Monday, November 24, 2008

Filthy Rich CEOs

After all of the media's revelations about how the CEOs of floundering companies are running business, it got me to thinking. Why is Washington so quick to do a handout? Why haven't they done any auditing? It's because the CEOs are paying off high-seated policital leaders so that they don't have to give up their lavish lifestyles.

Here's the deal: Even among the car manufacturers, CEOs and other execs have maintained their salaries and bonuses, along with company perks (such as living across the country and reporting for work each Monday on a private jet), while their companies have made dramatic cuts to avoid from going bankrupt... for example, laying off over 50,000 employees. That's the average American right there.

It seems to me that by keeping the money at the top, they are sealing the fate of the company. If you break down the spending, it does the company NO good to continually beef up execs pocket because they're not the ones making the company money, nor are they the ones who keep money circulating to other businesses. The average-American is. Let's call him Joe.

Joe, works a 50+ hour week as an engineer at a medical device company, we'll call it Meditronics. Meditronics is a small business that declares a market value of $4 million. Joe makes just about $79,000 a year with no perks. He doesn't recieve a company car to travel the 45 miles to work, nor does he receive compensation for gas or time. He buys his own life-insurance policy so that his family is taken care of if he should die. He also spends his own money on a PDA-cell phone so that he can keep in touch with co-workers off-the-clock. Joe is constantly being railed at work about making the devices better; lighter, easier to use, and, above all, cheaper to manufature. He works tirelessly with other members of the team to produce the best possible product. Joe works a little with their CEO, we'll call him Todd.

Todd is the only CEO at Meditronics, but he's also the mayor of a small town just south of Meditronics. He makes just over $400,000 with plenty of perks. He has a company car so that he can travel as much as he needs to. He also has a company cellphone and bonuses that are 10% of his salary. Todd comes to the office three or four times a week, but because he is also a mayor, his time is limited. He checks in with his officers and other execs to make sure business is running smoothly and on time; then, he's out to work elsewhere.

Back to Joe. Joe just bought a house and is penny pinching so that he and his family can buy new furniture in the near future. They could use some home upgrades, but can't afford them yet. They could also use a second car, but couldn't budget a car payment on his salary. They are the average spenders for our economy, but can't spend money they don't have. Todd on the other hand, drives a company car, gets a life-insurance policy through the company, has a lavish home and declares his vacations as company business. He is not the average spender for our economy, yet he makes the money.

Todd, Joe and Meditronics are small-potatos compared to car manufacturers and banks, but the story is the same as far as the aveage Joes in their companies. Joe makes the company more money and is being laid-off. After he gets laid-off, he has even less money to spend. So, all that construction that was going on, stopped. All those new cars at the showrooms, still there. Joe can't make the economy go anywhere if he doesn't have money and Todd isn't spending his own money on those things anyway. He's using the company dime to live, but taking a salary while he's at it.

Does this make sense to anyone? I think the best form of action would be the following:

1. Audit Todd's company.
2. Get Todd a list of unneccessary spending to change.
3. Check back with Todd about how company is shaping up after much needed changes.
4. Bail Todd out with a loan if he continues to have problems.

Stop overlooking the problems! Deal with them! CEOs should NOT being showing up to beg for money in a private jet!

**Note: Joe, Todd and Meditronics are a fabricated scenario researched through**

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