Friday, October 23, 2009

The ongoing saga of corporate logic

As you've no doubt heard, the Obama administration is taking steps to cut the pay of top executives at some of the biggest firms that needed, and got, government bailout money. Rachel Beck of the AP reports:

"Those facing pay restrictions outside the executive suite hold leadership positions in areas like finance and investment banking at the banks, and in manufacturing, brand management, and design at the auto companies. They come with years of experience, whether it’s making deals or overseeing car design. For example, Ford Motor Co. which is in far better shape than its two Detroit rivals, could lure auto executives who would be difficult for Chrysler and GM to replace.
"There will be a fallout,"said Janice Reals Ellig, co-CEO of the executive search firm Chadick-Ellig. 'Talent that is short-term-focused because they have big mortgages, college education payments, and other things will feel more pressure to leave."

I see. Firms which have been virtually destroyed by the bad leadership of top executives are worried that salary cuts may force these very same executives to leave for positions at companies that were fortunate enough not to have such leaders. And why would any relatively successful company -- Ford, e.g. -- want to pick up the salaries of these losers?

If I were a stockholder of AIG or GMAC or CitiCorp, I'd love to save salary money by foisting off these losers on my competitors. How can Ms. Beck report this with a straight face? (OK, I don't in fact know how straight a face she had when reporting this nonsense.) I mean, it would be hard to make this stuff up.

(In a similar vein, see the October 11 blog: Musical chairs for incompetents.)

I also love the part about the big mortgages and college education payments that these poor execs have. If you're making a million or more a year, and get a bonus even larger, you are not seriously worried about college tuition. If these jokers can't deal with their household finances, they shouldn't be running Big Biz.

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