Wednesday, September 24, 2008
What You Don't Know About Golden Parachutes
There is a lot of talk about Golden Parachutes these days in reference to the government's proposed bailout of the Wall Street Investment firms.
John McCain and others have suggested that to bailout these failed company bonuses should not go to the CEO's that put the companies into Chapter 11. I must wholeheartedly agree. I think what these men make is obscene to begin with and that is without the bonuses and golden parachutes.
Bonuses and golden parachutes are two different things. Bonuses are for doing well and usually given in some relationship to how well the company is doing. It is clear the CEO's did not do well so any bonus or stock dividend should be immediately nixed. But Golden Parachutes are severance packages negotiated at the time of hiring to cushion their transition to another company or retirement to the Bahamas to be close to their off-shore money. They are unfortunately a contractual obligation between the company and its chief executive officers. (yes, there are probably numerous employees in the upper ranks of the flow chart that qualify for this cushy landing.) Can these contracts be broken? Aren't they legally binding documents?
I have not read the fine print in any of these contracts. I sincerely doubt that the head hunters (highly rewarded people that find positions for these elites of industry) which procured these jobs originally for them allowed such language to be put in place. So can we, the US government as new owners, dump the CEO's out of the plane without that parachute? Somehow I doubt it and I think McCain knows that and he is just playing lip service to this concept to hoodwink us commoners that know nothing of such lofty matters.
At least in the Great Depression of the 1930's the CEO's had the grace to commit suicide by jumping out of their penthouse office windows. Without parachutes, golden or otherwise. But they haven't yet. Darn. Nor have we allowed these firms to go into Chapter 11 bankruptcy which would allow a renegotiation of all debts and contracts. Through mediation people holding contracts and bills would be asked to take a certain amount less - say 10 cents on the dollar.
But no, in the infinite wisdom of our government that never learns from its mistakes (see the savings and loan rescue of the previous Bush), to avoid a recession which would dearly hurt us little people we are going to bail them out before they sink (I think maybe that bailout is the name given to a Golden Parachute for an entire company) and bring down the world economy.
The truth is either way we (back to the little people here) are in deep dodo as we say. Because the price of this bailout in conjunction with the price we are paying for a war based on lies means any tax cuts or incentives to keep spending, any rescue from foreclosures on fraudulent mortgages, any hopes of universal health care, repair and replacement of our aging infrastructure system, or a comprehensive incentive plan for an ever greener country are down the drain regardless of who gets elected president.
So the bottom line here. Is that the GW Bush that has ruined the US economy (not to mention our faith in government) for the last eight years gets to do it for the foreseeable future.