Warren Buffett Quotes
Getting fired can produce a particularly bountiful payday for a CEO. Indeed, he can 'earn' more in that single day, while cleaning out his desk, than an American worker earns in a lifetime of cleaning toilets. Forget the old maxim about nothing succeeding like success: Today, in the executive suite, the all-too-prevalent rule is that nothing succeeds like failure.
Buffett, Warren. "Chairman's Letter." Berkshire Hathaway Inc. 2005 Annual Report, Berkshire Hathaway, 28 Feb. 2006.
Corporate CEO pay had traditionally been 5-15 times the average wage for the company. But it had changed to where in banks and financial companies the CEO pay was often 100-1000 times the average salary. This became a major political issue after the 2008 Meltdown. During the Great Recession some CEOs who had led the company to huge losses and then had to take government money to bail them out and prevent bankruptcy, took multimillion dollar salaries and huge bonuses while average salaries had gone down. There was a move for government to regulate CEO salaries. Macke argued for the position that would finally be taken.
In the Meltdown of 2008, the federal government, in order to prevent a major depression, bailed out the banks and the wealthy bankers whose speculations and greed has caused the investments of other people’s money. There was almost no Federal help for the average middle and lower class American who had not caused the meltdown but had been damaged by it. When the bankers took the bailout money and paid themselves and others huge bonuses, even though the companies had lost billions of dollars under their stewardship. Many people were outraged and raised all kinds of public protests that they were being paid bonuses with taxpayer money. The bankers and conservative politicians accused the protesters of being un-American because they were complaining about other Americans success. The President explained the situation.
High level financial industry executives were earnings millions of dollars even if the company did poorly. In many cases annual bonuses were paid even after the firm lost money and in some cases after the firm had to be sold to stave off bankruptcy. The worst thing in 2009 and 2010 was when some of the banks paid million dollar and more bonuses while the company was getting bailout money from the taxpayers to prevent their bankruptcy.
Corporations were not common at the time. The corporations of the day like large corporations today had directors and managers who were not the principle owners. There was deep suspicion that these professional managers would not watch over the money of the corporation with the same degree of vigilance as would the owner manager. The same problem exists today when the economic vested interest of the managers and the shareholders do not always coincide. Various bonus schemes have been created to ameliorate the problem, but as the meltdown of 2008 and the Great Recession demonstrated, many managers would make ruinous decisions for the corporation as they could get large bonuses. “Copartnery” is an older English term for “partnership.”
Warren Edward Buffett is an American investor, business tycoon, philanthropist, and the chairman and CEO of Berkshire Hathaway. He is considered one of the most successful investors in the world and has a net worth of over US$100.6 billion as of April 2021, making him the world's seventh-wealthiest person.
