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Originally Posted by firstdown
So before a board elects their new CEO they go to him to decide how he will get paid and what bonus they will receive. I don't think that is how it works but I could be wrong. You also say if they don't want to play by the goverments rules then don't except any bail out money. Then explain this statement by Obama.
"The administration also will propose long-term compensation restrictions even for companies that don’t receive government assistance, Obama said."
Look I agree that these CEO's get paid way too much at times and they also still receive big bucks when things don't go so good. What I don't like is the goverment deciding rather than the board and/or stock holders. Most of the banks problems started from goverment mandates to give out loans to people who could not afford them and now they are pointing the the finger at the banks and CEO's. Its also funny how the goverment is pointing out their waistfull spending when trying to pass a 900 billion doller bill. This new bill I heard is sponsored by SmithField Foods.
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It depends on the situation. If the CEO has been at the company longer than the board members then he typically sets his own pay, proposes his own compensation to the board and bob is your uncle there's money for his new boat. If the CEO is ousted from the company (a.l.a. Carly Fiorina) they'll have friends on the board who are willing to violate company policy and give out 21 million severance pay. What about Fiorina's replacement you ask? He's the CEO, Chairman of the Board, and President of HP. Do you know what that means? When he replaced a fired CEO he managed to get himself "elected" by the board to lead the board. This is typically how shit goes down man.
I think pay and bonuses should be voted on by the shareholders. If they want to give their CEO 1 billion dollars in pay good for them. Just rmemeber though who to ask for a handout when the tough times hit. The CEO might be willing to lend you 500 million if you ask him nicely.