Wednesday, September 24, 2008

Corrupt fubar

Imagine losing 1 - 100 - 900 million dollars of someone else's money. Anyone who does that ought to face some form of severe punishment.

Unfortunately the corporate world doesn't think like that. And it seems pretty cool with CEOs who totally ruin the show. The morons who ran corporate America - made like 20 billion dollars in pay and bonuses - and in return - they totally ruined many good companies.

How do you value performances - by the rise in the stock price? by this year financial statement?

The problem with those measures is that - it often results in manipulation by the top brass. All the leaders do is to lay down some creative accounting or cost cuttings... artificial means to jack off the share price and thus multiply their bonuses. Nevermind the effect.

Even if the moron get sacked from the job - they still manage to walk away with a considerable lump sum payment. One idiot CEO from one national australian bank here - resigned after one of his plans went awry costing the company millions of dollars - his reward?

He left with 14 to 17 million dollars in severance pay. Whhhhaaaaaaat????? WTF?? $17,000,000.00 dollars?????

He ought to have been thrown from his office on the 35th floor with a no parachute clause.

Here's a simple solution: the top management of a public corporation - should have their pay mainly derived from future share options with long expiry dates, ie. they can't immediately cash out their shares after they get sacked or resigned from the firm. And the amount of cash they get is directly linked to the long term future of the company's performances. Financial disasters related to them - ought to result in severe financial penalties, ie., the canceling of stock options etc..

This should be enforced worldwide. Good luck with that though.

Anyways - read this and scream.

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