Corporate Compensation

In the last couple of months, all we’ve heard on TV and read in newspapers have been job cuts here and there. The latest I read was this story from Zimbio about Citigroup cutting jobs by 300,000. This story from Reuters presents a more dismal situation in the United States. More job cuts than the country has ever experienced since the depression.

Does the bad economy really have anything to do with job cuts?
In my Social Role of the Mass Media class this week, Max Grubb the professor talked about CEO compensation. The class discussed how the bad economy has led to many corporations laying off their employees. In fact we were concentrating on how it’s affecting newsrooms and newspapers. Max said the people who usually benefit most from corporate job cuts are the CEOs. What happens is that, as employee numbers are reduced, profit increases and CEOs get huge bonuses. That is probably why most CEOs have done it already or are considering doing it in the name of the bad economy.
Let’s take a look at this post from the Long Run blog.

It bears mentioning that many of the compensation amounts you see in headlines are not necessarily disclosed in context. For example, you may hear “XYZ CEO received total compensation of $120 million in 2007″. What you typically do not hear that their salary was a few million and the rest was “bonus”. Not feeling better yet? “Bonus” in the world of CEO pay is not the same as your $1,000 Christmas bonus. This figurative term refers to incentive pay that may have been accumulating for a decade and just now “vested” or became available to the CEO. Typically these incentive packages are in the form of company stock and subject to meeting certain company objectives like sales and profit targets. In other words, that pay may be the end result from many years on the job and having that bonus ride on the company stock. Not only is that pay at risk, but it aligns the CEO’s interests with the shareholders- making the company successful and resulting in a rising stock.

Is it right for CEOs to have all these compensations?
The packages for CEOs are huge. The get more benefits than you can ever imagine. Check out this post. The point is huge money is paid to CEOs for doing almost nothing. I found this blog about the CEO of Dollar General, Cal Turner very disturbing. He was axed out of the company for obvious reasons; not doing his job well. But the store continued to pay him huge sums of money as compensation. How do these people go to bed knowing they are getting paid for no job done?

What made me actually write the post was when I thought about the greed of the CEOs. Why should ordinary people whose one year pay will not amount to their monthly pay suffer at the advantage of the CEOs? I have suddenly realized the importance of SOX. CEOs must be made to account for every dollar they earn. What do you think? There may be people out there who will say that they spend huge amounts of money to earn their degrees so they deserve a good salary. But they don’t need to steal or cheat ordinary people to get back what they spent in Harvard or somewhere else.

My break from blogging
When I first learnt that I’ll be blogging as part of my PR online Tactics class, I was scared. What will I be writing about? When I finally got into the class, and we started talking about planning, I became excited. I love to chat and since blogging is all about conversation I figured it will be all right. I remember when I first pushed the publish button for my first post, I was so nervous.
I enjoyed reading Bill, Rob, Chris, Shel, and all the other blogs. They gave me inspiration and a sense of joy every time I read their posts. I will continue to read them. PR ethics certainly has many issues that I couldn’t address in these few weeks.

I f you ask me what I enjoyed blogging about most; it was getting into ethics and looking at it from my own perspective. What I thought PR professionals could try out.
I may consider blogging about international affairs later.
It’s been great these past eight weeks blogging about PR ethics. This is not a good bye to blogging but that I will come right back to it when I’m less busy with my academics.

 

Photos courtesy of Wilson Peterson Ass. and Youth Rights.com.