Tuesday, October 30, 2007

You're Fired! Now Here is $160M to Help Ease the Pain

In the best spirit of Bob Nardelli, poor Stanley O'Neil was shown the exit (err, retired) but to make sure his family can eat he is being given $160 million to soothe the pain.
  • Sources confirm that O'Neal leaves with about $90 million in stock, $40 million in options and another $30 million in pension and other goodies. The finer points are still being worked out. And the values change with the company's share price.
  • Not bad for years of alleged "underperformance." Makes you wonder what Merrill would pay for a really good CEO.
  • A spokesman for Merrill said O'Neal gets no special severance package, but he does get to keep shares and options that had not yet vested.
  • And he gets to say that he "retired" at 56. Sure. Kind of the way Julius Caesar "retired" as dictator of Rome.
  • It's only been 21 months since the same board members were lavishing O'Neal with praise and a special $36 million bonus for doing such a good job.
  • They gave him another $18.5 million cash bonus plus another $27 million in stock and $2 million in extra incentives just last January.
It is pretty sickening; not just this case but the whole corporate America welfare system for the top honchos. When Joe Schmoe get fired he is lucky if he gets a box to pack his stuff - when top honchos get booted they get more wealth than most people will have in multi generations. This is why I never argue that athletes are overpaid - compared to their specialized skill set, compared to CEOs who other than the top 5% are truly a dime a dozen, they are underpaid.

Before anyone argues how important they are, (again excepting the top 5%) do most companies implode when 1 PERSON leaves? Not unless you are the top guys like Dell. I am sure there are plenty of guys 4 layers down in management who could do just a good job as the 'average CEO' yet we worship at the alter of these people as if they are demi gods. And they stack their corporate boards (in most cases) with 'associates' or in some cases 'friends'.

Yes they have hard jobs but so do many people. Go try being a coal miner. I don't have the stats in front of me, but the ratio of executive pay to "average pay" in the US has exploded from the 1970s to now. In Europe it is not this way - how are those well run companies somehow surviving without paying top honchos such lavish packages? Somehow they exist and survive and in fact many times thrive. 2 Americas. So while the financial innovations brought on by people in this firm (and the buck stops with the leader), are taking people out of homes, taking people out of jobs, we reward these guys as they get booted. Well at least O'Neil came from extreme poverty so at least 1 family in America made the highly touted jump from poverty to extreme wealth. I love how since it is possible in 1 out of 5,000,000 cases its held up as proof of how anyone can make it. Everyone else working 2.3 jobs is just lazy. I know, I know... its a scare tactic by Democrats... of course. This is why income inequality is at highest rate since the 1920s and age of Rockefeller. Got it. It's all a mirage - this is why everyday people never feel secure even during this recent half decade 'boom' in aggregate US GDP. One day this will come home to roost, not sure when - maybe when 60% of America will struggle to afford the basics... could be a generation or two more to go. Slowly but surely we keep walking that way... until then $100 M to every mortgage broker who just got fired. Yee haw.!

Ok back to your regularly scheduled blog.

Long the top 2%

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