Those Who Can Do, Those Who Can’t Complain
Posted: December 20th, 2008 | Author: Garrett Smith | Filed under: VoIP Commentary | 4 Comments »Some people – really smart people – just don’t get it.
Thanks to the economy there are lot’s of people – some of whom are really smart – pointing out the compensation that many of the nation’s top executives are raking in this year.
Me? I could really care less how much some CEO or VP at “insert company here” makes. This is a FOR-PROFIT world that we live in.
Some people – really smart people – just don’t get it.
It has always amazed me that – in a world that glorifies athletes and entertainers – businessmen and women are always the first to get heckled and hassled over how much they make. Rich’s post earlier today – which was prompted by a reader email – reminded me of how misinformed and misguided most people are when it comes to executive compensation (this post is not directed at Rich, BTW. I’ve talked with him many times, he get’s it).
Executives – whether they are at a big company or a small one – are the Pro Bowlers and All-Stars of the business world. Like your Terrell Owens, Tom Brady’s, Kobe Bryant’s and Manny Ramirez’s, CEO and top executives are paid a lot of money. That’s because they have the talent and track record of performance to warrant’s that sort of pay.
But – just like your favorite pro athlete who made millions this year despite the fact that they missed the playoffs yet again – today’s top brass don’t always win yet still get paid. Why?
Scarcity. Like anything else, the more scarce something is, the more expensive it is. And similar to how you can’t dunk a basketball, hit a 100 MPH fastball or run a 4.3 forty yard dash – you can’t do what they (top executives) do. Trust me – if you could – you would.
So before you go hating on the CEO of “insert company here” for how much he made this year – despite the fact that the company lost 20% of it’s market cap – remember that like your favorite pro athlete you can’t always win. Oh – and you can’t do what they do. That’s why you are an investor – not the guy (or gal) running the place.
Then again some people – really smart people – just don’t get it.
I agree with the “tone” of complaining — that being said, when companies like GM, Ford, and Chrysler request our tax money for assistance, I truly want to know more about ways they waste money. If you’re a CEO of a company that needs billions of dollars and your getting a bonus more than what a normal person could live on for their entire life, I think it’s time that Americans get to complain about your salary before giving you a nickel.
With TMC’s Vonage article, although I didn’t like the tone or complaining of it, I did like the reporting. Watching Vonage’s plummeting stock price and being in the VoIP industry, one can learn from their example and try to build a better mousetrap.
A for Profit company exists for Profit. And people who complain about this for the sake of complaining seem to be jealous with the “Sour Grapes” of others. People who instead use this published information to see where money can be better managed and compete with the business deserve more Profit.
Very true, but boards have responsibilities to ensure that the stockholders get value for money.
Too many CxOs get obscene salaries and even bonuses on the very cusp of the failure of the companies. As a company goes bankrupt, or begs the government for bailout monies, exec bonuses should trend to zero. Sales force should get paid salary, commissions and bonuses as agreed. But in the exec suites compensation should be adapted as befits the condition of the company.
@ Fred
I agree with your point that companies who are receiving public aide (by way of loans that taxpayers are funding), however the number of these companies is few when compared with the number of complaints you here.
Funny how people never complain about the owners of local businesses who get paid to buy old buildings, tax breaks to have an office in a low income area or best yet – derive business simply because they are “friends” with someone in office.
I personally know one local business that grossed over $1m this year without doing anything – other then assuming ownership of four buildings in downtown Buffalo.
Guess who paid for that?
@ Michael:
You are very true that the board and executives have a duty to provide a return to investors – but this isn’t tee-ball we are playing.
If all you had to do as an executive is swing the bat in order to hit a home run – every business would be a success. Unfortunately – as you know – it is actually much harder to hit home runs in business then in tee-ball.
That fact is these people get paid what they get paid because of scarcity. They have scarce talents. But – just because they are scarce – doesn’t mean they always hit home runs.
However – shouldn’t they still get paid for trying? Everyone else in the organization does – even though their talents are much less scarce.
If it is suggested that executives are paid strictly on performance – then shouldn’t the rest of the workforce adhere to the same? Who you work based solely on performance (results)?
I am willing to bet most of the American workforce would balk at the idea (auto unions anyone?).
Bottom line here is that people should stop whining about executive pay. If you say executives should get paid based on performance – so should everyone else. If you don’t know what you are doing or can’t stomach risk – don’t invest.
Maybe take that money and instead become your own big fat capitalistic pig – oh wait – that would take both knowing what one is doing and being risk adverse.
Something most of the general public doesn’t seem to possess.