Concerning You asked for it, but may not like the answer Dear Friends,
I want to take a moment and thank you for your many holiday wishes I have received over the last couple of weeks. The phone calls, emails and cards have been overwhelming, and for once, too many to respond to individually. As many of you know, a year ago I spent Christmas in the hospital and had another 3 1/2 months of hospitalizations facing me. The saddest experience I had during that time was hearing of the loss of a friend and contemporary, David Forbes of BE & K Engineering. David was a bright and witty individual who put up a valiant fight during nearly twenty years of chronic illness. Makes my little problem last year look like a tiny bump in the road. Yet, your support during that time and your wishes this holiday season have been overwhelming and special to me. It is a blessing and a delight to be back to my normal self. Best wishes for you and your families in the coming year.
Jim
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I agree with everything you said about what BOD's and CEO's should be doing to maximize return to shareholders. I guess I would just feel a little better if I thought that exorbitant golden parachutes were driven only by fear of lawsuits. This implies that people in control at that level have no expertise in writing a reasonably measurable and enforceable performance-based job description. I find that hard to believe. Is it not just as likely that the end result was at least foreseen if not intended whether accompanied by some "back-room" deal, or not?
Merry Christmas, and Happy New Year.
Laurence L. Coulson
Knoxville, Tennessee, USA
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Larry, I hate to burst your bubble regarding the perspicacity of many board members, but I fear the ones you may find that live up to your lofty standards are well within the minority of the whole. I heard an interesting talk on CEO salary inflation at the annual meeting of the National Association of Corporate Directors a couple of years ago. The speaker, a head hunter, said that she had yet to encounter a board that did not want to hire someone in the upper quartile of salary ranges for their company's size and peers. It becomes something like Garrison Keillor's Lake Wobegon, where all the children are above average. Following her talk, a salary consultant (yes, at these lofty levels, such people exist) stood up and said the same was true of annual salary increases--boards feel pressure to keep their CEO in the upper quartile, an obviously dizzy annual spin to higher and higher salaries. From this then, come the lawsuit-stopping payouts upon involuntary exits, for they are based on the theoretical lost salary of some time in the future.
Jim
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Jim,
Okay you enticed me to reply after I already wished you and Laura a Merry Christmas!
Most populous African country: Nigeria with a current UN estimate of 140 million people in an area twice the size of California. So take half the people in the US and cram them into two Californias. There you go.
I may be in the minority, but I agreed with most of what you wrote about CEO salaries.
CEOs are like football coaches. You may gripe about Nick Saban's millions, but he got Alabama football on the front page of every newspaper in AL and kept it there for months. Folks would kill or die for such publicity. And just this week Michigan paid West Virginia $4 million just to release Rodriguez from his WV coaching contract. What's that all about?
I never thought paper company CEOs were overpaid, at least in the 29 years I worked. Many of the exhorbitant CEO salaries came from stock options and the like based on increasing stock price. Not much of that has gone on the our industry, except perhaps for the occasional buy out that resulted in a short term price spike.
If you get the chance, pick up the December issue of "The Smithsonian" magazine. It has a very interesting article in it "Blame the Rich" about the nature of rulers, kings, leaders, and yes captains of industry in the western culture. Here is a link to it:
http://www.smithsonianmag.com/science-nature/presence-rich-200712.html
Peace
Gene Canavan
Prattville, Alabama, USA
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Gene:
You remind me of a somewhat unrelated story. I have never followed sports to any extent, at least until I met Laura (now I have to follow professional baseball in order to have a dinner conversation). Around 25 years ago, I was working on the rebuild of the paper machine at Wickliffe, Kentucky. I was assistant project manager, which meant I did the work while my boss fended off the higher ups. This resulted in me making nearly weekly trips to Birmingham to BE & K Engineering, who was our engineer on the project. I showed up one Monday morning and everyone was in an obviously subdued state. I asked, "What's going on?" They said, "Bear Bryant died." Innocently, I said, "Who's Bear Bryant?" Keep in mind, I am the client here. The next thing I know, all work stops, a crowd gathers around me and I get a half hour lecture on the career of the fantastic Mr. Bryant (which no doubt cost our project several hundred dollars in billable time). Client or not, I obviously needed an education in Alabama football.
Jim
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Jim
Another good job. One point I would make is that compensation and ownership get all mixed up in the public companies...
I don’t think CEO salaries in public companies are the big issue in most cases. The problem is how differently their ownership is handled vs. the regular stockholder.
I cannot believe there have not been more shareholder suits directed toward boards who award the excessive severance packages – I can’t see how a judge or jury would support a CEO whose performance was not acceptable if he only got a couple of years of severance, and nothing else.
[name withheld]
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Jim
What is the most populous African country?
Nigeria, with a population of over 123 million, is Africa's most populous country. Nigeria's 2010 population is projected to reach 155 million.
Bob Hurter
Ottawa, Ontario, Canada
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