CEO Pay And Severance Packages Of 2007

[Theige]

That doesn't even compare to the 68% loss the stock took over that seven year period.

The guy was CEO for six years.. meaning he'd have taken over after that huge spike (obviously the stock was was very overpriced for a small period of time during 2000) where as I gave the increase in dividend since he took over the company. Sure the stock has tanked in the last few months, but stocks tend to do that every now and then

HD is a mature company, having achieved a relative position of dominance. The stock most likely isn't going to soar again, ever, and now pays a fairly nice dividend, paying out $ 1.5 billion to shareholders in 2007. (About $ 372 million in 2001, I think)

 

[Godwynn]

The guy was CEO for six years.. meaning he'd have taken over after that huge spike (obviously the stock was was very overpriced for a small period of time during 2000) where as I gave the increase in dividend since he took over the company. Sure the stock has tanked in the last few months, but stocks tend to do that every now and then

HD is a mature company, having achieved a relative position of dominance. The stock most likely isn't going to soar again, ever, and now pays a fairly nice dividend, paying out $ 1.5 billion to shareholders in 2007. (About $ 372 million in 2001, I think)

Home Depot is part of the S&P 500, which consists of the 500 largest companies in America.

Here is a comparison of both.

The S&P 500 since 2000 is sitting at about a 3-4% gain, while Home Depot has fallen 55%.

 

[mrt144]

The guy was CEO for six years.. meaning he'd have taken over after that huge spike (obviously the stock was was very overpriced for a small period of time during 2000) where as I gave the increase in dividend since he took over the company. Sure the stock has tanked in the last few months, but stocks tend to do that every now and then

HD is a mature company, having achieved a relative position of dominance. The stock most likely isn't going to soar again, ever, and now pays a fairly nice dividend, paying out $ 1.5 billion to shareholders in 2007. (About $ 372 million in 2001, I think)

some people, like myself, view a dividend as a sign the company has run out of ways to improve the business and have to pay people to own the stock.

 

[JollyRoger]

But it is possible to be as irreplacable as 5000 average workers. And it is entirely possible to be 5000 times more valuable to the life of a company than the average worker. And although they may not "work 5000 times harder" than the average worker, their individual impact on a company could easily exceed 5000 times the contribution of an average lackey on the factory floor.

They wouldn't be collecting severance pay if the were so irreplacable. Looks like some of them are getting hefty paydays for doing 5000 times more damage to the company than the average worker could.

 

[Murky]

But it is possible to be as irreplacable as 5000 average workers. And it is entirely possible to be 5000 times more valuable to the life of a company than the average worker. And although they may not "work 5000 times harder" than the average worker, their individual impact on a company could easily exceed 5000 times the contribution of an average lackey on the factory floor.

I've worked in private sector long enough to know that the average professional employee is much more valuable than the average CEO.

 

[downtown]

I've worked in private sector long enough to know that the average professional employee is much more valuable than the average CEO.

Apparently not long enough.

 

[Murky]

Apparently not long enough.

I've always been more a doer than a delegator that just takes advantage of underlings. Every CEO that I've known, aside from SMBs, let's other people do all the work then takes all the credit.

 

[Masquerouge]

I've always been more a doer than a delegator that just takes advantage of underlings. Every CEO that I've known, aside from SMBs, let's other people do all the work then takes all the credit.

SMBs? Super Mario Bros?

 

[Brighteye]

They get high rewards because it's a high-risk job. Small decisions taken could be highly influential later on, and the company wants the best it can get in order to minimise these decisions.
In order to get qualified people it needs to offer the CEOs more money than anyone else. Perhaps if the companies had offered more money they wouldn't have done so badly?

 

[Murky]

SMBs? Super Mario Bros?

Small Business Owners

 

[Neomega]

But it is possible to be as irreplacable as 5000 average workers. And it is entirely possible to be 5000 times more valuable to the life of a company than the average worker. And although they may not "work 5000 times harder" than the average worker, their individual impact on a company could easily exceed 5000 times the contribution of an average lackey on the factory floor.

I would say this is highly disputable in the technology sector. A marketing whizz cannot be 5000 times more valuable than a plasma chip etching engineer.

They wouldn't be collecting severance pay if the were so irreplacable. Looks like some of them are getting hefty paydays for doing 5000 times more damage to the company thanthe average worker could.

Boo yah

 

[EdwardTking]

CEOS claim they wish to be paid on results and their results justify their pay.

Fair enough.

So competent and successful CEOs should earn a lot more than me;
but if they screw up and their company nose dives, then they
should be sacked with absolutely no compensation.

Time for courts to rule that CEO contract terms requiring compensation
on termination even in the event of gross incompetence are unlawful.

 

[mrt144]

They get high rewards because it's a high-risk job. Small decisions taken could be highly influential later on, and the company wants the best it can get in order to minimise these decisions.
In order to get qualified people it needs to offer the CEOs more money than anyone else. Perhaps if the companies had offered more money they wouldn't have done so badly?

it isn't that high risk though, if the price of failure is a bonus and severance millions and millions of dollars. think about it; if you succeed you can parlay that into a astronomical payday, if you fail you get a huge payday and severance package. where is the risk and consequence of failure for CEOs? that they wont have a job again?

the only place to do well as a CEO is in an up and coming company so you can parlay that into a CEO job where the price of failure is higher than the reward of success at the mid sized up and comer.

 

[mrt144]

i think the biggest thing that needs to change is the outlook on company potential and compensation related to that.

make it so that the CEO doesnt get a payday until they hit some benchmarks that are unrelated to stock price. make sure they don't get compensation in stocks/options unless the expiration is far into the future, or is tied to business related benchmarks.

part of the problem of offering stock or options as compensation is that it dilutes the current stock, it creates an incentive to focus on stock price alone in the tenure of the CEO and not underlying fundamental business. you want the incentive to be the business becoming stronger, not the price of the stock rising.

also, the hiring term should be set at 5 years or so. and if the CEO bails before that they lose all compensation. if they are fired before that because they sucked ass they will lose 95% of compensation. the idea that there isn't enough qualified and motivated people to fill these positions because of potential downside is nonsense. i'm sure there are more than a few VPs in the world that would jump at the chance to be the CEO with high risk of losing it all because there are people who would rather run a company than be a VP for life.

 

[Godwynn]

Thanks mrt144, now we are getting somewhere!

 

[Whomp]

Interestingly, I talked to this guy in a bar in Chicago. http://www.forbes.com/finance/mktgu...IdPersonTearsheet.jhtml?passedPersonId=937161

He was here for an investor conference in Chicago and they'd just finished having dinner and was bonding with his people. Not being shy we started talking to him about exec. comp. You'll see his salary is pretty low but his bigger stake comes from share performance which has been solid. What should never happen is to reprice stock options for a CEO.

He agreed that executive comp was out of hand. Some of the things we discussed as a better way to compensate would be focus on topline growth (revenue) and less on cost cutting, EBITDA since you can't mess with the numbers and FASB's not much help and ROE is a great measure imo. Share price can be deceiving at times but well run companies will always (ultimately) outperform.

I think what a lot of you would find with companies like Home Depot is when Jeff Immelt took over at GE how many of the other executives were offered big positions within days.

GE and McKinsey & Co. tend to be incubators for top talent. I think you'd be shocked how many high level execs had a stint at either firm.

 

[amadeus]

CEOS claim they wish to be paid on results and their results justify their pay.

Fair enough.

So competent and successful CEOs should earn a lot more than me;
but if they screw up and their company nose dives, then they
should be sacked with absolutely no compensation.

Why just the CEO? Why not everybody in the company?

Time for courts to rule that CEO contract terms requiring compensation
on termination even in the event of gross incompetence are unlawful.

Great idea! Let's just have rule-by-decree from now on, it's not like I really miss having a say in the government.

 

[Neomega]

A better system would be options granted years after their retirment, so they plan to leave a healthy, profitable company, and not inflate numbers to inflate prices, adn then cash out when leaving.

Sometimes it takes years for good groundwork to come to fruition.

 

[MobBoss]

People are strange. If I had several million dollars put away and could live off the interest, I would never work another day in my life. Wtf does someone need to work to earn so much friggin money anyway? I dont get it.

 

[Tabasco Sauce]

::sigh:: What can you do? I just don't understand how they figure these things out, and come up with these numbers with a straight face.