How to Get Rich – Become CEO and Blow Up Your Employer
Daniel Mudd, CEO of Fannie Mae and Richard Syron of Freddie Mac led their businesses off a cliff. Incompetent employees like these are usually fired with little or no severance. These two are entitled to walk off with over $20 million between them.
Stanley O’Neal led Merrill Lynch to losses exceeding $30 billion as a result of its disastrous expedition into the world of sub-prime mortgages … and walked away with $150 million +, in addition to the over $45 million salary he received the year before.
Having worked inside a bank, I can say with absolute certainty that Mudd, Syron and O’Neal were advised by the sensible voices within their institutions that the sub-prime mortgage was a disaster waiting to happen. It was just one more attempt to overcome the law of financial gravity and anybody with a cycle’s worth of experience knew where this would end up. What these CEO’s did to their organizations was unforgivable …. and the fact they walked off rich as Croesus is a disgrace.
Where are the Directors?
The directors who approve these ridiculous compensation arrangements are operating multiple zones away from reality. What’s wrong with saying “Stan, an $8 billion hit and you expect us to pay you $150 million?” or “Dan, you invested in these crazy mortgages and you want $9 million?”.
Where are the Shareholders who Elect Them?
The institutions that own the stocks of these companies need to elect directors who will bring executive compensation back into the world of the sensible. In the meantime, CEO’s of public companies will live in a consequence free zone.
Posted by tedcape 