Sunday, November 23, 2008

CEOs Are Robbing the Economy

Goldman Sachs (GS) has received praise in recent days after announcing that 7 top executives will forgo their 2008 bonuses, which are routinely 7+ figures. When I called and spoke with some AIG executives about their 2008 bonuses, they said, “we worked extremely hard to destroy the value of our company, destroying and delaying retirement for millions of our investors, and being a leader in the destruction of our economy. In doing so, we feel that we should be compensated appropriately.”

OK, so I didn’t actually speak with AIG. But, many other companies are following suit and lowering their bonuses this year. Bank of America (BOA) says bonus payouts this year will be around 50% of last year’s. GS really is getting some serious praise. Their CEO, Mr. Blankfein, should be able to survive this year on at least premium ramen noodles after receiving a near $70 million bonus last year.

I guess I just don’t get it. Talk about protection, what other job can you lose billions of dollars for consecutive years and still earn millions of dollars year after year in bonuses and salary?
Appropriate compensation in my book would be a county jail as opposed to straight-up prison. I was reading about 1 hedge fund that promises to make up for any cumulative losses before the company takes its management fee. This was a few months ago, so they may not be in business anymore.

I guess my main question is, why can’t we hold our top executives more accountable for the choices they make with our invested money? Why does the thug who holds up a Dunkin’ Donuts for the $84 in the cash register get 10 years jail, and BOA senior execs who lose billions of dollars get 50% less of a bonus, say, only around $5 million?

Aaron Konen


Anonymous said...

The reason, Aaron, that CEO's get their bonuses and the reason that you don't understand is simple--they are powerful and you are not. You don't understand because you waste time writing a pointless blog that is desperate to get more than 2 comments, while they and the Congress they lobby are very powerful. Some have power, others do not. As long as you waste time blogging, I'm certain you won't be receiving a yearly bonus either. Waste on!

Anonymous said...

We've had 40 years of deregulation which has lead to a widening in income inequality.

Here's something to think about. It's much easier to never give the top executives the salary than to later try to take it away from them.