Duffbert's Random Musings

1 - BAD archetype, GOOD point. Odd enough knowing that everyone else knows feels better - we all just keep watching (including myself). I wonder when people will demonstrate again or maybe even disempower enterprises in that respect ... perhaps never, cause we all fear to loose our jobs.
Some people say it's better to have no job at all than to have one working for !&%!$$" people / companies like that.
Last but not least it is a shame (does that help?) for any organisation (not just non profit ones) to employ people like that no matter what value they contribute.
Moral and Image should count more than plain number crunching. But as long as we keep buying from, working for and talking to such companies nothing will change.
Just my two cents.
(And no, I'm not jealous)

2 - Interesting feedback, everyone... As for Nathan's comments...

Yes, the perception was that the execs were bringing value, and that they were getting compensated for it. For that (base salary and options), I don't have too many problems. Excessive, yes. But still..

But then let's shift to Ken Lay. Takes the corporate jet to New York. Thing costs $6k an hour to have it in the air. Rather than wait a couple of hours, the second corporate jet is called into play to fly his wife up to meet him. And of course, one of those jets flies back empty. And what about the time he sent the jet over to Europe to either pick up or deliver his daughter's bed to her? I don't care *what* level of the corporation you're at... That's greed and malfeasance.

And while competition for executive talent does exist, a line needs to be drawn. If I'm costing the company $50K a year for dining and flying my wife first class, but then decide to cut benefits of my workers, is that right? If I'm costing the company $700K annually for a retirement package and then decide to close offices or cut staff because the "budget is tight", what does that tell the workers?

I'm not expecting austerity measures from upper management at companies. But I do expect that convenience perks like paying to watch the dogs gets cut just like education budgets or tuition reimbursements.

And Tom? I'll bring an umbrella stand to Orlando and we can discuss your purchase price...

3 - Duff,

You hit it right on the head. The Enron and Tyco cases were not the result of poor controls. They were the result of individual greed. Even the strongest control system can be undone by management override,

4 - This is the problem that has divided the University of Georgia, the Board of Regents, and the State Government over the past two years. The whole issue of compensation for UGA President Michael Adams blew up when he crossed a dangerous political line and essentially fired Coaching legend and Athletics Director Vince Dooley after 40 years of service to the University as part of a power struggle to emphasize academics over athletics (and get his grubby hands on money donated to the Athletic Association which Dooley would not let him touch).

Adams' compensation by the state is limited by law, so the fundation paid a supplement. They also gave a $48,000 a year contract to his wife for "Hosting duties" as the "First Lady" of UGA. According to a source on the faculty council, this was done so that she could bill her travel and entertainment expenses for trips when accompanying her husband on overseas trips to the foundation as an "employee" (she could not have done so otherwise).

The one expense that jumped out at a management review team from Deloitte was expensing $10,000 for a graduation reception for the law school. Nothing really wrong with this on its face until you realize that was the year his son graduated from the law school and he had never hosted such a graduation reception before (or since). His son also had his tuition at Emory University paid for by the foundation. Tne foundation also bought a house on the toney Buckhead area of Atlanta to host "official receptions" in the state capital. Of course, his son lived there while in school at Emory. One laughable finding was that when his son came home to visit one weekend, he could not stay at home with his parents because they were hosting out-of-rown donors/guests, so they packed him off to a hotel and billed the foundation for it.

So the salary for Dr. Adams this year?

State Salary: $234,799
Supplement:- 303,667
Total-------- $538,466

His wife has resigned from her "position, so the $48K is now gone. But they still get the cars, the mansion to live in, the servants. the country club memberships, etc.

In the meantime, Vince Dooley, who is as fine a man as you would ever want to meet and made the University of Georgia a national name, is left a meaningless figurehead. Dr. Adams continues to claim credit for raising the academic excellence of UGA when the reality is that the Hope Scholarship raised the standards, not anything he has done.

Disclaimer: I did not attend UGA so I have no axe to grind over the clear mismanagement and perceptions of wrongdoing by this university president. It has just been very interesting to watch.

5 - I don't think Tom is attacking an organization or class of organization. I think he's pointing out the folley of a culture. The culture (market value as you're calling it, Nathan) says excess is ok.

Competing for talent in a free enterprise of course means there will always be 'packages'. But the way in which that package is used is what is most telling about the culture which is made up both of the CEO's and those that select and hire them. I'm not suggesting accountability or mandatory charitable giving from these generous salaries... I agree with Tom. Do you inspire your employees and project the values of the company and improve your community through a $2500 a month entertainment budget? I think one -could- if one chose to do so, like taking the top 10 employees out for a nice lunch each month or sponsoring a local food distrubution charity for a week...

The business culture that glorifies the excess of success has come to focus too narowly on the bottom line and forget that being a prosperous member of the community has some responsibilities attached to it, or ought to anyway.

6 - What was the change in revenues for this not-for-profit company during the tenure of this CEO? Did he have any competing offers from *for* profit companies that were offering more generous packages? Not-for-profits compete for talent just like any other organization, and it's the responsibility of the organization's board of directors to ensure that the worth of such an individual fits with both the market rate, and the benefit generated for the organization.

It's not as though even the Enron executives were somehow compensated "wrongly." They were compensated in proportion to the perceived value they brought to the organization, which posted record profits during their tenure! Yes, it was fraud -- and that's the function of an auditor, to uncover that -- but shareholders and directors acted on the best information available to them at the time, which was that Enron was making ENORMOUS amounts of money. Surely you had that perception inside the company at the time as well.

7 - Tom,

I feel the need to remind you that an umbrella stand is a vital and morale building piece of equipment in any office.

To gaze upon its diminuative stature while basking in the exiguous nature of its usefulness cannot forestall an overwhelming sense of impetus driving one on to immolate all who were associated with the purchase of the stand in monumental fashion.

Wait- that meant it's good, right?

8 - /rant on
All of you actually read the proxy statements that you get, don't you? Who sits on the Compensation Committee's of all of these companies? Officers of other companies. Do you really think that they will cut the compensation for one of their own? Or to make it some percentage of the lowest employee? And most, if not all, of these publically traded companies have "special health care" for their executives, they certainly don't get what the average worker gets.
/rant off

9 - So, how much for an umbrella?

I somewhat recall seeing some investigative report on tv (we won't get into if their information was right, where they got it, etc..) about some not for profit groups, where a majority of the contributions (something like 80+%) go for salaries of top people or founders of the organization, who often do very little if anything for the organization. I don't recall if they mentioned any state laws that might have limited this more to certain states or not, but what they were reporting was that it was perfectly legal where it was happening. I did not say ethical, but legal. I believe they even spoke with some of the people standing on street corners trying to collect contributions. I believe most had no clue and some didn't care.

I think they may have even spoken to the top person of one who really didn't care either. He was basically there to make a buck and not hiding it.

After seeing it you would have thought that it would have become a bigger issue, but it doesn't sound like it.

There is a Missouri State Employees Charitable Campaign conducted every year to try to encourage state employees to contribute. I guess the nice part is that there are requirements that organizations have to meet to be eligible. I also like the fact that the administrative costs are listed for most of the organizations, so that one might have a better idea of how much of their dollar is going to the cause.

They also have the Century Club Plus. This I can't say that I totally get. Employees that give $120 or more a year are recognized. I believe in the past it was automatic, now you have to check a box if you want to get recognized. I believe it really boils down to a piece of paper with your name on it stating that you are a member. If you are really giving for charity sake, then why would you want money to be spent to print a certificate showing that you did it. I could care less that anyone knows I did it.

I guess for a company it might be good PR to have something that they can display that recognizes them for their contributions, putting them in good light with their customers, but once again the money for the plaques, etc.. is coming from somewhere. Oh well.