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Hullabaloo


Sunday, March 29, 2009

 
The Bucks Stop There

by digby

Via Atrios, I read this little tale of "bonuses", a story which is happening in different businesses all over the country:

Though the company teetered on the verge of bankruptcy at the time, this past December Philadelphia Media Holdings awarded bonuses to CEO Brian P. Tierney, vice president of finance Richard Thayer and Daily News publisher Mark Frisby.

PMH board chair Bruce Toll confirmed bonuses of $350,000 for Tierney and $150,000 each for Thayer and Frisby in a phone conversation on Friday. Reached by phone, Frisby told Philadelphia, “The numbers are wrong. But I’m not going to give you a number.”

[...]

“I forgot,” he said. “I’m involved with something like 20 companies, and [when Philadelphia first called] you were asking me to remember what happened in December. But when I asked around, some other board members reminded me we had approved the bonuses.”

PMH filed for bankruptcy in February. Toll, of the homebuilding Toll Brothers company, confirmed that the PMH board knew the company¹s fiscal situation was dire. “The financial condition of the papers was obviously not good,” said Toll. “We knew what was going to happen sooner or later.”

So why give out $650,000 in bonuses? “We thought it was deserved,” he said. “But we can’t get into the details because we’re involved in bankruptcy proceedings.”

It had earlier been revealed that Tierney received a raise in December, just before Christmas, boosting his pay roughly 40 percent to $850,000. The company initially defended the raise, which was revealed in its bankruptcy filing, by saying that Tierney had taken on extra responsibilities since his initial deal had been struck. [He later gave back the raise when it was publicly revealed.]

The boyz take care of each other. That's what the club is for. There's nothing particularly unusual about rewarding failure like this and it's certainly not unique to this period in time:

Embattled Home Depot Chief Executive Robert L. Nardelli, under fire from stockholders for earning hundreds of millions at the same time the company's stock fell and market share dropped, resigned suddenly today and will walk away with a severance package of $210 million, the company announced....During his tenure, Nardelli earned $240 million in salary, bonuses and stock options.

....During his leadership of the nation's second largest retail chain after Wal-Mart, Home Depot lost market share to home-improvement rival Lowe's Cos. and its stock price declined almost 8 percent.

In the case of the auto companies (GM and Chrysler) or the behemoth financial and insurance companies we now have the taxpayers footing the bills for this nonsense, which makes it a matter for public debate and scrutiny. In the past, the excuse was that if the shareholders of public corporations don't mind getting repeatedly taken to the cleaners by a bunch of incompetents, it's not really a public problem. And hey, a high tide lifts all boats, so if these guys skim a nice, huge dollop of the cream for themselves, there's no harm in it if the economy is growing strong.

Except there is, if you care at all about justice. Even in the best of times, wages were rising for average workers at a snails pace and the only thing keeping them from actually losing pace was easy credit. All that's gone now and businesses of all kinds are in distress and trying to cut costs. And yet the fat cats are still giving each other big bonuses.

Meanwhile, back in Philadelphia:

Now comes news of the bonuses, which were awarded just two months after the company’s unions voted to postpone $25-a-week raises for each of its members at the request of PMH.

This is the behavior that brings out the pitchforks.

People are being asked to make all kinds of concessions these days. They are being asked to cut back hours and pay and forego raises and benefits. They are taking on extra work because the companies aren't replacing employees who leave. Reports of mistreatment in the workplace are way up. They are trapped in jobs they hate, with houses they can't afford, desperately afraid to get sick because if they lose their jobs they lose their health care. And yet highly paid executives are insisting that they are entitled to huge sums of money.

This attitude of entitlement is what's infuriating average citizens and legitimately so. These people are supposed to be masterful leaders and they are instead acting like pampered Chinese princes cloistered from the rest of the world behind the darkened windows of their limousines and the walls of their gated communities. They honestly don'[t understand just how angry people are at this display of arrogance and aristocratic privilege. It's astonishing.

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