The boss makes big bucks for my benefit

[REWahoo]

OK, all you wage and salary slaves out there, here's a Forbes article I know you will love:

Why Your Boss is Overpaid --- and it's for your benefit, not his.

"Economists don't even pretend that your boss deserves his salary."

 

[lazygood4nothinbum]

the only thing my last boss ever inspired me to do was quit. sure hope he got his money's worth.

 

[SteveR]

I find the article quite close to what I see everyday. Promotions are not about being the best.........they are about being better than your peers. I also agree that holding out the $$$ carrot in organizations does motivate some people to higher positions because they know what benefits come with that position because the company has made a point of making them "public." Companies that hide the benefits lose this aspect.

Peers are in fact, competing for promotions. Most management structures are pyramids and the higher one goes the fewer the potential positions. Competetion at the apex is down right cut throat. I used to work in a mega corp. world headquarters and was within sight of the CEO's office suite. You can learn a lot by seeing what happens around you. There was a trail of bodies (mostly with knife wounds in the back) along the hallways there.

IMHO,
Politics are 80% of promotion with the other 10% being at the right place at the right time with the right set of conditions. The other 10% is not being a total loser and being able to walk and chew gum at the same time.

I made a choice about my career some years ago and took a sidestep off the ladder to preserve my integrity and my sanity. It cost me some major $$$ but I don't regret it one bit. I am just glad I got the flash of insight when I did and avoided all the baggage that comes from always being in the "game."

Winning is sometimes not about beating someone else. Sometimes winning is doing what you know is right and sticking to your ideals. It is about having no regrets and being able to sleep at night with a clear conscience.

 

[maddythebeagle]

Sounds like something from freakonomics and another reason to stop being a wage slave...

 

[Spanky]

IMHO,
Politics are 80% of promotion with the other 10% being at the right place at the right time with the right set of conditions. The other 10% is not being a total

Winning is sometimes not about beating someone else. Sometimes winning is doing what you know is right and sticking to your ideals. It is about having no regrets and being able to sleep at night with a clear conscience.

Steve,

As usual, you have illuminated one of the absurdities of the corporate working environment - poilitics dominates. Thanks for the insignt.

Spanky

 

[Nords]

As usual, you have illuminated one of the absurdities of the corporate working environment - poilitics dominates. Thanks for the insignt.

Well, thank goodness it's not like that in government or the country would be in serious trouble...

 

[Arif]

Well, thank goodness it's not like that in government or the country would be in serious trouble...

You've been out of the Navy too long. Your memory has started to fade.

 

[SteveR]

Well, thank goodness it's not like that in government or the country would be in serious trouble...

Where is that sarcasm face?

 

[Craig]

Trying to encourage performance through, say, stock options would unnecessarily expose workers to risks without really encouraging them to work harder.

  Someone will need to explain to me how stock options are risky for workers.  Often worthless, yes.  Risky?  Don't get that logic.

Workers are frequently ranked relative to each other and promoted not for being good at their jobs but for being better than their rivals. It is a natural response to the difficulty of true performance pay.

  And, I don't see where this is radical news.  People, and businesses, are only good or bad relative to the competition.  Even in a footrace, we measure the time to determine absolute performance, but winning or losing is relative to the finishes of the other runners.

As I recall, Jack Welch at GE had the philosophy that you "counseled out" the bottom 10% of your exec's each year.  A bit brutal, if taken literally, but not illogical if you're constantly improving the team.

Lots of folks can point to screwed up companies where promotions have nothing to do with accomplishment, and many see companies where they truly reward performance.  I've worked in both, and I think the latter succeed more often.

I agree that high comp for exec's helps drive performance down the ladder ... I know it helped drive me to advance.  But anyone who thinks exec's aren't driven by comp plans that reward bottom line performance hasn't sat in the seat and seen it firsthand.  Big bonuses can put folks over the top for ER, and the smart ones perform accordingly.  There are good exec's in this country, as well as bad.

 

[Nords]

Where is that sarcasm face?

It's my goal to never have to substitute an icon for vocabulary... I figured that sarcastic comment would stand on its own merits!

 

[SteveR]

It's my goal to never have to substitute an icon for vocabulary... I figured that sarcastic comment would stand on its own merits!

I was thinking more of the less seasoned folks here that might not know sarcasm when it is presented here. Emoticons do serve a useful purpose and can eliminate misunderstandings and a ton of off topic comments by someone who did not get the intent of the comment. Communication in a limited environment can and does lead to misunderstanding and hard feelings because body language, inflection, and facial expressions are invisible; leaving the reader to guess at to the intent of a message.
Emoticons add a bit more understanding to the message. Many a p*ssing match could have been avoid here if people were more clear in their intent.

 

[Martha]

I have noted that Nords never uses emoticons. But Nords is not prone to sarcasm. Or smiley faces.

 

[cute fuzzy bunny]

I'm always serious, never lie, and i'm currently under oath.


Oh yeah...

 

[canent]

  Someone will need to explain to me how stock options are risky for workers.  Often worthless, yes.  Risky?  Don't get that logic.

A stock option would be risky if it is in lieu of salary. Imagine that you are told that instead of a raise you were getting stock options. Otherwise, I agree that they are not risky...just quite often worthless.

Perhaps options are a way for the company to look like they are giving you something valuable, but in fact carries little risk to the company?

 

[cute fuzzy bunny]

Its also a bit risky if you exercise them but dont sell them to shoot for better tax treatment, then the options drop through the floor.

Also risky if you put 5 years of backbreaking work into a company in hopes the stock will take off and you'll be rewarded, only to find the company goes nose first into the ground on you.

 

[Craig]

Truth is, most folks receiving options see them as icing on the cake, and that is generally how they're perceived in the marketplace.

Even for exec's, since the big payouts are uncommon, the salary and cash bonuses are the most important numbers, and the focus for most in accepting and retaining employment.

 

[SteveR]

Its also a bit risky if you exercise them but dont sell them to shoot for better tax treatment, then the options drop through the floor.

Also risky if you put 5 years of backbreaking work into a company in hopes the stock will take off and you'll be rewarded, only to find the company goes nose first into the ground on you.

That is a fact!
If you exercise and hold going for the ISO tax treatment you can get screwed if the stock price falls before your year is up. Being forced to sell a bunch of shares in a fire sale environment to avoid an AMT tax nighmare is not my idea of a good time.

With the tax law changes and corporate repoting of financial data changes that took place after Enron, many companies are backing away from ISO shares and are going with Restricted shares for middle and upper middle management now. Personally, I would rather have the cash in hand than wait for a vesting period then hope the stock price is actually above water at the time so I can jump through hoops to minimize taxes and carry AMT credits far into the future while sweating out a possible stock price drop after I exercise but before I make my ISO holding period. Yuck!

I have a ton of shares that are and will continue to expire underwater. Had I been given a cash bonus instead I would have been much better off. I agree that until you exercise them there is no risk; there is only a promise of future money if the stock continues to go up.

 

[cute fuzzy bunny]

I went with an exercise and sell, although I decoupled the two by a week or two so I could get the best sell price I could manage.

Had I tried to hold to get favorable tax treatment, I would have watched the shares decline more than 80% over a few months, where they've not only never recovered, they've dropped another 10-15% and remained there.

No ER. Back to work!

Sucked writing a five figure check to CA and a six figure one to the IRS, but a dirty little smile kept creeping in.

When I got to the point of underwater options, and they were DEEPLY underwater at that point, was when I decided to take the separation package, get a years paid vacation, and even get repriced options if I went back to work.

A fine case of stock options being a negative influence to continue working...

I watched a couple of people try to exercise their options and hold them to lower the tax bite and get killed. Not sure which was harder to watch...those guys or the ones who crowed about having "every option the company ever gave them and never selling a share!" go from people with 10-15M on paper down to a million or two. Not that a couple of mil sucks, but to have been completely financially independent at that level would have probably been a little bit more pleasurable...

I remember one gal telling me that her 12M wasnt enough because she wanted to "continuously travel the world, stay in five star hotels and live extravagantly". Last time I saw her, she was still driving a 9 year old ford and living in a one bedroom apartment.

 

[SteveR]

...Had I tried to hold to get favorable tax treatment, I would have watched the shares decline more than 80% over a few months, where they've not only never recovered, they've dropped another 10-15% and remained there.


A fine case of stock options being a negative influence to continue working...

I watched a couple of people try to exercise their options and hold them to lower the tax bite and get killed.  Not sure which was harder to watch...those guys or the ones who crowed about having "every option the company ever gave them and never selling a share!" go from people with 10-15M on paper down to a million or two.  Not that a couple of mil sucks, but to have been completely financially independent at that level would have probably been a little bit more pleasurable...

We followed the advice of our financial advisers, fellow workers, managers, and the common knowledge in books and internet financial sites on what to do with ISO shares. It would have worked out great (in fact a couple years worth did so) but some major issues with the compay develped out of the blue and right before 2000. Add to that the general market purge at that time, 9/11, and the general downturn in the sector and you have a string of negative events that have taken would would have been a $2M ISO profit and turn it into a zero income event. At least I am not holding actual shares that are half what I paid for them.

 

[Scrooge]

Truth is, most folks receiving options see them as icing on the cake, and that is generally how they're perceived in the marketplace.

In my experience, it varies by industry and era. For me, options have always been an afterthought, but there were quite a few people who went to work for dotcoms in the late 1990s at relatively low salaries because they were given potentially lucrative options. In retrospect, it was probably a risker proposition than they realized at the time, but at least most of them were young and could chalk it up to experience.

An amusing story from the dotcom era. I had a minor but complicated stock option arrangement all through the 1990s that I never thought much about. Then the company got sold at the peak of the dotcom boom. I tried to have my options rolled over to the new company, primarily to avoid taxes, but the IRS forced me to cash in my chips. It wasn't a whole lot of money, something along the lines of $20K, but I was somewhat upset about it at the time.

6-12 months later the new company's stock was in free fall and pretty soon it was worthless. All I can say is "Thank you, dear IRS!"