Compensation committees are to blame. They are usually made up of a few board members who oversee incentive plans, top salaries, and bonuses.
The CEOs get to pick who's on their boards, and who is on the compensation committees. Isn't that awesome, it's almost like stealing candy from a baby. Obviously whoever they pick is going to be someone that doesn't hate them.
Shareholders are also responsible. They approve the pay plans and also re-elect the directors.
One great thing about the stimulus package is that companies receiving bailout money are limited to how much compensation can be paid. Part of the plan also gives unlimited restricted stock options but until the government gets paid back those options will not vest.
One thing I thought that was neat this last week was, that I read Jeffrey Inmelt the chief executive of GE is turning down his bonus for 2008. What he gave up was an 11.7 million dollar long term performance award. He still got a 3.3 million dollar salary along with $2 million in equity awards though. It's not like he is going to be poor but at least it shows that some of these executives are realizing that some of these bonuses are unnecessary in times when companies are not delivering solid returns.
If I don't do my job at work, I don't get paid. At least these executives still get paid. So I don't feel bad for those executives at all if they were to lose their bonuses in hard times when their companies are not making solid returns.
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here here! just like the executive that was at the president's address of congress who took the bonus but gave it away to past and present employees... just shows that there are still some good people in the world.
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