Call it what you will – “relief package” or “Bail out” it would have been unprecedented in US history as far as I know. The Government of the United States- the epitome of free enterprise- moving in to shell out $700 billion. To prop up the gasping economy by buying out what are now called “toxic” assets from banks. To breathe some relief to a floundering financial services industry- which seems to have strangled itself by extending credit, almost recklessly. With President Bush pushing his weight behind it, the bail out, many thought, would be a cake walk. A few hours ago comes the news that it was rejected by the House of Representatives.The stocks have crashed still further not only in the US but with repercussions the world over.
I noticed with interest that the Bill actually sought to do something which I thought was eminently sensible- putting a cap to executive severance compensation. Otherwise, the golden parachute, if you will pardon the poor pun, would be extremely handy to a coveted few in a bail out.
An article in USA Today gives perspective into the amounts people got as part of such packages-and the amounts are huge by any standards. CEOs of companies like Merrill Lynch, Lehman Brothers etc feature in this list just as do others like Freddie Mac and Fannie Mae ( which perhaps kicked off the current crisis).
The golden parachute, to me, is a luxury that most companies can do without. When times are bad and lay-offs take place the first to get hit are the front line guys. in deeper crises, managers and executives stand to get fired as well. But the CEO who sees all this through gets a handsome reward for driving the company down the drain?
Sure the risks are higher at top levels and the rewards should be better too. But they should be based on performance and results- just as it is for most other folk.
What are your thoughts?
You can subscribe to the A-Step-A-Day series using RSS at https://bprao.wordpress.com/category/a-step-a-day/feed
This is Post No: 302 of the “A Step A Day” series : To provide perspective and provoke thought to facilitate self-development across a wide spectrum of issues- big and small- crucial for executive success.