CEO Bucks the Trend

A Point of View in our local paper talks about executive pay and how, perhaps in some cases, high profile CEOs may actually be worth the big bucks they get.

In executive pay, you get what you pay for

Peter A. Coclanis - CHAPEL HILL, NC


"[N]umerous empirical studies have shown that most executives have earned big bucks in recent decades because the share prices of their companies have risen dramatically. In the vast majority of cases, prices rose not through corporate abuses, cooking of the books or financial chicanery, but at least in part because the possibility of high compensation motivated very talented people at the margin to assume top-management positions at a risky time, and because these people, generally speaking, managed in such a way as to add tremendous value to shareholders, much more value than top managers themselves received in compensation.

"In other words, top execs did good for themselves by doing well for those for whom they worked."

Basically what the article is saying is that sometimes the reason executive compensation seems excessive is because their "pay" is based largely on company stock. The greater the value of the stock, (presumably thanks to their hard work,) the greater the value of their take home pay.

It's the trend to complain about how high some CEO's salaries appear. But let's take a hard look at whether they worked to earn it by helping all shareholders of that company in the process.
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The Customer is NOT Always Right

In a recent article,


Sprint customers get the brush off
McClatchy Newspapers
Sprint Nextel told about 1,000 disgruntled cell-phone customers that they would be better off with someone else. ... Sprint executives decided to break up with a group of malcontents who called frequently with complaints. "While we have worked to resolve your issues and questions to the best of our ability, the number of inquiries you have made to us during this time has led us to determine that we are unable to meet your wireless needs," stated the letter Sprint recently sent to these soon-to-be former customers.


If you were a Sprint Nextel shareholder, how would you feel about how your company treats its customers? At first you may think that's pretty shoddy PR.

Some investors, on the other hand, may applaud Sprint Nextel for their good business sense. Sprint Nextel has the courage to recognize the fallacious statement The Customer Is Always Right and instead say, "We are expending too many resources trying to please a subset of users whose expectations may exceed the capabilities of our products."

We may see more companies becoming more selective in whom they will serve, and whom they will not.

Please see A Consumer Blacklist? for another example.

UPDATE:

Sprint has been asked to pay each of these customers $200 - "the amount the customers would have had to pay if they had prematurely ended their two-year contracts with the company."

What works for the goose ...
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What would YOU do?

OK, here's the circumstance. You tell a friend you're headed to Las Vegas for a week of fun and excitement. He pulls a dollar from his pocket and says, "Great! Will you put this into a slot machine for me and give me whatever winnings that slot pays for my dollar please?"

You say, Sure, why not, and put his dollar in a specific pocket of your wallet or purse.

You go to Vegas and have a great time. You see some shows, gamble a little, and eat way too much.

On your last day, you remember your promise. So you reach into the special pocket where you find the dollar your friend gave you and put it into a slot. You pull the handle, the wheels quickly turn, and one by one they stop as follows:

• Cherry
• Cherry
• Cherry

Bing Bing Bing! Twenty thousand dollars. On your return, what would you do?

(For the purposes of this discussion, please disregard tax consequences.)

Would you ...

1. Hand your friend two dollars and say, "You doubled your money!"

2. Give him ten thousand and keep ten grand for yourself.

3. Give him some other amount and keep an amount for yourself. How much?

4. Tell him you won $20K with the dollar he gave you and declare how much he's getting. How much?

5. Tell him YOU won $20K while in Vegas and would like to share some with him, because he's been such a good friend. How much?

6. Give him the whole $20,000, but hint like crazy that he should give you some for the effort.

7. Give him the $20,000, and make no attempts to receive anything in return. (Bonus if you make a fuss over accepting such a gesture.)

8. Give him a heartfelt pat on the back, saying "better luck next time," and spend the entire wad on yourself. After all, who can prove who's dollar it was?

9. Another choice?
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