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Tilted Cat Head
Administrator
Location: Manhattan, NY
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Quote:
Originally Posted by Derwood
If a corporation of, say, 50,000 employees decides to give their CEO $10,000,000/year (and by this, I mean the Board of Directors decides), and that CEO fails, you suggest that the market should punish the corporation for the mistake. Isn't the end result of such "punishment" a round of low-level employee layoffs and a comfy severance package for the outgoing CEO? In other words, why support a system that punishes the lower level workers for the mistakes of the executives?
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Actually it is the shareholders that get to punish the company. Shareholders can request the BOD to remove the CEO. The workers SOMETIMES get punished in the harshest of environments and situations, but not always.
Sumner Redstone (majority stock holder) punished Frank Bianci and Tom Freston directly after stock prices didn't respond upwards to the "good moves" they were doing.
Note that many PRIVATE companies don't have the same monetary performance requirements but still compensate their CEOs with million dollar salaries.
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