It's Like Winning the Lottery: Getting Fired

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There are a lot of folks out in La La land who believe that the American government should be run like a corporation. Or better still, that the private sector should take over many of the functions that the government provides for the public. Well, if this ever happens, be prepared to pay those who fail at their jobs more money than an entire small company's payroll for hundreds of working employees in a working year.

Great. Don't you wish you could "negotiate" how much you are paid for being fired from your current job? These corporations are supposed to be owned by the public. Yet how many rank-and-file owners of corporate shares would allow for this kind of nonsense?Judging by this response - not many.

http://www.msnbc.msn.com/id/8598956/site/newsweek/

It's just unbelievable that this could happen. How much longer can the average American worker bear the cost of this kind of corporate nonsense? If things keep up like this, corporate America may soon be looking to govenment to learn how to run a business.

 

Why people persist in thinking that this kind of inflated compensation (which in finance doesn't just apply to top executives) is "just market compensation" for these guys' work and skills, and why they can't seem to get their head around the mere possibility that these guys pay themselves so much simply because they can, because they're in the position to be able to skim off the top of transactions and to define their cut of the pie before anyone else, is beyond me.

Probably we'll need alot more economic pain before the joy of unregulated, unfettered capitalism (which often just means that business defines the rules and tells the gov't how it can best serve) begins to wear thin...

 

Whatever happened to "Your services are no longer required." Or even "Get the **** out of here."

Does this mean that if I were to get fired I could get a few bucks out of the deal? Yeah, right...

 

This sort of stuff has been happening for quite a few years, Chandos; it's just that the payoffs keep getting bigger. Bragging rights among the high level terminated, I suppose. "Oh Yeah! Well I got $50 million for running my company into the ground." Why succeed when the rewards for failure are so great?

 

The CEO and boardmember club is extremely small, this all comes down to "You scratch my back I scratch your". The boardmember in one corporation is the CEO of another and so on. Very simple, it is pretty much from the same small pool of people we get our politicians as well.

 

There have actually been a couple of books on this topic--it would probably be difficult to post a topic on which there weren't "a couple of books"--but I don't remember the titles, unfortunately. The gist of their arguments though was that it was considered cheaper to pay these bozos to go away than to push them out with a fight. I'm not really sure that's true, but that's how these people think.

 

Well, this goes on everywhere, even here in Denmark, albeit the amounts of money are a bit smaller than in the U.S.

A CEO of some company (can´t remember which one) miscalculated a budget 1 billion Dkr. (approx. 150. mill.$) He was fired by the board, but still recieved a bonus of 100 mill. Dkr (15 mill. $), or the equievalent of 10% of the amount of money he screwed around with. Okay, he wasn´t swindling or anything and the company wasn´t run into the ground. He made a mistake, and his error was corrected, but apparently this was a big deal in this company.

However, he didn´t get it all in cash. 19% of the bonus was shares in the company he was laid off from, worth approx. 3 mill.$. You would assume that the value of these shares could increase at some point in the future... but that´s not so important....

The most unsettling part about this story isn´t really the fact that he got such an insane bonus for making such a mistake. We´ve seen it before, so it shouldn´t come as a surprise. However, a financial newspaper interviewed him, and in this interview he complained that his bonus wasn´t enough. In his opinion he deserved far more than the 15 mill.$.

But hey, I don´t wanna be all judgemental or something like that. Perhaps he did deserve more than 15 mill. $... HMMMMMMM!!!!!!

 

It is called contracts. Most Executives in companies have a contract with x amount of years. If a company no longer wants to keep the executive they buy out a portion of their contract. Which is why some executives make $50MM a year in one shot when they leave.

 

The problem we have with this kind of stuff in Poland is that there was a wave of morons in early nineties to late nineties who believed that any private owner would be better than the public owner, even at the cost of giving public property away. And so they did, "selling" it for one tenth of the market value or similar. There used to be big state-owned factories and other enterprises that included some amenities for the workers, apart from the salary and insurance, such as flats. Thus workers would give away a part of their salary to get a flat in the blocks owned by the public corporation. Morons sold the corporations along with all property, including blocks of flats for workers, for even less than one tenth the real value. Workers and retired workers didn't get any offer to buy their flats off and become the legal owners. Instead, they got a new "host" to their homes, evicting them in the shortest possible term. The Constitutional Court approved (the law that enabled the sale was challenged) and no one opposed. If I remember correctly, there were even ranking clergymen who didn't see a problem with it when asked by journalists.