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Thread: Without huge salaries, financial leaders won't try hard?

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    Elite Member celeb_2006's Avatar
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    Thumbs up Without huge salaries, financial leaders won't try hard?

    (Great article, counters the argument that salary caps and whatnot for execs would lead to a drain in the best workers for the job)

    Without huge salaries, financial leaders won't try hard? - Los Angeles Times

    David Lazarus

    February 8, 2009

    Wall Street could learn a thing or two from 24-year-old video-store clerk Beatriz Corrales.

    "I love movies," she said from behind the counter at the Video Hut outlet in Hollywood's Franklin Village neighborhood. "If someone can't find a movie, I go and search the Internet for them. They could do it at home, but I'm happy to help."

    Surely that kind of going-the-extra-mile should merit some sort of bonus.

    Corrales laughed. "No bonus," she said. "That's something I do because I like helping people. It's my job."

    It was a sentiment I heard again and again from merchants I visited in the area last week. Sure, being paid a decent wage is important. And who'd say no to a bonus?

    But should the prospect of extra pay or perks be the main reason people work hard at their jobs? The reason you work hard, workers and employers in the retail trenches told me, is because you take pride in what you do.

    But not if you work for a bank or a brokerage or some other financial heavyweight. On Wall Street, the rule seems to be that no effort should go unrewarded -- and as lavishly as possible, regardless of how the company's doing.

    We got yet another reminder of this culture of smug entitlement when it was reported last week that Wells Fargo & Co. had been planning to send employees to a pair of high-end Las Vegas resorts.

    The trip drew scorn from lawmakers, who were quick to observe that this was questionable behavior for an institution that recently received $25 billion in bailout money from taxpayers and lost $2.55 billion in the most recent quarter.

    Wells Fargo initially defended the Vegas getaway. But within hours the company announced that the trip had been canceled and blamed the media for spreading "intentionally misleading" reports about what was actually "a four-day business meeting and recognition event for hard-working team members."

    Where have I heard that before? Oh yeah: In October, when insurance giant American International Group Inc. sent workers to a luxury spa after receiving $85 billion in bailout funds.

    "It was not an executive retreat," an AIG spokesman told me at the time. "It was a meeting to reward and incent independent sales agents."

    "Recognition event" . . . "reward and incent."

    Where do they get this gibberish?

    Look, don't get me wrong. I'm all for rewarding achievement. (Note to editor: Really.) But all bets are off when a company is failing so miserably that it has to pass the hat among taxpayers to survive. Heck, my employer is bankrupt, and we haven't shaken down Uncle Sam for some spare change.

    What sizzles my bacon is the expectation among our financial friends that the bonuses and perks should keep rolling in. Otherwise, presumably, they won't be motivated to give it their all.

    "I don't need to be motivated to do a good job," said David Jones, 40, manager of Counterpoint Records & Books in Franklin Village. "I either want to do it or I don't."

    OK, but wouldn't he want an all-expenses-paid trip to Vegas for a job well done?

    "Not Vegas," Jones replied. "Maybe the south of France." He smiled to show he was just kidding.

    "I like what I do," he said. "That's the motivation."

    You'd think the 598,000 jobs lost last month -- the largest one-month loss in 34 years -- would be enough to instill a sense of humility in even the most self-important workers.

    Yet the day after Wells Fargo scratched a trip to the blackjack tables from its to-do list, President Obama felt it necessary to propose that, from now on, senior executives of companies receiving "exceptional" bailout funds will have their cash compensation capped at $500,000.

    Obama didn't name any names. But more than a few observers noted that Bank of America Corp. Chief Executive Ken Lewis received compensation valued at more than $20.4 million in 2007 -- $1.5 million in salary and more than $18 million in bonus money, stock and other benefits.

    BofA lost $2.39 billion in the most recent quarter and so far has received $45 billion in bailout cash.

    The question is: Would Lewis still give the bank his best effort for a measly $500,000 in pay (not including all the stock he could still get for his trouble)?

    Paul Dorf, managing director of Compensation Resources Inc., a New Jersey consulting firm that advises companies about how to attract and retain top execs, said probably not.

    "Being a CEO of a financial company is very tough," he said. "Why would I want to do that for only $500,000?"

    I don't know, maybe because these are people who are leaders, and leaders are supposed to lead by example.

    Unfortunately, Wall Street clings to the notion that the only way you can get people to perform their best is by bribing them. In 2007, the latest year for which figures are available, the average bonus across all pay grades was $177,000.

    That was on top of salaries that averaged $223,000, according to the New York comptroller's office.

    At Video Hut, Corrales told me about the time a customer came in seeking a certain Matt Damon movie but couldn't remember the title or the plot, only that it co-starred Al Pacino but it wasn't "Ocean's Thirteen."

    Corrales said she dropped what she was doing and did some Internet searches. She brainstormed with co-workers. But she came up short, because there are no other movies in which both Damon and Pacino appear.

    Corrales said she didn't feel bad about the wasted effort. This is what she's paid to do.

    There's a word for this: motivated.

    Maybe Video Hut knows something that Wall Street doesn't.
    Last edited by Tati; February 8th, 2009 at 11:03 PM.

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    SVZ
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    Spoiled is one word for it...

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    Friend of Gossip Rocks! buttmunch's Avatar
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    Greedy fuckfaces is another...
    'Those who sacrifice liberty for security deserve neither.' Ben Franklin

    "When fascism comes to America, it will be wrapped in the flag and carrying the cross."
    --Sinclair Lewis

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    Elite Member southernbelle's Avatar
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    Any sort of cap on salaries is ridiculous. It's not greedy to be outraged about being expected to do the same amount of work while taking an 80% pay cut and paying MORE taxes.

    I would quit my job before I'd go along with that. I'm sick of this society where we punish success and hate the successful. Why don't they tell the Video Hut workers that they're going to cap their salaries at 1/4th of what they're currently making and then see how much they "love" their jobs and feel that they should put forth the same effort "no matter what".

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    Friend of Gossip Rocks! buttmunch's Avatar
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    It's not punishing success. It's saying that these morons played with our money and now want to be rewarded to sending the economy down the shitter. And why shouldn't people take pay cuts when times are tough and millions are losing their jobs?
    'Those who sacrifice liberty for security deserve neither.' Ben Franklin

    "When fascism comes to America, it will be wrapped in the flag and carrying the cross."
    --Sinclair Lewis

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    Elite Member southernbelle's Avatar
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    I believe in being self sufficient. I don't believe in punishing the people who ARE succeeding (and cutting their income IS punishing them, whether you call it that or not), to reward those who aren't. Expecting people who are making money to take paycuts just because some people are struggling is ridiculous. Despite some people's wishes, this isn't a socialist country.

    We are capitalists, and capping salaries goes against capitalism. What's the point of working when you can sit back and wait for a cut of someone else's check for doing nothing?

    If people are losing their jobs, they can accept government assistance or take another job, even if it's not their ideal , until they get back on their feet. They can make changes to their daily routine and purchase habits to make sure that they are living within their means. Times are hard for some people, but making them harder for everyone to be "fair" doesn't make sense and it frankly creates a lot of resentment. Redistributing incomes or capping them to make other people feel better about themselves is not the answer.

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    SVZ
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    Umm..if those guys want to go on welfare let them...see how they like existing on $500-$1000 a month or whatever it is

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    Elite Member Grimmlok's Avatar
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    512 dollars. more if you have kids. That's rent, food, transportation, everything.

    Quote Originally Posted by southernbelle View Post
    I believe in being self sufficient. I don't believe in punishing the people who ARE succeeding (and cutting their income IS punishing them, whether you call it that or not), to reward those who aren't. Expecting people who are making money to take paycuts just because some people are struggling is ridiculous. Despite some people's wishes, this isn't a socialist country.

    We are capitalists, and capping salaries goes against capitalism. What's the point of working when you can sit back and wait for a cut of someone else's check for doing nothing?
    they aren't succeeding. that's just it. they failed badly. they continue to fail badly. they have driven their respective companies into insolvency.

    p.s. the US isn't pure capitalism. Pure capitalism is actually fascist corporatism.

    The US has taxes. That means you aren't capitalist. You ARE open market.
    Last edited by Tati; February 8th, 2009 at 11:01 PM.
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    Friend of Gossip Rocks! buttmunch's Avatar
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    ^^Spot on, Grimm. They failed miserably. IF they hadn't, they wouldn't be going under, being bought out or having their hand out for funds from the governemnt. And the salary/bonus situation is relatively new and a result of the dodgy practices of the past few years. They were rewarded for taking massively stupid risks that not only made a lot of on-paper money for their companies but also screwed over millions of people. Here's how I see it: if they want to go it alone and see if they can dig themselves out of this mess, go for and give all the high salaries and bonuses you want. But if you want money from the government to save your ass then take a pay cut or go find another job. There is no way these people should be getting 6 and 7 figure bonuses on the backs of the taxpayers, particularly when very little has thus far been given to the ordinary wo/man on the street.
    'Those who sacrifice liberty for security deserve neither.' Ben Franklin

    "When fascism comes to America, it will be wrapped in the flag and carrying the cross."
    --Sinclair Lewis

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    Elite Member southernbelle's Avatar
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    I just feel it's very dangerous when the government can step in and start capping your salary. It totally strips any motivation to do better and it is infuriating. As is the anti-CEO attitude that Obama seems to be encouraging.

    My dad is a CEO and so I think a lot of the comments that are generally made about CEOs are grossly inaccurate and ignorant. They work their asses off. They provide jobs. They regulate publicly traded companies and their corporations sometimes support entire towns. They put their asses on the line for their company and for their employees daily. It's not an easy job, and it's frankly not comparable to an employee at the Video Hut who is blabbing about "making the extra effort" by doing a Google search for a movie. Are you kidding me?????

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    Elite Member Penny Lane's Avatar
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    That's like saying someone can't work their way up to a CEO position... you have to start somewhere. Yea, Video Hut doesn't look that great on a resume but I wouldn't want to cast off all minimum wage employers as people lacking work ethic.

    These CEOs are bitching because instead of two world class vacations they can only afford one this year. It's really stupid. We bailed them out when they went down the shitter and now they expect to be rewarded for doing their job--something that if they didn't do so ineptly wouldnt have necessitated a bailout in the first place-- and picking up where they left off. We all have to make sacrifices now that this financial crisis hit and they need to learn to shove their silver platters up their ass and deal with it.

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    Friend of Gossip Rocks! buttmunch's Avatar
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    Oh please. I know plenty of people in the financial sector and who are top execs and while they work hard and are supposed to take responsibility they aren't doing that, really. Again, I say if they want a handout they have to live by the terms, otherwise they can go it alone. And the bullshit argument that some are slinging about, saying the sector will no longer attract 'top people' should salaries and bonuses be capped is just that: bullshit. They aren't top people if a complete economic meltdown is the result. And let them go somewhere else...if they can get a job.

    I, for one, would like to see just one ONE person in a position of responsibility admit culpability for this situation. I'm not holding my breath. All we're hearing are dumb excuses and seeing business as usual. I have no problem with people being successful but running a company so far into the ground that it needs the government to bail it out is not success, it's complete and abject failure and should be labeled as such.

    Also remember that the gap between top and bottom salaries in large corporations has grown astronomically in the past decade or so, mainly because of huge bonuses and payoffs.
    'Those who sacrifice liberty for security deserve neither.' Ben Franklin

    "When fascism comes to America, it will be wrapped in the flag and carrying the cross."
    --Sinclair Lewis

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    Elite Member celeb_2006's Avatar
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    All good points. But in the end, these execs and industries were the ones asking the government for help. If our tax money, my tax money, is going to assist these banks and companies and execs (while they see fit to spend our money on their lavish parties and CEO bonuses), and as Grimm and others have pointed out failed miserably at their jobs, then I don't see why our President can't put a pay cap on their salaries. Our tax money is not free money.

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    Elite Member Quazar's Avatar
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    What's wrong with pay for performance??? This is fair. You make the company lots of money - you do well, you lose money for the company, you get a basic salary. It's like owning your own business - you don't get paid if there's no money coming in and you have employees and expenses to be paid. When things are going well - you can take a nice salary for yourself.

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    Friend of Gossip Rocks! buttmunch's Avatar
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    Not a bad idea and deceptively simple...which means it will never be considered for even a milisecond. I say if they don't like their salaries capped, quit and go get another job. The video store clerk couldn't do a worse job than they did. Hell, go to Vegas and snatch a few gamblers off the casino floor...because they're basically doing the same thing.
    'Those who sacrifice liberty for security deserve neither.' Ben Franklin

    "When fascism comes to America, it will be wrapped in the flag and carrying the cross."
    --Sinclair Lewis

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