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December 30, 2006

CEO salaries, bonuses

I think “obscene” best describes Goldman Sachs CEO Lloyd Blankfein receiving a record $53.4 million bonus for one year.

I have nothing against Goldman Sachs or Mr. Blankfein. I just have reached my breaking point with the salaries we now pay to corporate executives, athletes and movie/music stars.

For the money Mr. Blankfein is being paid this year, the poor of Kansas City could be fed for more than 1,000 years, and the working people of our area could receive high-quality medical care and education for decades. We also might find a way to overcome the blight of HIV/AIDS.

What is wrong here?

Corporate America, beware. Sooner or later, shareholders and clients are going to rise up and reject you so obscenely rewarding people who already have so much with even more, while at the same time you fight against livable wages for all your workers, as well as health care, quality education and an equal chance for all to reach for the American dream.

More important, ask yourselves this question: Would the God who created us all approve of what we are doing here? I think not.

Deacon Allen Ohlstein
Director, Episcopal Anti-Hunger Network/Kansas City Community Kitchen
Leavenworth

Comments

BeProudAmerica

Yes, the salaries are unreal BUT before you start casting stones, take the time to look at the facts of Goldman Sachs and CEO Lloyd Blankfein.

1) Blankfein became CEO in the last year.
2) Net profit rose 70 percent to $9.4 billion in 2006, a $3.9 billion increase in the last year
3) Share prices rose 58% over the past year

So, yes it is an insane amount but at least the salary has been in response to an incredible year for the company. Is all the good fortunes brought on by Blankfein, probably not, but did he lead the ship, yes.

It is when a company loses money and the CEO still gets a bonus is what baffles me.

mike d

Lloyd Blankfein is being paid $53 million because someone is willing to pay him $53 million. A-Rod is being paid $25 million because someone is willing to pay him $25 million. Who is anyone to decide if this is too much, other than the person signing the check? What is your job worth? Tell us what it is and we will determine what your salary should be. People who think like this guy amaze me. Isn't envy a sin? My advice to him, Sophie, and all the other crybabies out there: Start sending your resume to fortune 500 companies, learn to act or hit a baseball, otherwise quit your crying, you big babies!

JUNGLEJACK

"If the CEO is limiting the company's future for the purpose of loading his pockets, he is not a deserving manager."

Jack - I agree, and if I were a shareholder my opinion would mean something. Otherwise I'm merely speculating about a situation that is basically none of my business.

"No matter how far up the ladder he/she is from us, his/her salery is on the price tag for everything we buy."

This would greatly depend on the type of business. There are rare examples of such "price tags" that cannot be avoided entirely if the potential customer is so moved by the grossly overpaid executives of the corporation in question.

jack

jj: Simple corporate economics. A corporation is nothing but a peice of paper. It can not "make money", "pay money", or "pay taxes". Only people can do those things. Whatever a CEO gets paid is paid by "us". No matter how far up the ladder he/she is from us, his/her salery is on the price tag for everything we buy.

It bothers me that much of the upper levels of management in this country believe that they are worth many, many, times what their employees are worth. Last time I saw any data, many more times the employee pay than in any other country. IMO we have developped a whole new generation of "robber barons".

As in the past, the active word here is "robber". The employees are taking less and less out of the companies they work for. At the same time, upper management takes more and more. Instead of "reinvesting" in the company, the upper level takes money out of the company in huge chunks. This limits the prospects for the company having a prosperous future.

If the CEO is limiting the company's future for the purpose of loading his pockets, he is not a deserving manager.

Reality Check

CEOs and other senior management are essentially hired to keep a company from running into the ground. Given the billions in net earnings Goldman Sachs achieved this year, and the near-record price of their stock (~$200/share), I think a significant bonus is in order.

My employer, on the other hand, awarded huge (for our industry) bonuses to the CEO and COO two years ago, in spite of the fact that earnings were down, and the share price had stagnated for a few years. The compensation committee's excuse: our formula for bonuses relies too heavily on the most recent year's share price, and, gosh-darn-it, they're doing a heck of a job. Then last year, the committee gave them both huge salary increases so that they could pay bonuses more in line with the "formula."

Make a ton of cash for your shareholders: share the rewards. Maintain the status quo: Take a little reward for that. Lose money for your shareholders: lose your job and forget the golden parachute.

JUNGLEJACK

"I have nothing against Goldman Sachs or Mr. Blankfein."

... you could have fooled me.

"I just have reached my breaking point with the salaries we now pay to corporate executives, athletes and movie/music stars."

... the salaries "we" pay? Excuse me, Deacon - but just what CEOs, atheletes or movie stars are on your payroll?

"Would the God who created us all approve of what we are doing here?"

You mean the covetousness that you display towards those in your letter? Or blaming others for our problems? Or gossip?
You, my dear Deacon are guilty of all three.

whispering_to_kc

Sure, and some ungrateful Romans complained about Caligula even while he kept them busy building massive yachts and palaces and engaging in ... well, you know.

$53.4 million divided by 30,335 GS employees is only $1760/job, a bargain.

kcstar_is_one_sided

As usual Sophie, pure BS.

Big companies allow us as a country to distribute energy, food, clothes,etc effectively. Just because a company is big does not mean it is necessarily bad.

Sophie Demartine

What the Deacon doesn't "get" is that when you consider that highly paid corporate execs spend half of every day thinking about how to stay out of prison for all the risks they've taken circumventing regulations and financing Republican politicians so that their corporations can take more from the public trough and not pay for their crimes against nature or humanity, in order to enrich the major shareholders they work for, then maybe their obscene salaries are necessary to keep them taking those kind of risks.

I know I wouldn't risk a few years in prison unless I was obscenely paid to do so. If we expect our CEOs to continue polluting, filling the campaign chests of Republican politicians and breaking the law in order to assure double digit growth, for their major shareholders, than we need to pay them for it.

Multi-million dollar salaries may seem like excessive compensation for just good management and decision making skills but it is not excessive when you have to rob the poor, pollute and sometimes murder in order to keep the corporation profitable.

People need to be highly paid in order to sacrifice their morals and integrity, to sacrifice the greater common good for the good of a few individuals.

 
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