Finance Fatcats Live Large as Firms Crumble

Just finished reading:
http://abcnews.go.com/Business/story?id=5821887&page=1

and a number of comments that users posted.

Basic point of the article is the upper managements of many of the crumbling companies have been getting very rich (more rich then they already were actually) while their companies crumbled, and most are getting golden parachutes with bigger monetary values than the lifetime earnings of most of us.

In a nutshell: pretty close to zero accountability and pretty extreme economic injustice. The average employee in many of these companies is getting pretty hammered.

Many comments rant about seizing assets of these people and redistributing them to the poor or even "French revolution" type justice. Problem is these people have everything locked up legally so there is not much that can be done. The problems of "French Revolution" style justice I think pretty much speak for themselves. I suppose the government could go after them on some sort of fraud basis and try to take their assets that way but this to would open up a whole different can of worms. History shows vengeance to be counterproductive.

So what can be done. I thought about this today and I have an idea. The financial engineers who created this mess should be shunned. This has to be a grass roots thing of course to some extent and I'm talking about serious shunning. Guys like James Cayne (Bear Stearns) and Richard Fuld (Lehman Brothers) should never get positions of serious authority again. No CEO positions no Board of Director appointments, if possible they should even be thrown out of their country clubs. This can only be engineered via social pressure. Shun them and then ignore them. It might feel better to see their money taken away but where would their money go: chances are it would go to people just as undeserving (IE lawyers and the government) and the cycle of unjust predatory gains would just continue.

Instead, lets put those lawyers and our government to work in preventing this from happening again.

The system of executive compensation in America is badly broken and needs to be totally changed from the bottom up. Maybe now there will be an opportunity to really fix it.

At another time I will go into more detail but I'll give you the basics of what I think are wrong. The basic problem is that most compensation is "performance based." This is something that is designed to sound good but when you think it through you realize it's a huge mistake. It is (and was) really a scam - and always will be. How is performance for upper management measured? Stock price or profits of course. Both can be and have been manipulated. Both can be manipulated *legally* (to some extent). Plus there is a deeper issue: the stock price is influenced by all the employees of the company and is influenced by events outside of the control of *anyone* at the company. The fed can lower interest rates and that can result in an overall increase in stock prices. A scientist or engineer can come up with a great advance. A salesperson can make a big sale. Why should a tiny group of people (upper management) reap the windfall from everyone else. This is the inevitable result of paying people at this level for "performance." There is no way around this. Pay for "performance" for people at the top has not worked, is not working now and will *never* work.

It needs to be stopped and a different system put in place. This is not to say that upper management should not be highly compensated - they should be. But *how* highly compensated is a big issue and what compensation is based on is also a big deal.

I also think that if a company requires help from the Government that it's CEO and top management team should be required to have their compensation set to 1 dollar less than the President of the United States - or lower. These things need to be negotiated at the outset of course, you cannot force this on people after the fact.

It must really gall people that the likes of James Cayne and Richard Fuld are now the beneficiaries of government largess - and to a much bigger tune than anyone on so called "welfare".

For years apologists for high executive compensation maintained that CEO's "took the risk" and therefore deserved the money. Nope: we now know that we the people in the middle and bottom (the taxpayers) were the ones taking the risk (the government is bailing these entities out with our money) and the people at the top are walking away with huge additional paydays.