Liberally Conservative

"Freedom is never more than one generation away from extinction. We didn't pass it to our children in the bloodstream. It must be fought for, protected, and handed on for them to do the same, or one day we will spend our sunset years telling our children and our children's children what it was once like in the United States where men were free....... ~Ronald Reagan~

Wednesday, May 03, 2006

The Case for Large CEO Pay

The politicians of the Washington D.C. beltway are busy complaining about large CEO compensation, using that as an excuse for high gasoline prices. The fact these same politicians have lucrative outside incomes, outrageous perks from lobbyists and special interest groups makes no difference to the voting public. xxx The beltway baloney bunch makes no excuse for their “freebies”; they only make excuses when called on their indiscretions. How do CEO’s make larges sums of money in salary, bonuses, and retirement packages? In most cases, similar to the old Smith/Barney commercial, they earn it! In most cases the keyword for large income is, “Stock Options.” There is no guarantee set forth for success. Many executives leave solid positions, take a risk and accept options for performance. Companies like Microsoft have lured high talent by offering stock options. Many people became wealthy, without the CEO title, based on performance. The downside for companies is these people perform well, take their money and leave. Many look for new challenges and put their money up for the risk of succeeding in new ventures. Many times they create new businesses and enhance the economy by doing so. CEO’s are attracted by incentives, paid for making shareholders happy with successful decision-making in the business world. It’s not done with ouija boards, playing monopoly with fake money, a crystal ball or tarot cards. Talented managers who make companies successful earn performance packages. Market forces determine if CEO pay is high or low. Successful CEO’s work under the stress of corporate life, making wise decisions and putting in the time to utilize their education and experience to benefit the entity first, and their income second. Although the Enron bad apples get the press, or politicians discredit successful managers for votes, CEO’s get paid well for a job well done. If politicians had to earn their compensation and perks in Washington D.C. we would have a stream of new faces each election cycle. The shareholders, or voting constituency in this case, would fire them regularly.

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