CEO Bonus (Part II): Solutions
If you haven’t already please read part 1.
How does a CEO end up with a bonus in the ten to hundreds of millions of dollars range? Why does the Board of Directors approve such outrageous payouts? Well…
- Any of them might be the next CEO & they all drool over that possibility.
- Increased CEO salary opens the door to increased Board of Directors salary.
You can call this “you scratch my back” behavior, and the only people guaranteed to get the ‘scratch’ are the CEO and the Board of Directors. Left aside are the interests of the employees and stockholders, who ALWAYS end up holding the bag when the company tanks.
How many times have we seen a company be destroyed, with thousands losing their jobs, while the big wigs retire to one of several luxury homes?
How about THIS for an idea, if the company does well, the executive gets to keep his job, and gets a raise percentage equal to his employees. Of course his raise, in real dollars, will be bigger, because he starts with a higher salary. Is this a crazy idea?
What the heck. If he has been there more than 5 years, and the stock has gone steadily up, give him the aforementioned pay increase, and a new car! Even a $100,000 car wouldn’t dent the corporate bottom line like a $50 million bonus.
CEO’s say they deserve the bonus’s because the risk of losing their job is higher. The simple solution is this: If a company does not meet expectations for a year or two, and it was NOT due to mismanagement on that part of the CEO, he gets to keep his job, again with the same percentage raise, no matter how small, as the average employee.
Of course, if the company tanks due to mismanagement, the CEO is fired, with only a standard severance pay. No golden parachutes.
Viva la Stockholders !!
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