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> The revelations are just the latest in a parade of evidence pointing to the decade-long civil-war inside Boeing, pitting its famed "safety culture" against fi
by rectang 7y ago
> The revelations are just the latest in a parade of evidence pointing to the decade-long civil-war inside Boeing, pitting its famed "safety culture" against financial performance of the kind that pushes the stock price higher and provides big bonuses for senior executives.
As far as those senior executives are concerned, said strategy was a financial success. They got their big bonuses. What happens to the company years later doesn't matter.
- LorenPechtel 7y agoWhich is why we need to change how compensation works. Large salaries and bonuses should be paid out in corporate stock over a period of years. At the time it was awarded it would be a set number of shares (subject to splits and the like) but paid out over time. That ties their income to the long term performance of the company, not the short term results.
- dmurray 7y agoThat's...pretty close to how top executives currently get paid.
- rectang 7y agoThe question is, does that pay mechanism actually result in tying compensation to the long term performance of the company? Will Boeing's executives come out ahead even after all the destruction they've caused? If so, we still have moral hazard: executives are incentivized to chase short-term gains at the expense of long term company health.
- markdown 7y agoThe CEO just left with a $62M golden parachute.
- interestica 7y agoI don't know why I'm only now realizing how apt the "parachute" metaphor is in this case.
- LorenPechtel 7y agoOne key difference: "over a period of years". Current they get stock options they can exercise if the share price is over the strike price. I'm saying to give them actual shares over a period of time--what they end up getting is based not only on the current performance, but what it is 5 or 10 years down the road.
- babesh 7y agoCapitalism is very good at incentivizing externalizing costs: the environment, healthcare of its workers, etc... You need government to fix that because the market by itself sure isn't. Of course capitalism isn't all bad. There is a lot of good that can come out of it too.
- JumpCrisscross 7y ago> What happens to the company years later doesn't matter In finance, bonuses are now subject to claw backs. Is this true for Boeing?
- rectang 7y agoIn Wells Fargo's case, even after clawbacks, John Stumpf and Carrie Tolstedt ended up tens of millions of dollars ahead. The idea that clawbacks could be used seems to be a justification to keep executive pay at present levels. Even though executives who destroy their companies clearly are not worth what they are being paid.