Bonus Checks May Be Slashed as Boards Eye Ethics Implications
Dec 8th, 2008 • Posted in: NewsCar company CEOs, smarting from slap-down for taking luxury private jets to seek Washington bailout, return to Capital in fuel-efficient hybrids
WASHINGTON and DETROIT
December traditionally marks not only the holiday gift-giving season but also big end-of-year bonus checks for corporate CEOs — a tradition that may be curtailed amid this year’s ethics controversies over executive compensation.
BusinessWeek’s Ben Steverman reports: “As corporate boards begin discussing 2008 bonus awards, it is a near certainty that U.S. CEOs will get smaller checks — and many will not get bonuses at all. To blame are the plunge in the stock market, the financial crisis, the downturn in the economy, and also an environment that makes hefty bonuses toxic in the arena of public opinion.”
One boss who did not get the memo was Merrill Lynch chief executive John Thain, who was blasted widely on Monday for seeking a $10 million bonus during a year in which his firm sustained massive losses and appeared to narrowly avoid collapse only by being bought out by Bank of America. Late Monday, Thain apparently dropped his request, reports CNN.
Executive compensation has been at the center of debates over the morality of rewarding executives whose companies have performed poorly.
Some of those foundering firms, such as many banks and the major U.S. car companies, have asked lawmakers for a taxpayer-funded bailout.
As Washington moves toward finalizing some sort of bailout package for automakers, the Detroit Free Press and the Financial Times report that the CEOs of Chrysler, Ford, and GM have agreed to some government oversight on management and spending.
And, reports ABC News, the CEOs of the Big Three automakers appear ready to give up most of their salaries in return for a government bailout. But ABC reports that even if CEOs take a token salary of one dollar per year, the money faucet may not be entirely dry.
In the last year, according to data obtained by ABC, a handful of corporate executives took little or no base pay but still earned millions through stocks and other forms of compensation.
The Big Three CEOs recently were caricatured as the “poster boys” for corporate greed when it was disclosed that they flew to Washington on luxury private jets to appeal for a government rescue.
For their most recent appearance, reports the Detroit News, the CEOs drove to Washington in fuel-efficient hybrids.
Sources: CNN, Dec. 8 — Detroit Free Press, Dec. 6 — BusinessWeek, Dec. 5 — Financial Times, Dec. 5 — Detroit News, Dec. 4 — ABC News, Dec. 3.
For more information, see: Related Newsline story, Nov. 24 — Related Newsline story, Nov. 17 — Related Newsline story, Nov. 10 — Related Newsline story, Oct. 14 — Related Newsline story, Sep. 15.
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