There was a time when you needed to take a high risk to get rich: be an actor, investment banker, rock star or start your own business. But no more. Just get a good, safe job with a large corporation, survive the politics, climb to the top and then hold it hostage for money.
Today's sickening news announced the payment of $135 million as a "golden parachute" to a retiring banker: Wallace D. Malone, Jr. - long time chairman of SouthTrust and the key decision maker in its sale to Wachovia. Unsurprisingly, Wachovia accepted his benefit package when the sale of SouthTrust was being negotiated. Go to charlotteobserver.com for a detailed list of the absurd extent of his benefits.
I don't hold this against Mr. Malone. In fact I congratulate him for taking advantage of the ineptitude of money managers like myself who have been useless fighting excessive executive compensation. I also congratulate him for providing motivation for managers like myself to figure out how to stop this. Globalization sure hasn't put pressure on these labor costs.
While the role of money managers is important, it does seem like industry dynamics were overpowering. A more relevant take away from this absurd compensation might be the unhinged nature of banking at that point in time. It's instructive to recall that Wachovia was one of the largest banks to blow up only three years later. Perhaps this was a warning sign to money managers to stay away rather than stay in a futile compensation fight.
ReplyDelete