Executive Compensation and Layoffs in America

Tuesday night President Obama spoke about a noble man from Miami by the name of Leonard Abess who cashed out of his company receiving a $60 million bonus. He took that bonus and gave it to his workers. Why can't other executives take a pledge to follow that example and set aside their bonuses to prevent further layoffs in this bad economy?

How much is enough money to earn in one year? Why can’t every American executive take a pledge to limit their total compensation to no more than $500,000 per year retroactive to 2008 and continuing until this current economic crisis is over so that more employees can keep their jobs and weather this storm? Executives have asked the employees to make sacrifices and take on extra responsibilities while there are still people at the top of companies who have not made any substantive sacrifice that they will in fact feel on any real level. Some executives have said they won’t take salary increases but what about cutting their salaries a bit for the betterment of their companies overall?

Companies are becoming top-heavy and that cannot be good for their long term fiscal health unless their executives are investing or spending the vast majority of their incomes in the communities served by those companies. If the people making large salaries are saving the majority of their money they are actually hurting the economy by removing cash from the active monetary flow that sustains our economy. This is a consumer based economy and spending is its life’s blood. How about flipping the bonus structures so the people at the bottom can receive up to 30% salary bonuses and the people at the top have their bonuses capped at 5%? The people at the bottom will actually spend their money and stimulate the economy which benefits everyone and if executives publicly shift bonuses from executives to workers and use capital savings on executive compensation to save jobs it will put pressure on other companies to do likewise and improve the image of the companies that do it with the public likely increasing their market share. That would in turn negate the need for job cuts to improve profitability as market share increases related to increased public good will toward those companies would occur. Has anyone seriously considered giving more to the workers without whom companies would not function and tightening the belts of those who direct from above? It would yield benefits and restore faith in the decency of people of means which is very damaged at the moment in our country.

CEOs and CFOs across America should also be mindful of history when making their financial decisions in the coming months and years. When the gap between rich and poor becomes too great and the working middle class breaks down, revolution occurs. This is a fact of history. Eighteenth century France and twentieth century Russia are prime examples of what kinds of conflicts arise when there are broad divisions between those who have and those who have not. There is a tolerance level for inequity in any society past which the societal morays break down and people who once would never have considered violence become so desperate that they abandon their peaceful natures and seek out sustenance no matter the means required to obtain it. That breakdown begins with people losing their means of support through legitimate avenues of employment.

I’m sure that none of the executives wants to hear these things but they need to know that the American people are reaching the point of losing all faith in the ability of corporate executives to make fundamentally sound decisions. Whether justified or not the perception is that their decisions are based on personal greed with a total disregard for the well being of the people that they oversee. When we hear that AIG handed out billions in bonuses while crying poor to the federal government and laying off workers it strengthens the perception that corporate executives simply don’t care about the working people of this country. The onus is on the executives to restore trust and faith in their judgment and basic human decency. It is time for the people in charge to step up to the plate and take bold measures to show that they are worthy to lead.

The people have worked hard and done our part to keep the economy strong but we cannot support the nation if we don’t have jobs and those who have excess wealth need to understand that we are not the least bit sympathetic to their cries of hardship when their hardship is merely less excess and our hardship is fighting for survival. We simply don’t believe any longer the claims that executives deserve to earn millions when they have been the architects of our current economic chaos. When they can right the ship of our economy as a group they deserve a pat on the back and a handshake for fixing what they messed up but really no more than that. The workers didn’t choose to invest in risky investments. We just kept doing our jobs. We didn’t lobby Congress to deregulate the banks so we could repeat the mistakes of the 1920’s. We just worked our tails off for the company every day. We are suffering for the bad decisions of those at the top while they get huge bonuses. Why is that?

Need should always supersede greed in decision making. If you can afford to go with less so that someone else can merely have enough to survive it is your duty as a decent human being to do so. If you cannot put aside your luxuries for the survival of another human being then you are not deserving of those luxuries. Preaching the importance of sacrifice and actually leading by example are two very different things. The challenge to the wealthy has to be laid down to put their money where their mouths are and make real sacrifices themselves before asking for any more sacrifice from those who are of lesser means. That doesn’t mean cutting out caviar, that means giving up enough of your salary to make sure that some other people can keep their jobs when you make enough to sustain several families every year.

Nobody is going to really suffer in this country only making half a million dollars in a year but a lot of people could benefit if for a couple years nobody made more than that and the surplus money was redirected to the working folks whose work actually made the rich folks rich in the first place. The question is whether the people at the top have the decency to really sacrifice for the good of their fellow man or if they are all just completely self-absorbed and will let the unwashed masses starve while they live it up in their ivory towers.