Merrill Lynch's CEO Loses $8 Billion...

[FlyerFanX]

and gets a $160 million buyout as his reward. Unbelievable.

http://articles.moneycentral.msn.com...60Million.aspx

[chibnkr]

Originally Posted by FlyerFanX

and gets a $160 million buyout as his reward. Unbelievable.

http://articles.moneycentral.msn.com...60Million.aspx

Keep in mind that this is not a one-time severance...it is largely from the exercise of stock options and grants that were accumulated over his 20+ years of employment. Don't blame him, blame the board of directors and/or the compensation committee. Were you in his position, you'd take the money as well.

[Darrell]

Yeah, just because he's the CEO does not mean he calls all the shots. Someone messed up, I'm positive it was not 100% him. I'd take the money as well, why not?

[TideRoll]

The Peter Principle in action. Works at banks, too.

[Kayak_Rat]

Originally Posted by chibnkr

Keep in mind that this is not a one-time severance...it is largely from the exercise of stock options and grants that were accumulated over his 20+ years of employment. Don't blame him, blame the board of directors and/or the compensation committee. Were you in his position, you'd take the money as well.

Agreed. CEO really doest do crap. Kinda like blaming the president for that which congress and the house should be taking care of.

[Darrell]

Originally Posted by Kayak_Rat

Agreed. CEO really doest do crap. Kinda like blaming the president for that which congress and the house should be taking care of.

Smart man.

[jcarlton]

If the boss isn't responsible than who is? In the 50's that CEO's widow is cleaning his brains off the ceiling and patching the bullet hole from the self inflicted gunshot wound, but in 2007 he gets a bonus. And we wonder why our youth don't know how to take responsibility for their actions. He took the job and cashed the checks.

o

[Kayak_Rat]

Originally Posted by jcarlton

If the boss isn't responsible than who is? In the 50's that CEO's wife is cleaning his brains off the ceiling and patching the bullet hole, but in 2007 he gets a bonus. And we wonder why our youth don't know how to take responsibility for their actions.


o

If you would check your companies definition of "boss", you would find that most likely the CEO answers to the Board of Directors. And popcorn isnt too tasty if your foot is in your mouth.

[chibnkr]

Originally Posted by jcarlton

If the boss isn't responsible than who is? In the 50's that CEO's widow is cleaning his brains off the ceiling and patching the bullet hole from the self inflicted gunshot wound, but in 2007 he gets a bonus. And we wonder why our youth don't know how to take responsibility for their actions. He took the job and cashed the checks.

o

Well, he certainly does bear some accountability for ML's recent financial shortcomings. I doubt that anyone would disagree with that. However, regarding his compensation package - all of the "fault" (not sure if that is the correct word, but I'll go with it) lies with the board of directors. The CEO doesn't set his pay package, the Board does. Were there such severe grumblings when he was granted the options and restricted stock for his prior good performance (or, in the case of the 9/2001 grant, to incent him to shepherd the company through a time of national crisis)?

Here is my point. I'm not passing judgement on his ability as a manager or whether his actions directly or indirectly resulted in the $8 billion write-off. Merely by virtue of his position as the CEO he should certainly be held partially (if not entirely) accountable. All I am saying is that the fact that he is walking away with $160 million in economic value is due solely to the action (or inaction, as the case may be) of the Board (and, therefore, the shareholders). If someone offered me $160 million you can be damn sure I'd take it. The difference is, no one has yet (much to my dismay) offered me such an incentive compensation package; ML's board did offer him such a package.

[Mr.Maduro]

The sad part is most shareholders of these large corporations don't see how these executives (CEOs, COOs, CFOs, VPs etc.) don't spend a dime of their own money from the moment they wake up to the moment they go back to sleep. Everything is on the company. The limos, breakfast, lunch, dinner, entertainment, private jets, etc. You name it, its not coming out of their pocket. Then, at the Board of Directors meetings, its a 2-3 day all out feast... off-site meetings, preidential hotel suites, more entertainment. It's ridiculous! I've seen it.

[FlyerFanX]

I agree the CEO reports to the Board of Directors. But the CEO certainly gets the accolades when the company has a record year. Now some are saying he shouldn't take the hit when the company he is leading takes an $8 billion hit?

[WyoBob]

Originally Posted by jcarlton

If the boss isn't responsible than who is? In the 50's that CEO's widow is cleaning his brains off the ceiling and patching the bullet hole from the self inflicted gunshot wound, but in 2007 he gets a bonus. And we wonder why our youth don't know how to take responsibility for their actions. He took the job and cashed the checks.

o

Yep. I'm with ya. Bring back the 50's. Since CEOs sit on the board of directors of each other's companies, it is the original "incestuous relationship". The BODs should be civily and criminally liable for some of the stuff they pull. Why is there no "stockholders rights" group whose job is to look after the stockholder's interest? Of course, this should be the responsibility of our elected representatives but, since they are just as corrupt as the "in crowd" of business, they "see no evil". Plus, they all want jobs at these corporations after they get done fleecing the taxpayers.

WyoBob

[chibnkr]

Originally Posted by WyoBob

Why is there no "stockholders rights" group whose job is to look after the stockholder's interest? WyoBob

There are - they're called private equity firms. Read Steve Kaplan's article "The Evolution of Corporate Governance: We are all Henry Kravis now" (http://faculty.chicagogsb.edu/steven...rch/govern.pdf).

The boards do have certain fiduciary duties. However, executive pay likely falls under the "business judgement" rule, which is a case-law-derived concept in Corporations Law whereby a court will refuse to review the actions of a corporation's board of directors in managing the corporation unless there is some allegation of conduct that (1) violates (a) the directors' duty of care, (b) duty of loyalty, or (c) duty of good faith; or (2) that the decisions of the directors lacks a rational basis. Although there may be some unintended consequences, I believe that this is a good thing.

Finally, there are other activists out there - hedge funds, institutional investors (such as mutual funds, pension funds) and the like who can and will take an active role to see that board members or managers who do not perform are replaced.

In all, the system works pretty well. Is it perfect? No. But I'm not sure that additional government regulation is the right answer.

[billybarue]

Perhaps more governmental (SEC) intervention is not required because the ultimate burden of electing the BOD redounds to the stockholders. Who need to to a better job of evaluating who is elected. The current state, IMO, is there is too great a "hand in glove" relationship between corporate management (ie the CEO) and the BOD. The purpose of oversight by the BOD has been usurped by sometimes outright collusion.

For my example, my company (American Airlines) had a border-line incompetent CEO running the company prior to 9/11. Post 9/11 he at the same time was orchestrating large executive pay packages while extorting pay concessions from the Unions in our most desperate hours. In the post 9/11 darkness in the Airline industry that didn't sit to well with the employees when we ultimately discovered he had his "hand [shoved] in the cookie jar". It stunk to high heaven and he was run out of town on a rail, with a handsome payout BTW. While at American he was on the BOD for Dell computers and American purchased a good bit of Dell products as a result, including an employee purchase program at American (and they were crap computers). While at AA, his cozy relationship with Dell (as a board member) served him well as he eventually became Dell's CFO. And, from the little I think I know, he has run afoul of the SEC with some serious accounting irregularities for Dell. Why would Dell pick this idiot up - in my estimation it gets back to the screwed up lack of oversight that the BOD accomplishes today. But, as I said in the beginning, ultimately the stockholders need to be more vigilant in electing the right board members who act in an aggressive oversight capacity.

FWIW

[jcarlton]

Originally Posted by Kayak_Rat

If you would check your companies definition of "boss", you would find that most likely the CEO answers to the Board of Directors. And popcorn isnt too tasty if your foot is in your mouth.

I'm not saying the BOD has no responsibility, they do, but they didn't get a bonus with their walking papers. If I can get my foot out of the way to ask; what is the responsibility of the CEO if it's not to run a profitable business?