BLADAM - Entry - Zap ridiculous disclaimers, reform CEO pay in one fell swoop

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Zap ridiculous disclaimers, reform CEO pay in one fell swoop

Stupid disclaimers. You know ‘em, and you probably either ignore them or laugh at them. Slightly enhanced samples that are either spoken at 420 words a minute or that take up a bazillion lines of tiny tiny text on the back of ads in news magazines.

“Warning: Stunt driver on stunt track in stunt car. Do not drive like this [except in Rome]”
“Warning: Medication may cause sniffling, itching, numbness in extremities, permanent paralysis, or death. [+ 31415928 more lines that no one bothers to read]
“Remember, drink responsibly! [Also, be nice to your mom. Put up the toilet seat. Don’t be prejudiced. Love a geek today.]
“Results not typical. Your results may vary. [Let’s face it… 99.9999% of people on this diet don’t lose an ounce. We just managed to find the one freak who had liposuction after taking our product.]

Completely useless, aren’t they? Somehow I don’t think we’re gonna hear stuff like this from beer-bongin’ frat boys:
“Hey Sarah, I’m concerned about you! I mean, Mr. Jose Cuervo insists that we drink responsibly, and I just don’t think you are! Can I get you an orange juice instead?”
“Whoa, dude! Didn’t you listen to that ad? It said DON’T drive like this! Come on, pull it back to 55 man!”

* * *

And then there’s the seemingly unrelated issue of corporate compensation.
Forbes magazine lists some of the worst (most unproductive) CEOs and notes their compensation, including:
- Richard M Kovacevich, Wells Fargo, $72.04 million
- Edward E Whitacre Jr , AT&T, $49.01 million
and, brace yourself:
- Barry Diller, IAC/InterActiveCorp, $295.14 million (over half a BILLION dollars in the last 5 years, and ranked as one of the 15 most unproductive CEOs in the entire survey)

Which raises some questions:

If compensation is intended to reward good performance, why are so many outstanding leaders (in the public and private) sector making five figure salaries while many total losers and ruthless-jerk CEOs are making more than 100x their salary?
If we also assume that compensation is intended to incent good performance, shouldn’t we ask: do any humans really *need* $xx millions per year to get out of bed and work hard for the day? Given that there are, absolutely without a doubt, an enormous number of extremely intelligent and hardworking and respectable folks who would do wonders for a company at $x milion or even $xxx thousand per year, well… WTF?!

Admittedly, I’ve kind of stacked the deck in my above examples a bit: I mean, really, who loves their bank? Or their phone company? Personally, I find AT&T to be one of the most unpleasant, irresponsible, and customer-non-centric companies out there, but then hey, maybe that’s just me .

* * *

Never fear, I have the answer to both problems… a way to get rid of moronic speed-read or 1pt font disclaimers while effectively shaming the grossly overpaid CEOs who perform worse than would Paris Hilton in a dramatic Shakespearean theatre role.

In another article, Forbes complains that trying to do anything about CEO compensation is likely to either be unsuccessful or backfire, perhaps resulting in a further crapification and obfuscation in shareholder reports. But my idea wouldn’t have that problem.

Ready for it? Replace the disclaimers with two required placements of Consumer and Stockholder Truth:

On every TV, radio, and print advertisement, the following must be sanely presented: “Last year, the [company-name] CEO made $78 million, median [company-name] worker: $11,000. Stock has decreased 17%.”
On every stockholder quarterly / annual report, the company must present a “Compensation and Performance Summary” in one page, in normal font. It’d include exactly what the CEO and other key executives took home, how the company did (particularly in its sector), and so on. No forward-looking B.S., no big long charts. Just a one page, ideally-bulleted summary. I mean, hell, I don’t have time to read 50+ page shareholder reports, do you? Didn’t think so.

Okay, so I’m kidding a bit with the first part of the idea. But seriously… don’t you think that there’d be some hell to pay for CEOs who were (effectively) publicly outed as greedy and incompetent asses? And, in an ideal world, also some come-uppance for the lazy or thoughtless jerks who approved their compensation structure? My favorite is when *especially* bad CEOs are finally shown the door… and then they get a $100 million dollar severance package or the like. Often times, this happens around the same time that free coffee is eliminated from break rooms and lots of minimum wage folks are let go with two weeks pay.

* * *

Having seen what I perceive to be more sane and more humane economic structures and practices in place in Europe and Australia, I admit that if I could wave a magic wand and force exec pay to be no more than 10x worker bee pay, I’d do it. But yeah, that’s never going to happen here in America. So instead, I’d love to see executive losers simply get tomato’d in the public eye and forced to resign in shame. Can you imagine, for instance, an “American CEO Idol” combined with a “CEO Gong Show” and “CEO Survivor” where CEOs have to defend their performance and keep others happy or get voted out of the cushy work world? Not quite sure how instructive it’d be, but it’d sure be entertaining .

* * *

Related BLADAM entries:
- The Free (and Stupid) Market

- Blathered by Adam on Sunday, May 6, 2007 at 16:42 [ Permalink | Trackback ]
- Filed under Business and consumers • Society • Workplace
- Commented on by 11 folks so far. Scroll down and see for yourself (and join in the conversation!)

Comment from member JohnMu CHeeseland (Switzerland) [ BLADAM Profile \| URL ]	Sane and humane in Europe? Not where I am . Every time one of the CEOs of the large companies is in the media for having an outrageous salary, the company PR spokespeople come in and say “if he went to the US he’d get more” to justify it. DARN YOU, AMERICANS!! The social divide is only going to get worse like that. Who would be so dumb as to ask for less if he could have more? The crazy thing is those CEOs who do not want millions and millions usually end up with a salary like $1/year (of course outside of the benefits, stocks, etc etc). Why can’t people just take a normal salary? - Posted on Sunday, May 6, 2007 at 22:39 [ Permalink to this comment ]
Comment from Hawaii SEO Honolulu, Hawaii [ BLADAM Profile \| URL ]	The blog comment area is for use by trained personnel only. Adult supervision is required at all times. Caution: Some comments may be harmful if swallowed. Warning: Bad comments may cause eye irritation. Redness, blurry vision and tear production may occur. Comments may cause drowsiness, dizziness, headache, anxiety, nausea, insomnia and in extreme cases hair loss. Do not attempt to read comments while driving a motor vehicle or operating heavy machinery. Comments are not to be used a replacement for human companionship. Warning: Some comments may contain traces of nuts. This blog is not a toy. Keep out of reach of children. - Posted on Sunday, May 6, 2007 at 23:30 [ Permalink to this comment ]
Comment from Zack Lincoln, NE [ BLADAM Profile \| URL ]	Sports Organizations have salary caps .. why doesn’t Corporate America? CEO’s are equivically hitting the Lottery on an annual basis. If there was an imposed salary cap and lets go so far as to tax both the CEO and the company heavily if they exceed the cap. It might allow for there to be such a thing as a living wage on not a minimum wage within these companies. The extra taxes could be used to fund national health care for the non-insured. But hey, I have a better idea. Let me run IAC/InterActiveCorp for 1 year .. I’ll even do it at a cut throat rate for lets say $45.14 million/year which will save the company 1/4 billion my first year!!! If I don’t do well . I’ll resign with no severance package. I think I can live off of $45 million comfortable for the rest of my life. It’s a win win! - Posted on Monday, May 7, 2007 at 13:20 [ Permalink to this comment ]
Comment from Margret [ BLADAM Profile \| URL ]	If only it were that easy. - Posted on Thursday, May 10, 2007 at 11:19 [ Permalink to this comment ]
Comment from member JoeDuck [ BLADAM Profile \| URL ]	Nicely provocative post, Adam! As a fairly hard core Capitalist guy I think CEO pay is one of the hardest aspects of the system to justify. Pay weirdness is partly a function of the higher up schmoozing networks where board member/CEOs reward each other in ways that hurt shareholders and are not market driven. I like the disclaimer idea, but rather than capping pay I tend to favor incentives via stock, and I don’t object to a CEO making $100,000,000 if she elevates the company value by billions. How much is Dr. Schmidt worth to Google? A lot. If you cap him at $X you’ll disincentify him. Also important is what they do with all those billions. Buffet and Gates are giving most of it away to the poorest folks on earth. To the extent that the rich do this (and it is happening more and more though I don’t know the stats here), one can actually make a case that the most equitable long-term distributions comes from what seem to be inequitable short-term distributions to the wealthy. I’m not making the case for that without the data, but one must extend the analysis beyond worker bee vs CEO. It’s probably a taboo topic, but I’d sure like to see a post about tensions between the pre-IPO folks and post IPO folks who do the same jobs at Google or other companies where IPOs brought big bucks in to the equation. - Posted on Sunday, May 13, 2007 at 9:51 [ Permalink to this comment ]
Comment from member JoeDuck [ BLADAM Profile \| URL ]	RE: Fun warning labels. My favorite of all time was a pictogram in my Sears chain saw instruction book: It showed a little cartoon dude on a ladder braced on the branch of a tree, chain sawing the branch off .... between the tree and the ladder! - Posted on Sunday, May 13, 2007 at 9:56 [ Permalink to this comment ]
Comment from member Adam San Francisco [ BLADAM Profile \| URL ]	gah, I’m gonna cry! For the first time, my own blog ate one of my comments… and an uber-lengthy one as well. And no, it’s not in the spam queue. Sadly, I have to finish some stuff (and call the Mom, of course!), but I’ll try to circle back here and repost my thoughts. This is a great reminder to me (and others) to copy any form input—especially lengthy form input—into Notepad before hitting that submit button {sigh}. - Posted on Sunday, May 13, 2007 at 14:25 [ Permalink to this comment ]
Comment from Siim [ BLADAM Profile \| URL ]	I totally agree with Margret. If only it were that easy. - Posted on Thursday, June 28, 2007 at 2:10 [ Permalink to this comment ]
Comment from Jim [ BLADAM Profile \| URL ]	My favorites are the displays in the airports that show you what you cant bring on the plane. They kindly display chainsaws and cans of gasoline. Yeah, like I was going to bring my Husqvarna with me today… I guess I better discard it next to this guys bottled water. Jim - Posted on Tuesday, October 30, 2007 at 10:13 [ Permalink to this comment ]
Comment from Lynne [ BLADAM Profile \| URL ]	I saw this article today and it reminded me of this thread… What a joke… This guy loses 8 Billion during his tenure and gets 160 million buy out… http://articles.moneycentral.msn.com/Investing/Extra/Lose8BillionPocket160Million.aspx - Posted on Tuesday, October 30, 2007 at 10:56 [ Permalink to this comment ]
Comment from Jose Learn to Read [ BLADAM Profile \| URL ]	In any organization if they are giving recognition of success for any plan to CEO’s. than they need to willing for taking obligation of bankruptcy of any projects. Still it’s really terrible matter to push them from resigning their position. - Posted on Wednesday, March 26, 2008 at 1:45 [ Permalink to this comment ]

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