24 November 2008

We've Lost Our Minds

"Breaking News" from Yahoo this morning:

And according to a New York Times news alert, Citigroup will effectively halt dividend payments for the next three years and will also agree to certain executive compensation restrictions, which will be reviewed by regulators. It will also put in place the F.D.I.C.’s loan modification plan, which is similar to one it recently announced.

USAToday reports that last fall Charles Prince left Citi with a $10 million bonus, $28 million in stock and options and $1.5 million in other perks, according to the report.

An April 4, 2008 Times article by Claudia Deutsch (April 4, 2008) states:

"Shareholders and their advocates have increasingly viewed the escalation in executive compensation with concern and sometimes anger. In 2007 and 2008, numerous proxy resolutions were introduced to address the subject. Congress held several hearings on excessive pay and heard calls for action."

"The burgeoning ire has two roots. For one thing, toward the end of 2006 the Securities and Exchange Commission set tighter rules for corporate proxies requiring more information about the methods used to compile pay packages for top management. But by early 2008, as many proxies came in with a maximum of verbiage masking a minimum of information, some shareholders rebelled.

"The sinking economy also stoked shareholder discontent -- especially when executive pay rose even as share prices plummeted. It was hard to find a link between pay and performance; indeed, often the opposite was true. A study by Equilar, a compensation research firm, showed that even as the number and value of performance-based bonuses dropped in 2007, the value and prevalence of discretionary bonuses — ones not tied to performance at all — were up.

"And earned or not, paychecks remain high. The average overall compensation in 2007 for chief executives at 200 large companies that had filed proxies by the following March 28 approached $12 million."

It's no wonder our nation's corporations are bankrupt. I've lamented often on how former Northwest Airlines CEO Doug Steenland took millions in bonuses and stock by robbing the rank and file and the customers. When are we going to put these incompetents that continue to run their companies into bankruptcy at our expense on the firing line?

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