Executive Pay and Its Effect on the Economy

[Rex Kickass]

The 25 billion in bailouts was basically a farce btw. Less than 20% of that money was ever actually awarded.

[Balta1701]

This week, I'm going Back to Circuit City for this one.

Circuit City fired 3,400 of its highest-paid store employees in March, saying it needed to hire cheaper workers to shore up its bottom line. Now, the Richmond electronics retailer says it expects to post a first-quarter loss next month, and analysts are blaming the job cuts.

 

The company, which on Monday also revised its outlook for the first half of its fiscal year ending Feb. 29, 2008, cited poor sales of large flat-panel and projection televisions. Analysts said Circuit City had cast off some of its most experienced and successful people and was losing business to competitors who have better-trained employees.

 

"I think even though sales were soft in March, this is clearly why April sales were worse. They were replaced with less knowledgeable associates," said Tim Allen, an analyst with Jefferies & Co.

 

In particular, the televisions showing disappointing results are "intensive sales" requiring more informed employees, Allen said. "It's a big-ticket purchase for somebody. And if they feel like they're not getting the right advice or are being misled by someone who doesn't know, it would be definitely frustrating. They will take their business elsewhere."

[southsider2k5]

This week, I'm going Back to Circuit City for this one.

 

I am sure the loss had nothing to do with the charge they probably had to take to cover the costs associated with terminating the employees...

[Balta1701]

I am sure the loss had nothing to do with the charge they probably had to take to cover the costs associated with terminating the employees...

That can't affect the raw sales numbers right? Same article:

The company said Monday that it expects a loss from continuing operations of $80 million to $90 million for the first quarter of its 2008 fiscal year because of "substantially below-plan sales," especially of televisions.

[kapkomet]

They (Circuit City) didn't pay these people any kind of severance, they just let them go. I doubt they had any effect on the cost portion of the p & l.

 

And on the AMR issue, I know a certain individual that is VERY close to the pilot's union... and it's getting mighty interesting. That's all I can say about it now.

[southsider2k5]

That can't affect the raw sales numbers right? Same article:

 

"We will continue to monitor that," said Bill Cimino, a company spokesman. "Only two or three salespersons per store were impacted on average. Others were customer service representatives or warehouse employees," which would point to other factors for the drop in sales, he said.

 

About 60 percent of the people let go held in-store sales positions. Each of the company's almost 650 U.S. stores has about 50 salespeople per store, he said.

 

Not to mention they talk about other factors in the very same article.

 

This is the big thing for CC

 

The firings, along with several other moves, were expected to reduce expenses for the electronics retailer by $110 million in fiscal 2008 and $140 million a year starting in fiscal 2009.

[santo=dorf]

Leave the CEO's alone. They worked their way to the top so they deserve it.

 

I get so sick of hearing about "upper management" on a daily basis.

[StrangeSox]

Leave the CEO's alone. They worked their way to the top so they deserve it.

 

I get so sick of hearing about "upper management" on a daily basis.

 

It's hard to say some CEO's deserve 25M in severance pay for running a company into the ground...

[santo=dorf]

QUOTE(StrangeSox @ May 2, 2007 -> 05:53 PM) <{POST_SNAPBACK}>

It's hard to say some CEO's deserve 25M in severance pay for running a company into the ground...

I'm sure they have performance clauses and probably a lot of stock, but that all comes with a HUGE responsibility.

[NorthSideSox72]

I'm sure they have performance clauses and probably a lot of stock, but that all comes with a HUGE responsibility.

Responsibility denotes some sort of consequence for failing. That is where the problem exists. CEO's get paid a ton of money to lead a company, but even if the company does miserably, there are simply no negative consequences at all. In fact, they often get paid a big chunk of change when they leave or even for years after. Therefore, no, they do not have HUGE responsibility. They should, but do not.

[StrangeSox]

Responsibility denotes some sort of consequence for failing. That is where the problem exists. CEO's get paid a ton of money to lead a company, but even if the company does miserably, there are simply no negative consequences at all. In fact, they often get paid a big chunk of change when they leave or even for years after. Therefore, no, they do not have HUGE responsibility. They should, but do not.

 

Bingo.

 

With responsibility comes accountability. CEO's that fail miserably but still receive large sums of money aren't being held responsible for their failures.