Wednesday, November 23, 2005


GM announced yesterday that they would be laying off 30,000 employees and closing 9 plants and reducing capacity in 3 others. After all that, many of the people who watch this sort of thing - I admit to being only partially informed - say that this will not bring GM back to profitablity. It will, hwoever, trim GM's workforce. My question is: Has anyone thought about trimming the top?
I wonder how much the Executive Team of GM makes? Do you think there might be substantial savings there if the execs took a pay cut? How much money could GM save just by getting rid of some of the executive perks? And why aren't GM stockholders outraged by this?
Don't get me wrong; I'm not an economist (I don't even play one on TV), nor do I know all the ins and outs of GM. But you gotta figure that the CEO and the other major execs are getting paid pretty well. Does there stewardship of the company warrant that they get paid so well? Are they really doing that good a job?
And let's not forget that exec pay in the US is all out of whack! Why, for instance, should the CEO of Delphi and his team get 448 bonuses when they are asking their employees to take 50% pay cuts? Why, for instance, could K-Mart ask for bonuses for its exces when they had just announced that they were closing over 700 stores and declaring bankruptcy? Have these people no shame?
I had this discussion with someone the other day, and he argued that the market isn't out of whack; it works perfectly fine. But thinking about it, that's so much horse-hockey. For every CEO that proves to be more than competent, you have 10 that can't put their pants on without help. For evey CEO that raises shareholder value, there are at least 10 who think that the company they run is their personal piggybank and the shareholders are their personal loan officers - only they don't have to pay back the loans.
Look, the market is nuts! The oil companies get subsidies - Why? Big Agra gets subsidies - Why? Pharma gets subsidies - Why? Tax policy benefits the richest .01% - Why? Our priorities are so screwed up when it comes to money that we think people who are good at making it, or taking it from others - because let's face it, the CEO is just an employee - are somehow more competent and smarter than those that don't make a ton of it. We need to realign, folks, because if we don't we are going to be thoroughly screwed!


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