the subprime mess unquestionably was the worst housing maket in 70 years and even the best and most conservative traders are going to get hammered in that environment.
 
#16
#16
rjd970 said:
I'm not talking about salaries, I'm talking about total compensation. Of the top 10 paid CEO's of 2008, not a single compensation package was less than $40 Million, in a single year.
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i'm sure if i thought about it i could come up with 10 execs who are worth $40 mil. and generally speaking you aren't getting that kind of money unless the company's stock is going nuts.
 
#17
#17
To help put things in perspective, over the past 40 years... and especially in the past decade... there has been an explosion in executive pay in this country. In 1964, the average CEO's salary was 24 times the average salary of workers within their companies. Today, it is estimated to be anywhere between 275 and 430 times the average.

And over the past decade, executive salaries have risen five times faster than the average worker's. If these executives are worth so much money, then why are so many companies failing, needing bail outs, or at minimum struggling with profitability?
 
#18
#18
how many companies have failed or are struggling with profitability out of the fortune 500 companies? not many
 
#21
#21
droski said:
how many companies have failed or are struggling with profitability out of the fortune 500 companies? not many
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There were more than 10% (well over 50 companies) that lost money of the F500 last year, and an even higher percentage of the F1000. If you want to consider those that are marginal (i.e. they were able to avoid a loss by significantly cutting their workforce... but not necessarily executive pay) then the number grows even larger.
 
#22
#22
rjd970 said:
Shareholders tend to care.
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RJD and I have actually found some common ground. Shareholders absolutely care, but unfortunately the individual shareholder today can have very little impact on executive pay.

Here's another interesting chart. Compare these salaries with the pay of our POTUS which stands around $500k/year. I would consider both the POTUS and most CEO jobs to be extremely challenging. So which pay scale is the most "out of whack"? Is the POTUS paid too little or are CEO's paid too much?

CEO-Salary-to-Net-Income-Table.jpg
 
#23
#23
obama is obviously paid too much.

as for conoco philips they have billions of positive cash flow per quarter.
 
#24
#24
droski said:
obama is obviously paid too much.

as for conoco philips they have billions of positive cash flow per quarter.
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Yeah... I guess that was kind of a rhetorical question. :p

For the record, I don't have anything against CEO's per se. It is, after all, the board that has to approve the CEO's pay just like it is the baseball team owner that approves the pay of his/her athletes.

However, my point is that it has gotten out of hand. If the minimum wage had risen as much as average CEO pay since 1990, it would now be near $25/hour... which would obviously cripple most companies. Why has executive pay in the U.S. increased so much in the past couple of decades? Based on what I've previously read, this is primarily occurring only in America. Top executives in the U.S. now make about twice the pay of their counterparts in France, Germany and the U.K., and about four times that of Japanese and Korean corporate execs.
 
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