CEO Says “No” To Bonus (No Joke)
May 18th, 2008
Here it is Saturday night and I read something this morning that I found so profound it could not wait until Monday. As you may know, before founding www.MadeinUSAForever.com, I came from, and actually did pretty well in the corporate world. I know it both from being there at a decision level as well as from investing over the years. It is particularly as an investor that the skyrocketing level of CEO compensation at some of our companies has been irritating.
A CEO of a major corporation decided that he had not done a sufficient job and not to take his annual bonus worth just under $1.5 million. Well, there is the first clue, only $1.5 million in bonus when CEO’s who screw up at Countrywide, Wachovia, and GE continue to earn tens of millions while destroying billions in shareholder value? It’s complex, but what’s driving the explosive growth in American CEO compensation is the combination of weak boards of directors, apathetic shareholders, “compensation consultants” in bed with some executives, and some CEO’s influence over company Human Resources departments. Some CEO’s manage to get to ridiculous levels, allowing many other CEO’s to “show” their board that they need more, and so on. On the whole, American CEO’s are vastly more compensated than their counterparts in Europe or Asia (More on this issue will be discussed over time).
The CEO who walked away from this bonus was Willie Walsh of British Airways. They had a major screw-up with their new London airplane terminal. Supposed designed around automated luggage handling, it actually ended up causing them to cancel hundreds of flights and lose track of untold thousands of bags. Yet, they managed to remain profitable and even paid a significant bonus to staff employees. Mr. Walsh said, “I felt in the context of a disappointing opening of Terminal 5 it would be inappropriate to take a bonus”.
Wouldn’t it be amazing to hear that sort of comment out of our own CEO’s? Walsh could have easily pawned off the issue on software or something and taken the money, but he owned up to it like a true leader.
Nothing will every change my commitment to American made products, but we sure could use a few more CEO’s with the willingness to actually take ownership of issues, like BA’s Willie Walsh.
Todd Lipscomb
Founder of www.MadeinUSAForever.com
Sunday, May 18th, 2008 at 5:47 amand is filed under Uncategorized.
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