Golden Parachutes
| September 16th, 2008 by Robert | Word Count: 633 | Reading Time 2:32 | 1,954 views |
Lately, we’ve been hearing news about executives of failing businesses receiving millions of dollars upon exiting their position. Sometimes, the exits are removals, firings, or basic business collapses leaving the company in ruins. Is it fair that an executive in charge of a company receives millions while the employees and shareholders are left with nothing? Should the government step in and “correct” these issues? The first answer of course is absolutely no, it’s not fair. The answer to the second question gives us something to discuss.
Our economy and market system is primarily based upon free markets and our capitalistic ideology. Government tries to alleviate market manipulation by instituting laws and rules against insider trading, monopolies controlling markets, and providing bailout protection for certain key markets within our economy. Yes, there are government fingers in a lot of places where they shouldn’t be, but overall, the free market idea is still alive and well. Taxes on the other hand, play a major role in the “free” market. Taxation is a form of governmental rule without actually passing laws and rules about how to do business. But, that’s a topic for a different day.
Should we ask our government to pass laws on corporate payment behaviors? For many of us, the quick answer is yes, of course we should. Why should the executives receive money when the company fails and everyone else is losing money? Why should someone who helped drive the business into the ground with faulty decision making and bad policy profit from a disaster? These are all ethical, moral, and fair questions. However, where does the fault reside in these cases?
The fault is not in the government’s lap, it is in the lap of the shareholders and board of directors of these companies. Each company willingly pursued and entered into a contract with their executives. Each board of directors had to be approved by shareholders of the individual companies to speak and enter into business. Yes, they have made very poor decisions, but should the government be asked to provide laws on how the boards and companies do business and provide compensation?
Our government is not here to make laws for business. It is here to protect business by creating and protecting a free market place. If we begin asking our government to fix the upside down payments these executives are receiving, where does it stop? Do we allow government to dive deeper into the market more than they already are? The more government we have in our free market, the less free it becomes.
While I do personally agree that executives should have to pay the price of failure just as the employees are, asking for more rules and regulations is not the way to go. The people responsible are the people on the boards of each company. They are the ones responsible and at fault. Shareholders must take their experience and elect board members who will work more for the company rather than for their own checkbooks via backdoor golden parachutes and stock options.
We all want things to be fair and right and our easiest avenue to this “correctness” is to ask government to step in and clean it up. But, be careful about what you are asking for. More government is almost always wrong. Shareholders must be more adamant in their election process involving board members and also be more conservative on the contracts offered to high level executives.
Remember, these are private businesses signing private contracts. If we choose to ask our government to become involved with legal, private business deals, then we are opening a Pandora’s Box that will never be allowed to close. The fingers of government are long and greedy and they continually spread, invading everything we take for granted.
on September 16th, 2008 at 12:14 pm:
I agree that we shouldn’t be asking the government to bail out these companies. However, BIG STUFF IS BROKEN HERE! It’s not okay to see all the workers walk out with zero and these CEO’s getting severance packages worth 68 million.. or another that I heard this week of 120 million. Of course this was AFTER they had already bought multi-million dollar properties months before the company was going under.
It makes me SICK to hear of this! How can you fix it with the board members hiring someone with actual morals when most likely the board members are in cohoots with the ceo’s? Would it have hurt the CEO that had walked out with a $120 million package to take half and divey the rest up with the employees that actually WORKED? Of course I don’t know how the poor guy would have been able to afford jet fuel for his private planes, but still…
This kind of crap is exactly what is wrong with America and why other countries see us as selfish and spoiled.
The greed of many Americans has gotten so far out of hand, it’s appalling! They need to look far inside themselves to see if they still have any morals left. I, for one, am doubtful.
on September 16th, 2008 at 12:26 pm:
You’ve hit it, greed and moral ineptitude. These people are in their positions because it makes them the most money or gives them the most power. Their “friends” are in league with them so they are riding the coat tails of those above them in hopes they will rise to the throne or at least sip the cup of wealth while their friends are in power.
It is broken and the world has a right to view us as selfish and spoiled because the sad fact is, many of us are. We are not the same nation we were in 1941 or 2001 for that matter. Our country has fallen into the trap of worldly possession and monetary power.
Our country is on the verge of entering an economic crises, not just a “small recession.” Eventually, things will be corrected, but there will be many tragedies before it gets better. This is not a small wound to heal, but a major infection. The infection is nationwide, in business, in government, and in society itself.
Until we choose to live life as better people and doing what’s right for the country and society, living as individuals will continue to destroy what millions of people built before us.
on September 16th, 2008 at 12:36 pm:
This kind of power and money… it changes people. I think once they’ve had it, they’ll accept nothing less, no matter what the costs to others.
There needs to be some agreed upon guidelines that all companies would take on as a standard business practice to keep this type of greed from happening. But, it’ll never happen because they have a bit too much of that one ingredient.. what’s it called… Oh yeah.. Human Nature. The more we get, the more we want.. never satisfied!
on September 16th, 2008 at 12:42 pm:
Yes, our society has become a testament to the fact that money and power changes people. It pollutes the mind and heart of those in search of it and it corrupts those with too much of it. Rare is the individual who can withstand the tests of money and power.
I’m all for a set of guidelines, but you are right, it will never happen because that would be like asking the millionaire to give away his money with nothing in return. But, what “should” happen is a general consensus among major business executives about what types of contracts are acceptable should be forged.
It will only help them out in the end as the agreed upon business practices would help alleviate some of the business failures and keep everyone’s head above water rather than just a few with golden contracts.