That Giant Sucking Sound From The Newspaper
The Pioneer Press offers up an utterly worthless piece of agenda journalism regarding CEO pay. At the risk of upsetting the Red Bird, I have pulled some quotes from You’re fired! Take these millions and go (all my emphasis):
If 3M ever fires George Buckley, one of Minnesota’s highest-paid CEOs, there is one detail Buckley won’t have to sweat: health insurance.
The Maplewood-based manufacturer will kindly pick up much of the tab for Buckley’s health care for two years as part of the $38 million goodbye he’ll get on the way out the door. (ed. - we learn later in the article that this “supersized pay” health care equals $28,430)
Buckley’s potential exit payout, with its health-insurance perk, is just one of hundreds of potential multimillion-dollar termination treasures detailed to the dollar for the first time in this spring’s revealing crop of corporate proxy statements.
Expect some “holy cow!” moments to rattle a few company boards. The numbers are expected to stoke activism to stop rewarding poor performance with supersized exit pay. (ed. - I think this writer is attempting to stoke it herself since she does not provide a single shred of evidence revealing “poor performance” amongst her CEO examples.)
Still, they are a keen reminder of just how CEO’s aren’t like the rest of us.
Hodgson said he thinks one year’s salary plus bonus “is quite sufficient” for severance to play its role as a “small insurance policy.” (ed. - how about letting the market determine what “is quite sufficient?”)
I realize newspapers are disintegrating right before our eyes so apparently editors are absent. How else do you explain this intern-level business writing making it to print?
This article “reveals” pay packages for 9 other local CEOs. The spin is simple - the writer’s focus is on their health benefits that are miniscule compared to the overall comp package. I suspect her goal is to anger the “common laborers” who are paying for ever-increasing healthcare insurance.
The writer does not make a single reference to overall stock performance during any of the CEO’s tenures. Completely pathetic, in my opinion. Overall corporate performance and shareholder value must be included to provide the proper context to this discussion.
Ours is a free-market economy that self-corrects over time if something is misaligned. I would argue that these CEO compensations are generally not misaligned. Price and wage controls stifle freedom, inject government control where it should not be and ultimately can lead to totalitarianism.
See Hugo Chavez.
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Posted By Derrick Moe | Compensation, Trends | |
Absent some illegal activity by the CEO, these monsterous pay packages are dealt with by falling stock prices if they’re not deserved and by rising stock prices if they are. Boards have a fiduciary duty to act in the best interest of the shareholders, not the CEO, so if the boards approve a monsterous pay package then they better be sure that the CEO has earned it. If the CEO has earned it, then Pioneer Press and other newspapers should look for some real news.
Have they written a story lately about the financial performance of their newspaper and tied that to the pay and health insurance benefits that the writers and other are receiving?
Steven - thanks for the comment. You make a good point about the board’s responsibility to the shareholders. I would prefer to see the majority of CEO comp tied to overall company performance (beyond just stock price).
It is worth noting that the newspaper’s failing financial performance is never referenced even though we are in the midst of a booming economy.