Regarding the Sunday letter on CEO salaries, “Talent, education lead to big bucks”:
While the writer is correct in assessing the educational background for most, if not all, CEOs, there are a few more points to make in today’s economic times. I would like to know why more CEOs were not better at “reading people,” especially corporate staff who came up with the subprime-mortgage issues that permeate our society today. What do you suppose happened to any underling in finance or any department who may have stated that these particular investments could also backfire and create a terrible financial meltdown?
One problem is the bonus that executives are given as compensation, for what I don’t know. When I was growing up and working, a bonus was something that was usually a surprise, not to be factored in to any reward or pay because it may or may not occur. A bonus was compensation for extraordinary work done, usually at less cost than anticipated or in record time to save money on a project. Today’s CEOs receive bonuses for reasons that remain unknown to many.
While not all CEOs acted irresponsibly, the ones who did usually made decisions based on profit, growth and bonuses. All those subprime mortgages were packaged as investment securities and because money and finance are international as well as local, sent around the world for other finance firms to use as investment vehicles. While CEOs no doubt believed in these investments, they also knew they would be very rewarded, bonus wise, for them. Was any CEO far-thinking and examining enough to request a second look at these financial time bombs? It seems not! And please, don’t use the excuse that many or most investment houses and mortgage companies were doing this. If it will not work for criminals, why would it work for CEOs?
Steve Arnhold
Marysville
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