No 'Golden Parachutes' For Bear Executives

Bear is gone, and we feel badly for the 14,000 employees, many of whose net worth has been devastated and many who may lose their jobs. As is typically the case, the many suffer for the failure of the few in management.

Unlike the typical situation, according to Reuters, Bear will not be lavishing its executives with outrageous change of control compensation payments.

What a contrast between Washington Mutual (WM), where the company is in tatters and executives are given a pass on bad loan losses in their bonus plans and Bear Stearns (BSC), where, according to Reuters, the company “does not offer payouts, known as ‘golden parachutes’, for executives in the event of it being taken over.” (Reuters).

As much as we feel both empathy and sympathy for the injured Bear employees and the inside and general shareholders who are wiped out, we respect that Bear chose to play by compensation rules that make the executives suffer along with everybody else in this historic collapse.

Let’s wait to see if the same is true when Bear executives are fired or squeezed out following the takeover — we hope so. It would be an inspiring and hopeful sign that the the risk and reward that governs for most of us also applies to top executives — at least in some companies.

Now that investors will recieve from $0.01 to $0.06 per $1.00 of investment cost, it would be tragic to see executives recieve $10 to $20 in severance for each $1 of recent annual salary.

Comments

[BobS]

This article is right on! Tis about time! Speaking about executive compensation in general, I've long thought that any compensation above seven times the average of that paid to the lowest paid 80% of employees should be paid out of capital as a recoverable loan and then forgiven two years later (taxable) only if certain goals were met.

2008 Mar 17 10:51 AM

[Woz2000]

Bobs, it really doesn't matter how you structure their pay, they find a way to get more... just like the article mentions WM and their bonus scheme that somehow ignored the losses. Whatever the goals, they just move the posts!

2008 Mar 17 05:30 PM

[cfish]

I bet the fed tagged this on, because otherwise it'd be publish outrage.

2008 Mar 18 02:29 AM