One simple layoff could save 200 jobs
It's connect-the-dots time.
Earlier this year we learned that Bank of America CEO Brian T. Moynihan received an annual compensation (pay plus bonus) of $10 million.
On Monday we learned that Moynihan’s bank will be laying off “at least” 30,000 employees over the next two and a half years.
Why is a CEO paid $10 million to run a bank that is forced to lay off thousands of workers?
Why not lay him off and use the $10 million savings to keep 200 workers paid $50,000 a year?
My guess is that the bank could make a few other executive bonus cuts as well to keep on-line workers on the job.
And how many corporate jets does the bank have in its hangers? How many houses does Mr. Moynihan own?
By the way, numbers don’t always illustrate their significance. Let’s do this visually. Here is what $10,000,000 will get you.
One CEO symbolized by...
or 200 workers, paid $50,000 symbolized by...
Got it?
Now tell me that pay inequity doesn’t cause unemployment.
And don't get me started on hedge fund managers.
Moynihan is pauper compared to hedge fund manager John Paulson, who earned a record $4.9 billion last year. That's 490 times what Moynihan made.
Oh, and these hedge fund managers pay their taxes at 15 percent. I still can't figure out what they do besides move money around electronically. Big deal.
Earlier this year we learned that Bank of America CEO Brian T. Moynihan received an annual compensation (pay plus bonus) of $10 million.
On Monday we learned that Moynihan’s bank will be laying off “at least” 30,000 employees over the next two and a half years.
Why is a CEO paid $10 million to run a bank that is forced to lay off thousands of workers?
Why not lay him off and use the $10 million savings to keep 200 workers paid $50,000 a year?
My guess is that the bank could make a few other executive bonus cuts as well to keep on-line workers on the job.
And how many corporate jets does the bank have in its hangers? How many houses does Mr. Moynihan own?
By the way, numbers don’t always illustrate their significance. Let’s do this visually. Here is what $10,000,000 will get you.
One CEO symbolized by...
X
or 200 workers, paid $50,000 symbolized by...
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Got it?
Now tell me that pay inequity doesn’t cause unemployment.
And don't get me started on hedge fund managers.
Moynihan is pauper compared to hedge fund manager John Paulson, who earned a record $4.9 billion last year. That's 490 times what Moynihan made.
Oh, and these hedge fund managers pay their taxes at 15 percent. I still can't figure out what they do besides move money around electronically. Big deal.
Labels: Bank of America, Brian Moynihan, inequity, Jobs, John Paulson
posted by Rick Seifert at
12:30 PM
6 Comments:
Hmm, leaving out a few facts and distorting others - (disclosure - I absolutely hate BofA and think they are one of the slimiest companies around)...however -
FTA:
Mr. Moynihan will get a bonus of $9.05 million in the form of restricted stock, along with a base salary of $950,000.
What is more, Mr. Moynihan will have to fulfill performance goals to earn the full $9.05 million
“All of the year-end compensation was deferred and tied to some measure of stockholder value,” said Bob Stickler, a spokesman for the company.
You said he 'received' $10M when he really only received $905K, the rest deferred based on performance goals. His one and only job is to increase shareholder value. In fact, BofA is legally obligated to do so, unless they want to be sued out of existence by the shareholders.
Asking how many homes and airplanes these people/companies have is a crass class-warfare tactic. Who cares. Unless the were obtained illegally I could care less.
Your math is also flawed. If your 200 employees are paid $50K per year I can promise you they cost a company a whole lot more than that. Payroll taxes, health insurance, 401K, and other benefits can easily add 20-40% to the base pay number.
Of course you also (as usual) make the apparent assumption that employees 1-200 are equal in every way to the CEO. Equal in intellect, experience, business skills, and ability to increase shareholder value. It's simply a matter of being a 'lucky sperm' that one guy gets to be CEO and another files papers.
Back in the real world businesses need leaders. Otherwise you wind up with a rudderless ship.
Last comment - how come you don't wake up tomorrow morning and become a hedge fund manager? You could earn billions from your couch and spread all that wealth around to your heart's content. It's just fiddling around on the computer, right??
Thanks, Chris. That's in particular for filling in details that you feel are relevant and needed. Others may too. I'm not so sure.
This could be the beginning of a long response, but I'll try to limit it to the thought that our assumptions, perceptions and values are quite different.
As a practical matter, I'd like to know how the CEO's "performance goals" are measured and who decides whether they have been met.
I love the idea of "performance goals." What are our "performance goals" as human beings? What are yours? What are mine? What are Moynihan's ... as a human being?
What happens if one's "performance goals" as a CEO conflict with one's "performance goals" as a human being?
My own "performance goals" are inconsistent with (completely at odds with, in fact) becoming a hedge fund manager, since you asked.
Did the 30,000 plus laid-off workers meet their "performance goals"? Did it matter to those laying them off?
Your raise the question of benefit costs above $50,000. Good point. What are the costs of the benefits Mr. Moynihan receives? (Back to the corporate jets, golf club membership fees, limousine services etc. To call them a matter of class-war is a cheap way of dismissing them. They exist at a time when we have people living on the streets, Chris. That's reality. If that's class war, who is waging it? Who are the perpetrators? Who are the victims?)
"His one and only job is to increase shareholder value. In fact, BofA is legally obligated to do so, unless they want to be sued out of existence by the shareholders."
Does firing 30,000 people while allowing oneself to be grotesquely compensated (never mind deferred payments, performance standards etc. We understand the principle here.) increase "shareholder value"? If loaning money to people who can't pay it back increases shareholder value, do you do it? If you loan to industrial polluters, do you do it? In the long-run, does it "increase shareholder value" to destroy the planet?
As I said at the start, this is a question of assumptions, perspectives and, ultimately, values.
We are starting this discussion from very different places, Chris. Where is the common ground?
Hi Rick,
You are right, we come from different places for sure.
I think the common ground is that we both dislike human suffering and misery. I feel terribly for those laid-off workers and I understand how awful it is to lose your job through the stroke of a pen. I've been there myself - one of the worst, most helpless feelings of my life, and I didn't even have a wife or children at the time.
When I lost my job, I was a worker bee. I was well compensated and loved my work. Highly regarded by my peers (I think!) and was regularly rewarded and commended for my performance. However, the company decided that our location was redundant so they closed it. Poof, 100 people out of work. Meanwhile, our CEO regularly cashed in his stock options and made millions and millions of dollars every year.
I admit, at the time I felt it unfair. He could throw $100K to each of us, give us some 'breathing room' very easily. Why should he make these unreal sums of money...did he really 'need' it, etc.
Years later in the shoes of a business owner and employer I realize things I never did as an employee. This CEO took the company from $600M in revenue to over $1B in a years time. The stock options I received when hired went from $17 to $75. Even though by scale the CEO's compensation dwarfed mine, I (as a stockholder) benefited quite well from his work. Neither I nor any of my colleagues could have done what he did - he had a unique talent and did wonders for the company. They are now a $15B company and have more than doubled the number of employees they had when I was there.
I also found that as much as I hated getting laid off at the time, it was the best favor anyone ever did for me. I was able to find a niche where I help people every day. I support my employees, pay them well, provide health insurance, and so on. If I just continued to moan about how much more money someone else made than me and waited for the gov't to 'fix' this, where would I be? I did what I had to do to get back to work, support myself, and find a reason to get out of bed each day.
I'm getting stuck in the functional details of work and pay, but my point is that I hear a lot of talk about how much money or material things 'the rich' have. If the people complaining about this inequity would channel that energy into helping others, wouldn't the world be a better place?
Some people will always make 'grotesque' amounts of money. Some will always earn more than others and it won't seem fair to those on the bottom. But rather than complain about it, go spend some time at a Sr. center and talk to lonely seniors. Become a big brother for a kid who needs guidance. Go mow the lawn of the little old lady down the street. I don't say this so that we ignore the problems of the world, but by focusing so much on who has what and how much I think we just direct that energy in the wrong direction.
I've rambled enough and didn't really answer your questions but I hope I've made some sense. Good night -
Thanks, Chris, for sharing your story. It helps me understand your perspective.
While I see some really important shared values, you are right, your perspective differs from mine.
A couple of differences....
I don’t believe that the CEO “took the company from $600M in revenue to over $1B in a year’s time.” He and his employees did that. Loyal, satisfied customers helped. Supportive family members helped. Past teachers helped.
At the very least, the increase in value should be shared fairly and equitably with his employees. As you note, it wasn’t.
I am not a believer in the solitary “great man” theory of history. Sadly, it distorts our perspective. I see that distortion in your statement, which is repeated numerous times in defense of bloated executive salaries.
(An intriguing question: how much was Gandhi paid? Jesus? Martin Luther King? All "underpaid")
Nor do I believe that anyone “pulls themselves up by their own bootstraps.” Ever been helped by a teacher? By a friend? A fellow employee? A “subordinate”? A chance mentor? Come to think of it, who made the bootstraps in the first place?
Which leads me to the second difference. We don’t live in an either/or world where one criticizes and then retreats to a corner to brood.
“If the people complaining about this inequity would channel that energy into helping others, wouldn't the world be a better place?... go spend some time at a senior center and talk to lonely seniors. Become a big brother for a kid who needs guidance. Go mow the lawn of the little old lady down the street.”
You assume we “complainers” don’t do anything but complain.
I complain a lot about inequity, particularly the harmful and growing gap between the very rich and the very poor as well as the destruction of the middle class.
The idea is to lessen the inequity — fairly and profoundly. I think you agree the situation is out-of-hand. I call it grotesque and destructive.
Those of us who are trying to end inequity don’t just sit around and fume and write diatribes. Far more often than not we do exactly the kinds activities you mention. You and I, Chris, could end up working side-by-side at a senior center or in a homeless shelter.
I volunteer publishing and writing an on-line community newsletter, hillsdalenews.org. It routinely addresses issues of poverty in our community. I am deeply engaged in my very active, socially-involved Quaker congregation multnomahfriends.org. Through Quaker Friends, I have just embarked on organizing a prison visitation program for inmates, who bereft of friends and family, have no visitors, no one who cares about them as human beings.
I was going to say, “don’t get me started,” but I guess you have! I’ll stop before I tell you about the Peace Corps, the Civil Rights Movement and establishing a community foundation.
Like you, I hope I have made some sense. Here's to making sense!
An afterthought:
It is precisely because we DO work with the victims of poverty and greed that we complain about inequity and injustice.
Thanks for your reply Rick. I want to clarify I wasn't referring to you as one of the 'complainers'. I realize you and many others do help and work with the less fortunate. But I hear a constant drum beat of 'make them pay their fair share' from some who seem to think that taking some arbitrarily decided 'surplus' from 'the rich' will suddenly create jobs and fix the economy. It seems a tactic to distract the 'masses' from the real problems with our two party system. Rinse, repeat, every 4 years, virtually the same results regardless of the D or R at the end of the persons name.
The real problem I have with the "Robin Hood" style solution that you've advocated for is that I fear that while it might help a small percentage of truly needy people, the vast majority of it would wind up supporting the lazy and the opportunists. Our government is so large and slow moving that corruption and massive waste is part of the 'cost of doing business'. There are millions of people who were born into the welfare system and have learned how to game it so that they never have to work a day in their lives. They still have money for cable, cigarettes, cell phones, Internet, eating out, and so on. It's these people that make me resent the idea that I'm not paying my fair share. How to address this? I don't know. The power structure we have in place combined with the mainstream media seems destined to never allow the 'truth' to be exposed in a way that the average person can really understand it. I agree though that it's not an excuse to do nothing while people suffer.
You know as well as I do that almost anything the gov't does, it does more expensively and less efficiently than the private sector. I'd rather see the wealthy and well off encouraged to help the less fortunate through private organizations - churches, non-profits, and the like.
Anyway, no perfect answers I know, but maybe some ideas towards a common goal of helping those who truly need it.
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