Would you keep your job if your performance was this bad, and get paid more than 99.999% of people in the country?
Freddie Mac Chairman and Chief Executive Richard Syron pocketed nearly $19.8 million in compensation last year, according to a Securities and Exchange Commission filing Friday, even though the mortgage company’s stock lost half its value in 2007.
If Syron stays at the helm of Freddie Mac through the end of next year, he will receive nearly $20 million in stock awards if the board says he has met certain goals. This year, he is guaranteed to get $8.8 million in stock grants regardless of performance.
Same thing happened with that asshole who runs Countrywide. He bears a large part of the responsibility for the mortgage meltdown and got a MAJOR golden parachute when BofA bought them out. He may even still be working there.
Executive compensation has been divorced from actual performance for a while now. They’ve managed to stack the deck by appointing the same bunch of usual suspects to each others’ compensation committees and delivering million-dollar reacharounds.
This sort of thing is not new, and is at the root of what’s wrong with an otherwise fantastic country. In most of Asia and Europe, C-level execs make ten to twenty times what their employees make, and can earn bonuses based on performance. In America, C-levels make 100-200 times what their employees make, and have bonuses guaranteed in their contracts regardless of performance. We all know how corrupt the political system is, but it has nothing on the boardroom corruption rampant in corporate America.
Mozilo? Yeh that leather tanned asshole is still the CEO. Countrywide is currently under investigation for the “Friends of Angelo” programme, where he arranged special rates on loans for PEPs (politically exposed persons … politicians, industrialists etc), which is either illegal or against Countrywides charter.
Mozilo previously set up another bank in the headlines at the moment, Indymac.
In Dan Ariely’s book, Predictably Irrational, which I am reading now, he notes that CEO compensation went up when it became public knowledge. If you assume causality, which he does, for fun, then instead of creating an atmosphere of responsibility with compensation, it created an atmosphere of competition between CEOs and to a certain extent, the companies that hire them, as to what their compensation is. (Ariely, 16-17)
Most people have no problem with their boss getting paid 10-20 times the amount they get paid, since it’s his clout, investment and vision that allows the company to exist in the first place. That’s good enough for most people and it’s good enough for me. At least in Asia and Europe, the amount the execs get paid is entirely dependent on the success of the company. It’s a pity that things don’t really work that way in the United States. It’s pretty fucked up that some of these guys are making 100-200 times more than even their top level employees (not including directorship benefits and stock options) and it’s even more fucked up that they can basically do fuck all and still get paid for it even if everyone else finds themselves on the street at the end of the day.