Beta
×

Welcome to the Slashdot Beta site -- learn more here. Use the link in the footer or click here to return to the Classic version of Slashdot.

Thank you!

Before you choose to head back to the Classic look of the site, we'd appreciate it if you share your thoughts on the Beta; your feedback is what drives our ongoing development.

Beta is different and we value you taking the time to try it out. Please take a look at the changes we've made in Beta and  learn more about it. Thanks for reading, and for making the site better!

A Reflection On Sun Executive Payouts For Failure

ScuttleMonkey posted more than 4 years ago | from the lavishly-rewarded-for-failure dept.

Sun Microsystems 316

With the Oracle/Sun merger finally completing at the end of January, one former Sun worker has taken the time to reflect a bit on the extravagant compensation and golden parachutes that the former executives at Sun are receiving for failing at their jobs. "I think it's fair to say that, for all the miscues that eventually led to its demise, the company created many products and technologies of value along the way, enough so that Oracle thought it was worth it to acquire them and try to keep them going. However, I think that it's equally fair to conclude that, after years of running losses, including about $2 billion in fiscal 2009, so that a buyout was necessary to avoid looming bankruptcy, Sun's executives did nothing to deserve lavish rewards, by any conceivable meaning of the word 'deserve.' But what actually happened is by now a familiar story. [...] And here's a prediction that I feel quite certain of: if, against expectations and my hopes, Ellison drops the ball and things start going south for Oracle, it's the employees who will suffer for it, and he'll be doing just fine."

Sorry! There are no comments related to the filter you selected.

Easy Solution (5, Funny)

cohensh (1358679) | more than 4 years ago | (#31064134)

If only they would have gone on Undercover Boss. All would have been solved.

First post (-1, Redundant)

Anonymous Coward | more than 4 years ago | (#31064140)

Where's my million? - Larry Ellison

Link to DailyKos diatribe? (-1, Troll)

tjstork (137384) | more than 4 years ago | (#31064154)

Come on dude, do you really think people here are retards?

Re:Link to DailyKos diatribe? (2, Informative)

Jeng (926980) | more than 4 years ago | (#31064308)

I'm thinking that DailyKos got the link on this one because everyone else got done talking about the potential golden parachutes back in June of 2009.

http://www.theregister.co.uk/2009/06/12/sun_network_gets_it/ [theregister.co.uk]

Re:Link to DailyKos diatribe? (0, Flamebait)

dburkland (1526971) | more than 4 years ago | (#31064310)

Nothing like a link to a fanatical left-wing blog to boost your credibility

Re:Link to DailyKos diatribe? (5, Insightful)

Zocalo (252965) | more than 4 years ago | (#31064398)

Well, not that you mention it... :)

Diatribe or not (no, I didn't bother to read it), I don't think Oracle's is going to be anywhere near the kind of situation Sun ended up in for the foreseeable future. Sun had multiple sources of direct competition across a good deal of their product range and many IT budgets just couldn't justify paying the extra cash for the few extras Sun brought to the equation. Oracle, on the otherhand, has seen off almost all of its competition: DB2, Ingres and Informix are either history or essentially relegated to also-rans in the marketplace for high-end DB servers with paid-for support and an SLA that you could take to court if you had to. It's going to take a screw-up of positively epic proportions for Oracle to go down the pan; "dropping the ball" wouldn't even come close...

Re:Link to DailyKos diatribe? (4, Interesting)

spun (1352) | more than 4 years ago | (#31064882)

What's wrong with DailyKos? Do they, you know, actually lie, or do they just say things you don't want to hear? If you think they lie, provide a documented example.

To quote Mel: "Its good to be the King" (4, Interesting)

Fallen Kell (165468) | more than 4 years ago | (#31064164)

As almost always in big business, those in control will make sure that their personal interests are met, even at the expense of the company as a whole. It is more important that the board makes sure they all get several million payout should the company fall apart.

Re:To quote Mel: "Its good to be the King" (0, Troll)

pclminion (145572) | more than 4 years ago | (#31064262)

Why is it that people doing what people do naturally -- looking out for their own interests -- is normal and acceptable when you do it, but evil and wrong when somebody else does it?

Re:To quote Mel: "Its good to be the King" (4, Interesting)

jeffmeden (135043) | more than 4 years ago | (#31064326)

Because when it's their *job* to look out for the interests of the employees and stockholders, and they instead look out for only their own interests, it becomes something completely different from self-preservation, motivation, or whatever you want to call it. It becomes greed. It is arguably theft. It is almost certainly evil. It is in no way, shape, or form a 'job well done'.

Re:To quote Mel: "Its good to be the King" (4, Insightful)

Cryacin (657549) | more than 4 years ago | (#31064672)

Exactly. A board is supposed to be a "trustee", a "custodian" to the shareholders.

Unfortunately, there are still numerous methods of "legal" *ahem* acquisition of funds by those in power on the corporate board. Enron was the first case where boards were whacked, and you can see the effect that it has had in such board rooms. The aforementioned people in power are very mindful that they don't wind up walking to the gallows. (And of course by gallows I mean at worst a small country club resort for a few months/ maybe a year.)

The severance deals such as poison pills and golden parachutes usually end up poisoning the shareholders and being a golden shower on the hard working employees. They very rarely do anything but line the pockets of executives.

But hey, thuggery, buggery and some skullduggery. A CEO's life for me!

Re:To quote Mel: "Its good to be the King" (1, Insightful)

cayenne8 (626475) | more than 4 years ago | (#31064802)

"Because when it's their *job* to look out for the interests of the employees and stockholders, and they instead look out for only their own interests, it becomes something completely different from self-preservation, motivation, or whatever you want to call it. It becomes greed. It is arguably theft. It is almost certainly evil. It is in no way, shape, or form a 'job well done'."

That may be the job title...but how is that any different than other job titles like general manager, breakroom supervisor, technician, janitor. All of those people also have 'jobs' that support the interests of others...and in a less direct way, even the stockholders too. But you seem to have this thought, from your writing, that the top boss should somehow be more altruistic about their jobs vs their survival instincts. I don't think that way. When it comes to supporting my lifestyle and means of living (money) I pretty much think only of myself and MY survival if it ever comes down to it.

Don't get me wrong...I love my friends, my family and anyone around me, and as long as I have the means, I like to help out, pay for things...and I've done that with a number of my friends who have been out of work for awhile. But that is when things are flush with me. If it gets tough for me, well, that well shuts off. My sense of self preservation is priority #1. I expect no less or no more from others. I guess some give till it hurts, and that's their prerogative, but, I don't expect it and I'm not sure why anyone ever expects it from the higher up bosses, just because their survival instincts and practices involve so much more money that other peoples'.

Re:To quote Mel: "Its good to be the King" (2, Insightful)

langelgjm (860756) | more than 4 years ago | (#31064332)

Why is it that people doing what people do naturally -- looking out for their own interests -- is normal and acceptable when you do it, but evil and wrong when somebody else does it?

It's different when the "someone else" is the board of a publicly owned company.

That said, that sort of behavior is also to be expected due to inherent differences of interests in the principal-agent relationship.

Re:To quote Mel: "Its good to be the King" (1)

cayenne8 (626475) | more than 4 years ago | (#31064856)

"It's different when the "someone else" is the board of a publicly owned company."

Well, it isn't like these CEO's held a gun to the boards collective head and forced them to hire them AND to give them these packages. It is the company's own fault for striking such bargains in the first place...they signed the paperwork too, so there should be no bitching when executive Billy Bob exercises his contractual options for his own benefit.

Re:To quote Mel: "Its good to be the King" (4, Insightful)

FooAtWFU (699187) | more than 4 years ago | (#31064372)

This is what the economists call the "principal-agent" problem. The principal (shareholders) hire a bunch of people to do things in their best interests (get the company to make money and give that money to the principals) but the agents (CEOs, and his own agents) are "looking out for their own interests" and just set things up so they get rich one way or another.

It's "evil and wrong when somebody else does it" in this case because they're supposedly being paid to do better. It's "normal and acceptable" to some extent when you do it, because you're usually doing it with your own life and your own resources, unless you aren't, in which case that's just hypocrisy, which is nothing new in the world one way or another....

Re:To quote Mel: "Its good to be the King" (4, Insightful)

Chris Burke (6130) | more than 4 years ago | (#31064390)

Some people can look out for their own interests without dicking over others. For some people, viewing other people's interests as an integral part of their own is "natural".

The difference between "looking out for your own interests" and "looking out for your own interests by fucking over everyone else" is subtle, I admit, but once you grasp the nuance you'll see why behaviors that are on the surface the same are ultimately different, and why one is evil and the other is acceptable.

Re:To quote Mel: "Its good to be the King" (1)

creimer (824291) | more than 4 years ago | (#31064480)

There's a difference between looking out for one own interest and being in a leadership position to be looking out for the collective interest of an organization. Too many executives think only about how how to game the system to maximize the benefits for themselves. If the company goes down and the employees get laid off in the process, too bad and go cry a frakking river.

Re:To quote Mel: "Its good to be the King" (1)

microbox (704317) | more than 4 years ago | (#31064544)

We are *all* expected to have a sense of social responsibility, or end up with the label "jerk". The powerless do. But the rules work differently for the powerful. Everybody would be better off if these guys were given a kick in the nuts for taking advantage of their position.

Consider this. Corruption could just be seen as "naturally looking after your own self-interest". Since it is natural, it should be acceptable, except that it naturally leads to the demise of whole nations. We should demand better.

Re:To quote Mel: "Its good to be the King" (4, Funny)

Anonymusing (1450747) | more than 4 years ago | (#31064622)

Why is it that people doing what people do naturally -- looking out for their own interests -- is normal and acceptable when you do it, but evil and wrong when somebody else does it?

Natural?! This is a Christian nation. As such, we do not look out for our own interests, but instead follow the Biblical commands to do nothing out of selfish ambition, vanity, or conceit, but in humility consider others better than ourselves. Each of us looks not only to our own interests, but also to the interests of others. We are peace-loving, considerate, full of mercy and good works, impartial and sincere.

Oh wait.

Re:To quote Mel: "Its good to be the King" (4, Insightful)

wizardforce (1005805) | more than 4 years ago | (#31064624)

Stealing is looking out for your own interests too. However, society has rightfully restricted some selfish behaviors like stealing and fraud because they harm others. The ideal economic system would harness selfish desire to expand markets, increase efficiency and encourage innovation (ideal capitalism). When the economic system encourages self interest to the point of destroying others' wealth it's crony capitalism.

Re:To quote Mel: "Its good to be the King" (1)

MarkvW (1037596) | more than 4 years ago | (#31064650)

"Why is it that people doing what people do naturally -- looking out for their own interests -- is normal and acceptable when you do it, but evil and wrong when somebody else does it?"

The answer to your question is fiduciary responsibility. In other words, we trust that the corporate executives will work for the corporate benefit and not their own.

It's the same fiduciary duty that keeps Steve Jobs from liquidating Apple and retiring with the sale proceeds to his own private country.

Re:To quote Mel: "Its good to be the King" (5, Insightful)

dave562 (969951) | more than 4 years ago | (#31064738)

In my mind it is the scope of reward that is evil and wrong. In the article, it is mentioned that one of the Sun executives is getting a severance package worth $175 MILLION dollars. That compensation package is enough to pay 1750 employees $100,000 for a year. Those 1750 imaginary employees who would be making that $100,000 are employees who are doing the jobs given to them by senior management. For all intents and purposes, those people are probably doing their jobs competently. Despite the fact that they are competent at their job, they are getting laid off.

People who are competent get laid off. The person responsibility for the health of the company gets enough money that he could pay 1749 other people a significant amount of money, even though he completely failed to keep the company going.

As the blog post mentions, the problem is fiduciary responsibility and the fact that in many cases (including Sun), the major share holders are also the executives themselves. So the CEO, CFO, Chairman of the Board and the rest of the executives set things up so that even in failing, they increased their stock value 42%. Thousands of employees lose their jobs, but those guys at the top get hundreds of millions of dollars among them.

There is a saying that "There is no greater sin than not knowing when you have enough." Corporate America is out of wack. The guys at the top fail so seriously that their companies go bankrupt. Despite that, they get millions of dollars. Employees who do their jobs don't get millions of dollars, and when the company fails they get assed out.

The "evil" that you don't understand is the rewarding of failure that leads to the suffering of others.

To make it easier to understand and to make a more basic explanation, lets replace "money" with "food". Lets say that the executive in charge of Sun has a machine that makes food for thousands of people. He runs the machine so poorly that it breaks down, and thousands of people no longer have access to the food it provides. In the process of breaking the machine, he manages to engineer it so that the very last time he runs the machine, it makes enough food to feed him, his family and his friends' families for a couple hundred years if they manage the food he created properly.

If there weren't laws in place to protect the asshole running the machine, the masses would tear him apart and divvy up the food he set aside for himself. Since there are laws in place, the asshole gets labeled "evil and wrong".

If there were justice in the world, or if the person running the machine were moral, he'd divvy up the remains equally among the tribe who helped him run the machine. There isn't justice in the world, and the man running the machine isn't moral. He took the lions share of what the machine produced and left everyone else out in the cold.

Re:To quote Mel: "Its good to be the King" (5, Insightful)

eln (21727) | more than 4 years ago | (#31064288)

While there's no doubt golden parachutes in contracts are often excessive, in this case (from a quick scan of the article), the bulk of the compensation these guys received are from the buyout of the stock. They owned lots of stock (due to stock grants and options from the company, most likely), and so they get a big payout when Oracle buys all of that stock. Yes, they got a straight cash parachute too, but the bulk seems to be from stock.

So, isn't the fact that they owned a lot of stock in the company, and thus their personal fortunes were tied directly to the company's performance, a good thing? We can argue all day as to whether or not their compensation in general was excessive (and it probably was), but it seems to me the fact that most of their golden parachute was due to the buyout of stock they already owned is a good thing.

Re:To quote Mel: "Its good to be the King" (1)

The Spoonman (634311) | more than 4 years ago | (#31064758)

So, isn't the fact that they owned a lot of stock in the company, and thus their personal fortunes were tied directly to the company's performance, a good thing

I'm going to do something unheard of on Slashdot and give a reasonable answer to a reasonable question: you mentioned in the first paragraph the subtle flaw in this argument: "They owned lots of stock (due to stock grants and options from the company, most likely)". In other words, they were given this stock (I don't think executives get options very often. That's usually left for the peons and serfs.), they didn't buy it. They didn't invest their own personal fortunes in order to make the company stronger, they were given these and made their fortunes off of the dividends paid. When the stocks were sold, they were simply transferring ownership, the company did not benefit at all from these sales.

In extremely simplistic terms: if I buy stock in a company during their IPO for $5, $5 goes to the company as capital (again, very simplistic explanation). If I sell that stock for $10/share, I make $5 and the company sees no benefit. If I'm an officer and am given stock as a benefit, and then sell that stock, the company sees no benefit.

Re:To quote Mel: "Its good to be the King" (1)

maxume (22995) | more than 4 years ago | (#31064434)

Jonathan Schwartz is some sort of magical pirate ninja.

Plenty of people could have actively worked to drive Sun into a cliff and still end up doing a worse job of it than he did.

Re:To quote Mel: "Its good to be the King" (0)

Anonymous Coward | more than 4 years ago | (#31064710)

Here's another quote "Shit flows downhill"

American companies are unique in this respect. (5, Informative)

reporter (666905) | more than 4 years ago | (#31064966)

With regards to highly compensated senior management, American companies are relatively unique. Among Japan, Europe, and the USA, the ranking from highest relative compensation for the CEO to lowest relative compensation is the following.

1. USA

2. Europe

3. Japan

Here, "relative" means dividing (1) the annual income of the chief executive officer by (2) the average annual income of the employees who are not part of the management structure.

Table 2 on page 6 of an interesting document analyzing the financial compensation of American CEOs [americanprogress.org] is instructive. For the sake of this discussion, we can reasonably assume that figure in the aformentioned category #2 is approximately the same throughout the West.

Table 2 then, in effect, gives us the relative compensation of the CEOs in the West. The typical American CEO in 2003 received annual compensation that is worth $2.2 million. The typical European CEO received $700,000. The typical Japanese CEO received $460,000.

Was the American CEO worth his pay? American neoconservatives answer, "Yes." They say that such compensation enables American companies to be top-notch competitors in high-technology.

On 2009 November 5, "The Economist" issued a startling report [economist.com] . It asserts, with plenty of evidence, that Japanese companies are the sole manufacturers of numerous components that are critical to the operation of high-technology devices ranging from tiny disk drives to huge nuclear reactors.

So, who is telling the truth? American neoconservatives or the "The Economist"?

Duh. (1)

MokuMokuRyoushi (1701196) | more than 4 years ago | (#31064190)

Not a huge surprise. They aren't going to spend time and energy on others when there's money to be had.

thnx, but no thnx. (3, Insightful)

polar red (215081) | more than 4 years ago | (#31064202)

The system will regulate itself? HAH! yeah, keep voting for the big bucks ...

Re:thnx, but no thnx. (1)

Ethanol-fueled (1125189) | more than 4 years ago | (#31064292)

keep voting for the big bucks ...

In Soviet Amerika, big bucks vote for us. [ft.com]

Re:thnx, but no thnx. (1)

CodeBuster (516420) | more than 4 years ago | (#31064952)

The system will regulate itself? HAH! yeah, keep voting for the big bucks...

And you propose what exactly as an alternative? Shall the government, on your behalf, intervene with coercive force to appropriate the private property of Sun and Oracle shareholders? Did Sun or Oracle receive taxpayer bailout money? What gives you the right to insert yourself into a transaction between two private third parties? You may not like what Ellison has done after the acquisition, but it was his perfect right as the new owner to do it.

Can everybody say "principal–agent problem"? (2, Informative)

fuzzyfuzzyfungus (1223518) | more than 4 years ago | (#31064212)

I thought you could.

Past performance no guarantee of future gains... (2, Insightful)

fahrbot-bot (874524) | more than 4 years ago | (#31064222)

Sun's executives did nothing to deserve lavish rewards, by any conceivable meaning of the word "deserve".

Don't worry, I'm sure they'll do better at their new jobs with Goldman Sachs, J.P. Morgan Chase, AIG, ... (sigh)

How Companies Work (5, Insightful)

Bruce Perens (3872) | more than 4 years ago | (#31064224)

How Companies Work

There are a few top managers, and they run the company for their own interests. If they have stockholders, they have to make some pretense that they are working for the stockholders, but look how much stock _they_ are getting out of the company. Sometimes they collect a $1/year salary to look good, while they get many Millions of dollars in stock per year. Rarely do people at this level work for anyone but themselves.

Then there are a number of second-tier managers, whose goal is to make the most out of the company that they can, or to make it to that top level so that they can run the company for their own interest. Sometimes people at this level have other motivations.

Then there are lots of other people. Often these people haven't even thought very deeply about what their motivations are. They are essentially treated as work-units which keep the company operating, but they are as expendible as a server in a rack. Fortunately, companies do need their talents, at least for now.

Then there are the small stockholders. They cross their fingers and hope the managers will do a good job for them, but they really do not have any power to influence the company.

Then there is the government. The government's job is to protect little guys with no power (the general population) from big guys with lots of power. But unfortunately the big guys essentially own the government, because of the fact that they pay for political campaigns and in other ways influence politicians, and because they are gate-keepers on jobs for voters.

All of this motivated self-interest is supposed to result in a good working system for the general population. It doesn't work terribly well. However, there are many other systems that work even worse, so people are reluctant to change it. Also, the average person can not be bothered to concern himself enough so that in the aggregate with other people that person can effect change.

Re:How Companies Work (1, Offtopic)

TooMuchToDo (882796) | more than 4 years ago | (#31064284)

+1, Owes Bruce a Beer

Re:How Companies Work (0)

Anonymous Coward | more than 4 years ago | (#31064394)

And bruce owes me a keyboard and coffee for making so much sense on slashdot

Re:How Companies Work (0)

Anonymous Coward | more than 4 years ago | (#31064488)

Wait, you really needed Bruce to point out what's blatantly obvious to the other 6.3 billion non-Americans living on this planet?

Re:How Companies Work (1)

iammani (1392285) | more than 4 years ago | (#31064582)

6.5 billion actually, nevertheless -1 Flamebait

Re:How Companies Work (3, Interesting)

castironpigeon (1056188) | more than 4 years ago | (#31064402)

the average person can not be bothered to concern himself enough so that in the aggregate with other people that person can effect change.

This is because the average person probably isn't thinking much farther ahead than what he'll have for lunch tomorrow. By the time he realizes he won't have anything for lunch tomorrow he's no longer in a position to do anything about it.

Re:How Companies Work (2, Insightful)

Rary (566291) | more than 4 years ago | (#31064498)

the average person can not be bothered to concern himself enough so that in the aggregate with other people that person can effect change.

This is because the average person probably isn't thinking much farther ahead than what he'll have for lunch tomorrow. By the time he realizes he won't have anything for lunch tomorrow he's no longer in a position to do anything about it.

And those who are thinking beyond tomorrow's lunch are often deluded into believing that through sheer hard work and determination they can one day be at the top of this pile.

Re:How Companies Work (3, Insightful)

Bruce Perens (3872) | more than 4 years ago | (#31064598)

And those who are thinking beyond tomorrow's lunch are often deluded into believing that through sheer hard work and determination they can one day be at the top of this pile.

Arbeit macht frei.

I'm thinking about Pizza a few days from now (0, Troll)

tjstork (137384) | more than 4 years ago | (#31064684)

This is because the average person probably isn't thinking much farther ahead than what he'll have for lunch tomorrow.

I'm pretty average and I'm thinking about pizza a couple of days from now. You must be pretty smart, to know so much about average people, and pretty arrogant, to be so wrong.

Re:How Companies Work (5, Insightful)

nedlohs (1335013) | more than 4 years ago | (#31064424)

If those top managers are being paid in stock instead of in dollars, then clearly they are stockholders and hence their interests are one and the same as the stockholders. Which is the entire idea behind such compensation schemes.

The real issue is that the stockholders are getting exactly what the want. Short term performance, and who cares about the long term. Since most of the shares are owned by mutual funds and so on and what they care about is how they did on last quarter's performance numbers.

That the company will go broke in 5 years is irrelevant, they just want to perform better than their competitors this quarter. And since they make up the bulk of the owners that's how it is supposed to work.

If the owners cared about long term performance they would structure compensation schemes to reflect that - mind you that is easier said than done. Short term stock price incentives, however, are just about the worst way possible to do that.

Re:How Companies Work (4, Interesting)

Bruce Perens (3872) | more than 4 years ago | (#31064510)

If those top managers are being paid in stock instead of in dollars, then clearly they are stockholders and hence their interests are one and the same as the stockholders. Which is the entire idea behind such compensation schemes.

Well, sometimes. In this particular case, the Golden Parachute was constructed purportedly to make a hostile take-over unattractive. Otherwise, perhaps Carl Ichan might have owned Sun before now. But it is not at all in the stockholders interest at this point.

We also have cases in which the managers receive different classes of stock from others. This seems to have been the case, for example, in the recent acquisition of Monta Vista, a former embedded Linux companies. The employees are said to have gotten $0 for employee stock, but some tiers of preferred stock took real money out of the company, as did the managers.

Re:How Companies Work (1)

Bruce Perens (3872) | more than 4 years ago | (#31064648)

Oops. I forgot to mention stock dilution. Another big way to work against the stockholders with stock.

Re:How Companies Work (1)

nedlohs (1335013) | more than 4 years ago | (#31065030)

No different than paying them in cash. It's compensation, something has to be transferred from the company (i.e. the stockholders) to the guy being paid.

If it's cash then the company has less cash on the books and has more expenses (and hence less profit) which should reduce what it is worth and hence the share price. If it's shares then the share price will be reduced by dilution for the same end result.

Re:How Companies Work (0)

Anonymous Coward | more than 4 years ago | (#31064736)

If those top managers are being paid in stock instead of in dollars, then clearly they are stockholders and hence their interests are one and the same as the stockholders.

Um, Bullshit. Top mangers are only aligned with stockholders when the stock goes up. If the stock price collapses then the top execs get all of their lovely incentives repriced. In other words, they win no matter what the stock does.

Please explain to me how that is being aligned with anything other than their own greed.

Re:How Companies Work (1)

nedlohs (1335013) | more than 4 years ago | (#31064968)

Because that is the stockholder view as well.

If the stock goes up the mutual fund looks good and the performance metrics will attract some more clients. If the stock goes down, who cares it's the idiot client's money anyway.

Re:How Companies Work (0)

Anonymous Coward | more than 4 years ago | (#31064986)

Because of accounting issues awarding stock to people does not have to expensed on the P + L whereas paying actual real money does leading to inflated profit figures.

Re:How Companies Work (2, Interesting)

godrik (1287354) | more than 4 years ago | (#31064466)

I am pleased to see I am not the only one to think that our (I should emphasize I am european) system suck so much; but so much less than the other one we know of.

Re:How Companies Work (0)

Anonymous Coward | more than 4 years ago | (#31064490)

This deserves at least +6

Re:How Companies Work (3, Interesting)

Publikwerks (885730) | more than 4 years ago | (#31064550)

I disagree with the form/function of the Government. I think it follows exactly the same for as a corporation. As the stakeholders, politicians have to pretend to be working for us. But they are just like the two tiers of managers. They are always looking out for themselves and looking to advance to the next level.
Tell me the last time a politician voted on something they saw as political suicide?
And as for the motivations of us little people, I think a more accurate description is that we are too busy avoiding getting crushed by corporations and the government to act proactively for change most of the time. Besides, if we had the power to control our own fate, we would just give it back as we are too short sighted to handle it

Re:How Companies Work (1)

Nefarious Wheel (628136) | more than 4 years ago | (#31064748)

One man, one vote. Larry Ellison is the man, and he's got the vote.

We are all slaves to the vote.

Re:How Companies Work (1)

twsobey (1700970) | more than 4 years ago | (#31064558)

But we are all the "average person" so how do we start to effect that change?

Re:How Companies Work (1)

DoofusOfDeath (636671) | more than 4 years ago | (#31064560)

Thanks Bruce. Now I'm suicidally depressed...

Re:How Companies Work (0)

Anonymous Coward | more than 4 years ago | (#31064584)

Also, the average person can not be bothered to concern himself enough so that in the aggregate with other people that person can effect change.

I don't agree. I think that most people really try hard to make a change, and are really dedicated to work together to -- OMG! PONIES!

Tag story !surprise (0)

Anonymous Coward | more than 4 years ago | (#31064244)

Isn't this the norm for big businesses? It's sad and all, but why is this news?

Re:Tag story !surprise (1)

creimer (824291) | more than 4 years ago | (#31064586)

It's Monday morning quarterbacking time, where /. regulars piss, moan and groan about some stupid tech company. Since everyone is a geek and no one watches the Superbowl (except for the David Letterman commercial [youtube.com] ), no one is going to talk about pigskin.

Missing the point. (1, Informative)

sunking2 (521698) | more than 4 years ago | (#31064254)

Let's compare the total money he has been paid in 20+ years to the total salary that Sun has paid out to all it's employees and shareholder dividends before you decide the compensation is lop sided. Say what you want, this article is sour grapes.

Re:Missing the point. (1)

tthomas48 (180798) | more than 4 years ago | (#31064444)

Sure, I'll do that if you can explain how he's doing the work of 1000 employees.

Re:Missing the point. (0)

Anonymous Coward | more than 4 years ago | (#31064512)

He can in a day, ruin the reputation of the company, bring it down to bits and make ten thousands employees jobless in a week. He does not do that, and hence is worth 1000 employees.

Its from his decision of when to exercise and when not to exercise power, the whole company runs on. So I would say he is worth 1000 employees.

Re:Missing the point. (1)

tthomas48 (180798) | more than 4 years ago | (#31064756)

Hmmm... so to distill your point - a sick Taco Bell employee who washes his hands and by doing so, doesn't cause E. Coli contamination resulting in millions of dollars of losses for his parent company should be paid like a CEO?

And if another sick Taco Bell employee doesn't was his hands and does cost the company millions of dollars, he should also be paid like a CEO?

Re:Missing the point. (0)

Anonymous Coward | more than 4 years ago | (#31064930)

You're an idiot.

Nowhere, anywhere, at any time was that crazy, stupid shit mentioned. What was mentioned was: That if someone does the work of 1000 people then it's justified in the same salary ratio. The original comment was to compare the salary given to this one man to the entire working force that sun has had in a period of 20 years. Also a stupid idea by the way. It doesn't matter what the total salary to all employees was, to justify the salary of any individual you should benifit, as a company, from their proper job fulfillment by a comparable number otherwise they should not be given the compensation. This guy didn't do his job for the company or the employees so his compensation is disproportionate. Get it?

Re:Missing the point. (1)

tthomas48 (180798) | more than 4 years ago | (#31065036)

So that last reply was flip. But I did want to point out an important point. The value of CEOs is grossly overvalued. And it seems to be people who tout the power of the market most who are defending them. But why do you never see one of these jobs on Craiglist? It would be easy enough to prove you had what it takes. Your resume would look something like this:

started company - grew to couple hundred thousand in revenue
appointed CEO of new company took it to $5 million in revenue, continued to increase revenue for 10 years after departure
appointed CEO of new company took it to $20 million in revenue, continued to increase revenue for 5 years after departure
etc.

But the way our corporate boardrooms works looks the most like communism of any part of of financial system. The typical CEO position looks like this:

got job at huge company as junior ass kisser
got promotion to cushy job in highly profitable department where I kissed some more ass. Did not lose huge amounts of money
got promotion to a bigger highly profitable department. made decision that ran it into group, but my all those golf games with senior management made them see me as a "ballsy risktaker" rather than an "out of control failure".
etc.

It would be very easy for the market to actually pick who would be CEOs. Sports team coaches are highly accountable. A few losing seasons and they're on their way back down to coaching little league games. There's some ridiculousness in there, but there's a much stronger correlation between performance and pay. And it actually appears that the market is involved.

I can see no sign of the free market in the pay packages or employment status of most of the leaders of large banking firms in the US right now.

Re:Missing the point. (1)

Romancer (19668) | more than 4 years ago | (#31064752)

So why don't the other employes that are actually making the company better by designing products, manufacturing them, marketing them and selling them get anywhere near the salary that this guy gets? Compare the total salary of one person in product design that launched a family of products that nets the company millions. That's actual work. Even the guys manager that helped get the team together and "optomized workflow" had more of a hand in the company being productive and profitable than this yahoo so far from the actual company business processes that are necessary in a capatalist system. This guy was not necessary, just a leach on the company and withoout him the company would have more money and be a better supplier with better profit and productivity.

Paid to Fail (1)

the1337g33k (1268908) | more than 4 years ago | (#31064260)

Sometimes its nice to know that while most of us actually work our jobs and do them very well, some companies like sun employ people where their only job is to screw the company and its employees for money they don't deserve.

What a great success story... (1)

creimer (824291) | more than 4 years ago | (#31064278)

1. Develop great products.
2. Run company into ground.
3. ???
4. Profit w/golden parachute.

This seems to be a very successful formula for many executives over the last decade. Not that society benefits from all this "creative destruction" to enrich a few people.

What was the great product? (1)

tjstork (137384) | more than 4 years ago | (#31064760)

Develop great products

Where's the great product?

* Java isn't a product, because its free.

* Solaris lost the unix mindshare ware to Linux.

* The side effect of AMD's 64 bit Opteron lunge at Intel was to make every computer 64 bit RISC workstations, so now SPARC is kinda pointless.

* For personal computer, Apple has elegant worskstations down to a science

Bottom line is, computing is a volume business, not a high end one, and Sun was focused on the wrong end of the scale.

Franky, if I was a shareholder of Oracle, I'd be kinda angry that they actually made this buy. The only good thing the company has is MySQL, and that could have been gotten a lot cheaper by waiting for Sun to go BK.

Re:What a great success story... (1)

_Sprocket_ (42527) | more than 4 years ago | (#31064946)

This seems to be a very successful formula for many executives over the last decade. Not that society benefits from all this "creative destruction" to enrich a few people.

But to be fair - isn't this the real story of Silicon Valley? It seems there's always a failing company that was the new, disruptive company not long before that. Of course, most companies never get to be the new success. And a very few companies survive success.

Heck - a company could be doing everything it was doing during it's halcyon days and yet still go out of business because of other influences in the industry around it. In short, it doesn't have to be YOU driving the company in to the ground. Others can do that very well for you.

Well, sure they sucked... (5, Funny)

elrous0 (869638) | more than 4 years ago | (#31064294)

...But if we hadn't paid them a competitive salary we might have lost them.

Re:Well, sure they sucked... (1)

iammani (1392285) | more than 4 years ago | (#31064600)

Which is good? no?

Re:Well, sure they sucked... (1)

godrik (1287354) | more than 4 years ago | (#31064908)

which is why OP is modded funny!

Re:Well, sure they sucked... (0)

Anonymous Coward | more than 4 years ago | (#31064678)

I think you meant to be sarcastic, but you are generally correct.

CEO's that take over failing companies tend to be the highest paid of the bunch. Bankrupting a company leaves a black mark on a CEO's career, limiting the possible future earnings, and unfortunately it is very hard to distinguish between a lousy manager and someone who did an excellent job, but failed to turn the company around due to an already-existing bad situation. As a result, the worse state the company is in, the higher the cash and stock options and a golden parachute have to be to offset the risk taken by trying to fix the company.

Pointless Rambling ... (1, Troll)

be0wulfe (252432) | more than 4 years ago | (#31064316)

Uhm. WTF. The article would have been better if it focused on EITHER divergent views on social liberalism vs conservatism OR the fact that Sun screwed itself repeatedly through bad management yet still somehow found a buyer (who's the bigger fool?).

As it is, the article comes of as an angry, rambling rant flipping between one or the other yet not making a cohesive point - aside from slamming capitalist and conservatives - but hey, it's on the daily KOS, so no great surprise there.

Sun was a company with great tech, at the time. But if it's one thing technologists need to understand - it's not how great your product is, but how well you can a) SELL IT (capitalist dogs!) and b) EVOLVE it - fall behind and instead of going to the great socialist nirvana in the sky you get eaten up by the darwin doggies that took you down.

What happens to sun now is anyone's guess. Oracle's got it's fair shair of WTF and Brilliant! moments, more of the former recently.

Re:Pointless Rambling ... (0)

Anonymous Coward | more than 4 years ago | (#31064486)

Why do they need to understand?

The point of the pointless rambling is that Scottie and Jonathan AREN'T going to understand what you said because THEY went to the "great socialist nirvana in the sky" and left their comrades to the darwin doggies. They were the ones who needed to learn to "SELL IT" and "EVOLVE".

But I do some what see what you're saying. Why was Buckeye Hamburger complaining about being employeed for X years? I don't know. If he wanted more money, he could have asked for more, and gotten it, or been replaced.

Ferris Bueller: (0, Offtopic)

uslurper (459546) | more than 4 years ago | (#31064334)

Ferris: [to the camera] If you had access to a car like this, would you take it back right away?
[beat]
Ferris: Neither would I.

Re:Ferris Bueller: (1)

sammy baby (14909) | more than 4 years ago | (#31064504)

It is so choice. If you have the means, I highly recommend picking one up.

Executives are employees, too (1)

mc6809e (214243) | more than 4 years ago | (#31064348)

And this seems like another example of employee theft.

The only difference between employees in upper management and all the other employees is the scale of the looting.

Why do shareholders tolerate this?

Re:Executives are employees, too (3, Informative)

mbone (558574) | more than 4 years ago | (#31064722)

Why do shareholders tolerate this?

Because the ones who are small have no real recourse, and the ones that are large are mostly institutions with upper management making these decisions, and why should they want to rock this boat ?

Ahh, the good old days... (4, Interesting)

stokessd (89903) | more than 4 years ago | (#31064358)

I loved my sparc 1+ with the funky ruled reflective mouse pad, and the quirky SunOS. For some reason I always wanted pizza for lunch after working on it all morning. Ahh those were the good days, oh mosiac how we used you to find things in the larval days of the web.

Linux really ate Sun's lunch. All the reasons to own a Sun largely evaporated with Linux. I say that as a researcher and end user, not a data center wienie. As soon as linux and commodity hardware got good enough, it was all over for Sun. I really feel bad (and old) but frankly I'm surprised that they lasted this long.

Sheldon

Re:Ahh, the good old days... (3, Insightful)

Bruce Perens (3872) | more than 4 years ago | (#31064430)

Beige boxes with tiny margins ate Sun's lunch, once they could run any reasonable operating system, or even an unreasonable one. Remember when so many people thought the future would be Windows and that Unix was dying? That was so depressing that we had to fix it by ourselves. But the beige boxes would have taken over either way.

Re:Ahh, the good old days... (1)

WinterSolstice (223271) | more than 4 years ago | (#31065004)

As opposed to beige boxes with little purple accents :D

They really charged too much for SPARC and hung onto it too long. By the time they diversified with the x86_64 hardware and such it was too late - IBM had eaten the higher end market, but Linux and Windows had eaten the lower end.

That, and many people truly despise Solaris.

Reaganist? No, Economists. (5, Insightful)

Anonymous Coward | more than 4 years ago | (#31064388)

In the introduction I referred to what I call the "Reaganist dogma" of the free market, my description of what a Republican might refer to as "capitalism" as opposed to "socialism".

Reagan got that from the economists. He didn't think that up himself. That's one of the incorrect assumptions economists use in their models and theories - free markets always work and that the market is rational.

Free markets work only within a narrow range of economic activity. If they exceed those ranges then you get bubbles and collapses. That's why the Fed was created to try to eliminate those things. Of course, if you get a Randian dogmatic believer in the free markets of a Fed Chairman (Greenspan), then you end up with serial bubbles: stock market and real estate.

There's a few other blanket assumptions that economists make that are horribly incorrect in the real World, but I'll save those for another time.

Oh, and economists need to get over their physics envy. They develop these impressive mathematical models and everything but the underlying assumptions are incorrect. As in this example, the assumption is that markets are rational. As we have seen, they are hardly rational.

Reading assignment: rational irrationality.

Oh, OK the last thing: the behavioral economists are redeeming the whole "profession"! :-P

Re:Reaganist? No, Economists. (1)

justinlee37 (993373) | more than 4 years ago | (#31064796)

What'd you do, take an introductory economics course and decide to give us your critical analysis of the entire field? I think most economists realize that markets are inefficient and economic actors aren't perfectly rational.

Go study econometrics for awhile and then get back to me and tell me that the mathematical models are useless, or that it's not really a profession. Predicting the price changes of commodities is an incredibly valuable skill that companies will pay out large salaries for.

Author does not understand capitalism (-1, Troll)

Anonymous Coward | more than 4 years ago | (#31064412)

These executives succeeded. In fact they succeeded exceptionally well, in particular by getting IBM and Oracle to do a bidding war over Sun. Who the fuck cares what products died or the history of the company or who lost what job. All that matters, and all that should EVER matter, is the return on investment obtained by shareholders. So fuck you dailykos, you communist bullshit rag site. Communism sucks. Obama sucks. YOU SUCK.

Re:Author does not understand capitalism (1)

tthomas48 (180798) | more than 4 years ago | (#31064520)

You're completely right. And that is why Bernie Madoff is a god!

Cance in base assumptions (1)

Black Parrot (19622) | more than 4 years ago | (#31064436)

This is hardly specific to Sun. Somewhere over the past 30 years the notion of a bonus has changed from being a reward for a job well done to being an entitlement - a basic part of the compensation package.

Or rather, that notion has changed among the executive class. Ordinary working stiffs weren't informed, which is why they are outraged at bonuses for failure.

Shocking (2, Informative)

whisper_jeff (680366) | more than 4 years ago | (#31064446)

...if Ellison drops the ball and things start going south for Oracle, it's the employees who will suffer for it, and he'll be doing just fine.

Welcome to the real world. This is the way of things. Get used to it because it's never going to change.

Year's salary as compensation and he complains? (1, Insightful)

Anonymous Coward | more than 4 years ago | (#31064462)

As with most dailykos stories this one leaves me confused. SUN's former managers were so greedy that he got a year's severance? Oh he's just angry that someone got more than him.

Under corporate feudalism... (1)

drooling-dog (189103) | more than 4 years ago | (#31064564)

the serfs may starve, but the lords still get their due.

At that level... (3, Insightful)

straponego (521991) | more than 4 years ago | (#31064572)

Success or failure is irrelevant. It's a buddy network, and these guys have no interest whatsoever in the long-term well-being of their companies. They'll get top executive positions elsewhere if they want it. They'll make some big, short-term changes when they hop on-- layoffs are great for their bonuses, the bonuses are all about short term profits-- trash the company, and move on. It's a grifter aristocracy.

Look at execs from AOL, Yahoo, now Sun... hell, Carly Fiorina is running a campaign to do to California what she did to HP. Ask anybody who worked at HP while she was there, or any stockholder, how that works out. At least the citizens of California will have some say over whether she is taken on. Hard to believe such a tech-savvy state would fall for her, but...

And Sun execs. Oh ho, they're brilliant. "We hate Linux! We're doing Solaris x86! Linux rules! We're cancelling Solaris x86! Linux is GARBAGE! We're the biggest Linux providers in the world! No, wait: screw those customers. Oh hey, we have Solaris x86! I mean Linux! I mean OpenSolaris! Okay, now it's really open! It runs all that great OSS stuff without that horrible Linux!"

Yeah. They've done very well by themselves. And will continue to do so.

They are not "payouts for failure". (3, Insightful)

John Hasler (414242) | more than 4 years ago | (#31064610)

They are payouts as specified in the executives' employment contracts. Next time you hire executives try to negotiate better contracts.

Re:They are not "payouts for failure". (1)

tjstork (137384) | more than 4 years ago | (#31064776)

They are payouts as specified in the executives' employment contracts. Next time you hire executives try to negotiate better contracts.

Our socialist friends only believe in negotiations with a rifle.

Not very shocking (5, Insightful)

Angst Badger (8636) | more than 4 years ago | (#31064680)

Techies often have trouble understanding this, coming as they do from a very strongly meritocratic culture: the world at large is so far from being meritocratic that the sheer extent of its non-meritocracy strains the imagination. Professional academics often run into the same blank wall of incomprehension.

By no means am I saying that this is a good thing, or even that it is strictly necessary (though that is certainly a possibility given primate psychology), but the fact remains that the normal means of acquiring wealth is by conniving, cheating, swindling, and deceiving to one degree or another. If wealth was awarded on the basis of hard work, knowledge, or creativity, then the world would be full of super-rich construction workers, mathematicians, and artists. Instead, it is awarded on the basis of how good you are at talking (or coercing) people into giving it to you. Period. Things like quality, reliability, creativity, and utility are, at most, means to an end, and are by no means indispensable, except perhaps as grist for motivational speeches given to the people who do the work by the people who receive the rewards.

Here is a theory (4, Insightful)

mbone (558574) | more than 4 years ago | (#31064686)

Here is a theory that I heard expressed by a C level corporate executive :

The top people should be paid enough to make the people on the rung just below them green with envy, so that they will work their butts off to get to the top, and so on, proportionally, down the line. (In other words, the motivation is not greed, but envy.)

I haven't heard this expressed much in public, but it explains the high payments and bonuses in bad times much better than the "we pay them for their successes" theory.

A Stockholder Menality Change (1, Insightful)

Anonymous Coward | more than 4 years ago | (#31064728)

The only way this golden parachute will cease to exist is if the stockholders stop allowing these Executives from creating gold parachutes. Unfortunately stockholders don't do their jobs. Workers need to demand a parachute for themselves in this case. why? because if the stockholders are asleep at the wheel, it's time to steal from the stationary closet.

A post-Solar Haiku... (1)

ArtFart (578813) | more than 4 years ago | (#31064846)

Scottie got richer. Jonathan, too. Larry has Java.

I have to wonder (0)

Anonymous Coward | more than 4 years ago | (#31064928)

How much Obama will get after he finishes wrecking the US economy.........

thank shareholders (1)

DaveGod (703167) | more than 4 years ago | (#31064998)

If you're feeling a need to point fingers, go look over at the shareholders. Sure, exec's basically set their own remuneration through undue influence over the "remuneration committee", but it gets approved by the shareholders.

It's not going to stop until the broad body of shareholders as a whole start exercising their power. Not just at a few companies with good governance, but everywhere. Shareholders can't be left thinking that they have to turn a blind eye to absurd remuneration or they will simply go get it elsewhere. As it stands, frankly if an exec is not trying to wangle himself some fantastic pay deal then he's probably not fit for the job.

Turning up at the AGM would be a start. Legislation, guidance and listing rules can help significantly though, for example the UK Combined Code of Corporate Governance [frc.org.uk] puts pressure on institutional investors to participate. Allow internet streaming of the AGM together with voting over the internet - how many people have a sufficiently large investment that it's worth travelling to the AGM?

on stock compensation... (0)

Anonymous Coward | more than 4 years ago | (#31065014)

The ONLY reason executives want to get paid in stock is because capital gains taxes income taxes....by a LARGE margin.

Nothing altruistic about someone who makes 131351321 times what the real workers on the front line.

Load More Comments
Slashdot Login

Need an Account?

Forgot your password?