Tuesday, September 9, 2008

Incompetence Pays

The NY Times recently reported that the heads of Fannie Mae and Freddie Mac stand to take home up to $14M in severence pay after running both companies into the ground.

I certainly hope the guvmint doesn't allow these payments, it's about time to stop the policy of rewarding CEO's for performance, and even more for poor performance.

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nitsuj said...

Why would you stop rewarding them for performance? Doesn't incenting them for good performance help align their goals with that of the rest of the stakeholders? Or am I misreading what you're trying to say and you're essentially saying if you run a company into the ground you shouldn't have a golden parachute.

PDX Outsider said...

Sorry if that didn't come out right, but it seems like lots of CEO's are making decisions that reward short term performance over long term performance, as they're thinking they'll only be in the job 3-4 years. Then when their plans blow up they get paid even more to leave. There's no downside to temper the risks they are taking with other people's money. Much like a homeowner who buys a house with nothing down.

nitsuj said...

CEO is a funny role, eh? Once you've had the title once it seems like you can go anywhere and get a job regardless of past performance. Never understood how the boards of directors are approving the compensation packages they are...or is it just that once you hit that level you are buddy buddy with everyone and it's a 'I'll scratch your back if you scratch mine' game going on that us common folk aren't privy to?

Anonymous said...

Maybe the solution is for the government to control everything. No more private ownership. That would sure change the equation.

Anonymous said...

It's the Age of Conservatism. Worshipping the wealthy, rewarding them just for being. It's all what you voted for if you voted republican ever in your life.

Now stop complaining and get back to work. Freddie and Fannie need to be fed as do the wealthy folks up in da hills.

Patient Renter said...

I'm with you on this one.

If a private corporation wants to give out millions to an executive who did a poor job, that's fine, but these companies aren't private anymore. Their public, and these are taxpayer dollars. They deserve nothing because nothing is what they would have gotten if the taxpayers didn't bail them out.