Home Depot’s CEO-Size Tip

I’m not upset by the $210 million golden parachute Robert Nardelli just received as a send-off from Home Depot. Not at all. To those critics who see it as one more step in the slide from free-market capitalism to wholesale looting, I say: What do you really know about Nardelli’s circumstances? Maybe he has a dozen high-maintenance ex-trophy wives to support, each with a brood of special-needs offspring. Ever think of what that would cost?

Or he may have a rare disease that can be held at bay only by daily infusions of minced fresh gorilla liver. Just try purchasing a gorilla a day for purposes of personal consumption, or any endangered species for that matter. There are the poachers to pay, the smugglers, the doctors and vets. I’m just saying: Don’t start envisioning offshore bank accounts and 50,000 square foot fourth homes until you know the whole story.

Another reason I’m not troubled by the $210 million payoff is that the Home Depot board may see it as a kind of tip for its fired CEO, and like me, they may see no reason to link tips to performance. I don’t tip as a reward for good service; I tip because it’s part of the tipped person’s living. Waitstaff, for example, earn about $2 or $3 an hour – a bit more now in certain states – so a tip is just my contribution to their wage. Sloppy waitress? Surly cabdriver? I’m not their damn supervisor-- they get their 20-25 percent anyway.

So what if Home Depot’s stock fell from $50 to $41 on Nardelli’s watch? Maybe the board should be commended for their generous tipping policies. Possibly they’re trying to send a message to us stingy 20 percent-ers: that 300 percent (based on Nardelli’s $64 million earnings over his six year tenure) is more like it.

Or it could be that Home Depot has a more profound philosophical message to impart. The board may have decided to flout the very principle of capitalist exchange: that what you get paid should in some way reflect the work that you’ve done—or the “value added,” as they say in the business. If that seems unlikely, consider that Pfizer has just rewarded its own failed CEO with an exit package of – and this can’t be coincidental --$200 million.

Picture the board members sitting cross-legged on the floor in a circle, munching S’mores and giggling about how cleverly they’ve undermined the basis of our capitalist economy. Home Depot sales clerks get about $8-10 an hour for lifting heavy objects and running around the floor all day; the CEO gets a total of almost $300 million for sinking the stock. We’re not talking about a rational system of rewards – just random acts of kindness, vast sums of money alighting when and where they will, generally in the outstretched hands of those who already have far too much.

Now, could anyone in this store please tell me where to find the little doohickeys that hold up shelves? Oh well, I guess you have to scrap a lot of sales associates to come up with a decent CEO tip these days.

Comments

[That Girl]

Thanks for the laugh.

[Rhea]

Just more evidence of the topsy-turvy world we live in. What a lesson for kids: do badly, reap enormous reward. Why bother to do the right thing?

[chris]

It doesn't hurt to review a few FACTS regarding Nardelli's parting package.

The following is from the latest HD 8-K filed with the SEC. An 8-K is a document submitted to announce unscheduled changes such as resignations of principal corporate officers.

"Mr. Nardelli and the Company have agreed in principle to the terms of a separation agreement which would provide for payment of the amounts he is entitled to receive under his pre-existing employment contract entered into in 2000.

"Under this agreement, Mr. Nardelli will receive consideration currently valued at approximately $210 million (including amounts which have previously been earned or vested).

"This consideration will include a cash severance payment of $20 million, the acceleration of unvested deferred stock awards currently valued at approximately $77 million and unvested options with an intrinsic value of approximately $7 million, the payment of earned bonuses and long-term incentive awards of approximately $9 million, the payment of account balances under the Company's 401(k) plan and other benefit programs currently valued at approximately $2 million, the payment of previously earned and vested deferred shares with an approximate value of $44 million, the payment of the present value of retirement benefits currently valued at approximately $32 million and the payment of $18 million for other entitlements under his contract which will be paid over a four year period and will be forfeited if he does not honor his contractual obligations."

The terms of Nardelli's departure were established in the year 2000. In other words, the package is not "tip" awarded after he performed his expected tasks.

And the pay-out to Nardelli will occur over FOUR years. He doesn't collect the entire balance in a big fat check at the end of this month.

Meanwhile, there's something else missing from this one-sided slam. In 2000 and 2001, the stock market was on fire. Stocks were soaring to new peaks, many for no sound reasons. Those were largely internet-related stocks. Many of those went over $100 a share and some went well past $200 a share. From there, most of them went to $0 per share.

Why not focus on the absolute madness of the crowds that flocked to stocks of companies with NO earnings? Those companies were headed by CEOs who further promised that earnings, if they were ever to arrive, wouldn't do so for several years. Yet the stocks flew into the stratosphere. That's madness on the part of investors.

Meanwhile, under Nardelli's leadership, HD's earnings rose 150%. Not bad. But not good enough to move the stock above the tulip-mania levels seen in 2001 when most market averages hit highs that remain unsurpassed.

Yes, HD stock is trading at lower prices today than when Nardelli took over. But this has more to do with the nature of the stock market than with operational failures at HD.

HD is nothing more than a massive hardware store. Its existence will never revolutionize anything. As a business, it has no transformative power like, say, Microsoft once had. It's just a simple business that must exploit every angle to nudge its profits up an inch.

It's also a company at the end of its fast-growth cycle. It is now a much more mature, slow-growing business. And it's hardly news when stocks of relatively mature, slow-growing businesses drop back from the peak days of high-speed expansion and profit growth.

If you want examples of huge waste among public companies, look at the Internet companies and review the stories investors swallowed from 1995 to 2001.

Those stories were whoppers.

[Different]

Baby boomers old boys club.

[Elizabeth]

$200 million, $210 million -- maybe we're in the midst of a CEO minimum-wage hike. While I keep reading in the op-eds that giving poor people more money per hour is a bad, bad idea, maybe it works the other way around for rich people. I'm sure the WSJ could make us understand.

[Ron Davison]

Nardelli did one really amazing thing. He got those self-checkout cash registers installed, ones where the customer uses the barcode and card swipe without need to interact with a live cashier.

There are two really marvelous things that can flow from this. One, given they can avoid cashiers and their small talk, now even introverts and agoraphobics can shop at Costco. Why should only extroverts have nice homes? Two, this may be a bold step towards eliminating those low-paying jobs like cashier. Nardelli may not think of this as extravagant pay; he may just be trying to set an example for the rest of us, pointing out what is possible once we've all let go of our paltry paying jobs. In the future, maybe we’ll all have our chain of retail stores, we’ll all be CEOs and no one will need to work those low paying jobs done away with by automation.

[chris]

Ron Davison wrote:

"Nardelli did one really amazing thing. He got those self-checkout cash registers installed, ones where the customer uses the barcode and card swipe without need to interact with a live cashier."

Hey Ron. Where have you been?

I pumped gas in high school. Every gas station in America had a crew of part-timers, mostly high school kids, pumping gas afternoons and weekends.

Where is that job today? Gone.

Why? Because the job requires no skill except collecting the payment from the customer. And that part of the transaction required honesty on the part of the employee.

Credit cards and credit verification changed everything. Customers pump their own gas because anyone can do it, and advancing technology was able to take care of the payment issue.

Today, instead of working for a small wage pumping gas in a generally grimy environment where gas pumpers inhale possibly dangerous gas fumes while they work, high school boys now work in video stores and a hundred other venues that have arisen in the years since the demise of the gas-jockey job.

[lc2]

chris,

Will you do me and everyone else here a favor? Will you never, ever again tell all of us that you pumped gas for a spell, self-serve is now the norm and that you therefore have a unique and insightful perspective on the value of labor and technology?

BTW, I've had my gas pumped by others in the past few weeks, and neither of them were high-school boys or girls. They were a middle-aged man and woman.

I heard a labor analyst on NPR's Marketplace recently say that self check-out is increasingly popular b'c retail cos. can't find people to fill those jobs. Huh? My spouse who is a retail mgr. turns away people every single day who will do anything for work and would love to be cashiers. I'm not looking to start a debate over whether a company has every right to install self-checkouts. Of course it does, and I'm not one to stand in the way of progress. But I also don't understand how an expert on a nat'l news show can say something that everyone in the trenches would say is completely untrue. Is it because no one cares what the people in the trenches have to say?

[Ceci]

I'm back in college after getting "downsized" by my former life partner. To say that I've experienced a drastic reduction in money is an understatement. For months I couldn't even find a minimum wage job that would consider me...they were swamped with hundreds of applicants. But I lucked into a job at a university and a "perk" is 2 classes per semester paid for (not to mention health insurance). So the salary isn't a living wage, but the other benefits give me a way out of it.

Now, I post my response here to recommend a book that I've gotten for my American Gov't class. It's called "The Irony of Democracy" and can be found at Amazon.com here http://www.amazon.com/Thomson-Advantage-Books-Democracy-Introduction/dp/0534601669/sr=8-1/qid=1168456081/ref=pd_bbs_sr_1/102-0481970-5284960?ie=UTF8&s=books.

This book discusses how the US is governed by an elite class who will logically stay with the status quo to protect their lofty position in society. There's nothing wrong with an elite class perse...if they continue to remember the lives of the masses in their decisions(IMHO). The US has always been ruled by an elite society, but the number used to be smaller (less bureacracy anyone?), and they had an ethic/moral belief that recognized that their own welfare was linked to the welfare of the masses. (you're ultimately only as strong as your weakest link).

The book is a text book, so it does have purely factual elements such as gov't organization, the constitution and ammendments etc. But it's whole focus is how these elements are wielded by the elite class.

[chris]

lc2, you wrote:

"I heard a labor analyst on NPR's Marketplace recently say that self check-out is increasingly popular b'c retail cos. can't find people to fill those jobs. Huh?"

Imagine my surprise at reading that NPR sent forth a story that was totally false. Oh, the perfidy. The heartbreaking disappointment that a ultra-lefty "news" venue behaved like the finest media source the Soviet Union, Cuba, North Korea or the middle east has ever known.

Hopefully the lesson you will learn is the one about how "trusted" sources have an agenda.

[chris]

ceci, you wrote:

"The book is a text book, so it does have purely factual elements such as gov't organization, the constitution and ammendments etc. But it's whole focus is how these elements are wielded by the elite class."

Really? The book is a textbook, therefore it contains only truth and facts? Wow. That's quite a statement.

[Ceci]

Actually I've read many text books that state opinion quite frequently and provide little supporting evidence to corroborate their conclusions. The textbook I mentioned does state quite a few opinions, but they're supported by factual evidence and often referrals to raw data versus massaged data.

There are portions of the textbook thought that are the typical dry facts, such as the sections I mentioned in my previous post.

[Anarcissie]

It's pretty obvious that the United States is governed by a elite class. You have only to ask how things get done, and follow the money, or look at the CVs of our great leaders.

I don't agree that 'they had an ethic/moral belief that recognized that their own welfare was linked to the welfare of the masses.' That was true in the later New Deal period and during and just after World War II, and may become true again when our present debacle matures, but before and after the New Deal the upper classes were as unconcerned with the general welfare as they are today. Only great disasters seem to awaken them to their aristocratic responsibilities.

Are elites a good thing? I don't think so, but most people seem to want to play follow the leader, so there's not a lot one can do about it. Exploit the fatuities and idiocies of the rich and powerful for entertainment, I guess; but as we see in Iraq and elsewhere, left to themselves they often wind up killing a lot of people and breaking a lot of stuff.

[chris]

Anarcissie wrote:

"It's pretty obvious that the United States is governed by a elite class. You have only to ask how things get done, and follow the money, or look at the CVs of our great leaders."

More nonsense from the glass-is-half-empty crowd.

Come to Brooklyn, city of 2.5 million -- more than many states -- and you will find that most city councilmen/women are anything but "eilte".

In Brooklyn, most were born in other countries, many of them Caribbean countries.

Meanwhile, NY state senators and state representatives also emerged from roots that were anything but "elite".

Our two senators representing us in Washington were not born to the aristocracy either.

However, both worked hard in school and were accepted at two of the most prestigious colleges in the country. But they didn't get into Wellesley and Harvard based on their parent's last name.

Of course if we confine our discussion to the Democratic Party, perhaps "elite" is the term that describes many of those elected under that banner.

The Kennedys come to mind. It doesn't bother the people who re-elect Ted every year that he's guilty of a crime that led to the death of Mary Jo Kopechne.

John Kerry, Mr Heinz, also comes to mind.

On the other hand, who was Jimmy Carter besides a lousy president? Did he get into Annapolis for reasons other than merit? Where was his silver spoon?

He didn't have one.

Clinton may have developed elitist sensibilities, but he certainly wasn't raised in the country-club and horse-farm set. He got into Yale on merit and he became governor of Arkansas by winning the popular vote.

Of course he has to thank Ross Perot for helping him defeat Bush 41 n 1992. Without Perot siphoning off 15% of the popular vote, Bush 41 probably would have won re-election.

If the US were "governed" by the "elites", Bush 41, a member of the elite, would have won. He didn't.

Neither did John Kerry, who was probably the crown prince of the political elites.

Here in NY City the last mayor who could be described as a member of the "elite" is probably John Lindsay. Even Bloomberg is a self-made billionaire.

Giuliani? There couldn't be a person of less elite origins than Rudy, except maybe David Dinkins.

On the other hand, the very elite Ronald Lauder, of the Estee Lauder family, ran in the mayoral primaries a couple of elections back. Despite his enormous wealth and the amount he spent in the primaries, he got crushed.

Steve Forbes once had presidential ambitions. He got crushed because almost no one responded to his eliteness.

John Kennedy and FDR were two presidents who would fall into the "elite" class. So might both Bush presidents.

But Bush 41 lost to a non-elite, and Bush 43 defeated two other elites.

Is John McCain a member of the elite? No.

Is Hillary? No.

[TZB]

Hey, what's wrong with a CEO making a few bucks?

[chris]

For whatever it's worth, a shareholder suit has been filed against Nardelli and HD over his severance agreement.

Unfortunately, the plaintiffs should have filed this suit when HD agreed to the severance plan, which occurred when Nardelli was hired.

The details were available in the proxy statement filed for that year -- 2000 -- and every year since.

Because shareholders are the owners of every public company, they should focus on executive pay issues. But most shareholders believe that managerial talent is not cheap.

And despite lackluster stock-market performance of HD's shares, earnings rose from $2.5 billion to $5.8 billion (2005 net income) under Nardelli's guidance.

But investors were not impressed. That's how it goes sometimes.

[Tommy T. Payne]

"CEO-Size Tip" made me laugh-out-loud several times.

Chris, your Jan. 11 posting re the power elite made a cogent point that many non-elite members gain public office. Yet leaving it at that alone paints a grossly inaccurate picture, because two crucial factors are left out of the picture: 1) Government is not the only center of power shaping our lives; 2) "Commoners" are permitted to achieve high office ONLY if they demonstrate they will NOT seriously threaten the privileged position of the corporate elite.

As to "1)": Financial institutions and corporations have much more power than government. The power to deploy capital - which is the accumulated productive capacity we've inherited from the labor of ALL our ancestors - determines who and how many work, how much they're paid, what gets produced, etc. I'd say the Fed Chair (formerly Alan Greenspan, now Ben Bernanke) has way more power over our lives than the president - unless you're in the military.

As to "2)" - Consider the example of Bill/Hil. Bill Clinton lost his bid for a 2nd term as Arkansas Governor in 1980 because he supported bill against the interest of one of Arkansas' richest guys. I believe the bill had something to do with trucking weights on the highways and would have cut into the profits of the Tyson chicken king. The rich schmuck organized his fellow big dogs to defeat Clinton. Ever since the Clintons have been wary of arousing the ire of the corporate elite. Thus, the '93-4 proposed health care plan gave a cut of the action to 5 of the biggest insurance companies, making it such a cumbersome, complicated plan that no one understood it, and the political support evaporated.

Or take Jimmy Carter, who was, yes, merely fabulously well-to-do, not tippy-top elite. Carter took care to serve on Rockefeller's Trilateral Commission and in other ways hob-nob with The Masters to assure he wouldn't rock the hierarchical boat.

Chris, don't you think we really think we have government "of the people, by the whores, for the corporate elite?

As to your posting Jan. 9 re the FACTS of Nardelli's compensation, you convinced me Nardelli can't be reasonably faulted for the lackluster performance of Home Depot's stock. But can you tell me what he DID do to "earn" that $210 million? Assuming the median wage of HD workers to be $12.50/hr., and that we're talking a 5-year period, NARDELLI WAS PAID IN SEVERANCE 3,200 TIMES AS MUCH AS THE AVERAGE COMPANY WORKER EARNED DURING HIS TENURE. What magical quality did Bob contribute that was worth more than the efforts of the people who actually serve the customers? If Bob could have squeaked by on a paltry $10 mil severance, the other 200 mil could have been used to give a $5/hr. raise for 16,000 employee-years!

It would seem Nardelli was REwarded for being a good contract negotiator.

[Ceci]

I find it interesting that there was an assumption that the word 'elite' meant being born into priviledge. Nowhere did I mention that the average person can't become part of the elite class. If they weren't allowed to bureaucracy wouldn't have ballooned to such a high degree. The head count at the top of the pyramid is seriously out of proportion. We no longer have a pyramid. Anyway, I digress.

The bottom line is that when one becomes an elite member, you have to check your empathy at the door or you'll get your head handed back to you on a platter. ...like what happened to Carter and the Clintons.

I don't have one negative feeling toward those with riches and power. (Only people who are abusive, manipulative, and self centered...and those types can also be poor.) But if you're rich, it would be wise to remember "to whom much is given, much is expected"...and have a broader sensibility than your own personal pocketbook and status/job protection.

[lc2]

chris,

Give me a little credit. I never listened to NPR like it was gospel -- do you really think that I turned to NPR for reliable news about labor issues? Two years ago they devoted Labor Day coverage to Italian hip-hop artists' interpretations of Bob Dylan tunes. No, I'm not making that up.

It's just that it was so completely out of left field (no pun intended) I was a little surprised. It's not every day that any self-respecting "expert" gets away with that kind of statement without citing a shred of data. Save me the lecture about textbooks too.

[chris]

lc2, you wrote:

"It's not every day that any self-respecting "expert" gets away with that kind of statement without citing a shred of data."

Right. It's not once a day. I'd say it's at least TWICE A DAY that "experts" make unsupported and unchallenged statements. That's one of the perks of living in "expert-land".

[chris]

lc2, you wrote:

"Will you do me and everyone else here a favor? Will you never, ever again tell all of us that you pumped gas for a spell..."

You're joking, right? I'd say you've mentioned "that my hubby works in retail" twice as often as I've cited my high school job.

Meanwhile, many readers of blogs don't read every entry or leave comments. My statements about various experiences of mine are in support of my points and made with the new reader in mind.

[chris]

Tommy T Payne, you wrote:

"Chris, your Jan. 11 posting re the power elite made a cogent point that many non-elite members gain public office. Yet leaving it at that alone paints a grossly inaccurate picture, because two crucial factors are left out of the picture: 1) Government is not the only center of power shaping our lives; 2) "Commoners" are permitted to achieve high office ONLY if they demonstrate they will NOT seriously threaten the privileged position of the corporate elite."

The post to which I had responded made the point that only "elites" obtained government power. This is clearly false and an insult to all those who have worked since the founding of the country to give anyone and everyone a shot at political leadership.

Meanwhile, your claim that government representatives are "permitted" some time in office as long as they don't rock the corporate boat is pretty silly. It would be political death in local elections to seem beholden to corporate interests. No one could get elected to any post whatsoever in The Peoples' Republic of Brooklyn if it appeared they were on speaking terms with an oil company, unless it was the one headed by Caesar Chavez.

Meanwhile, the economy of Brooklyn -- 2.5 million people -- has long shown the impairment of the socialist ideology at work.

You wrote:

"As to "1)": Financial institutions and corporations have much more power than government. The power to deploy capital - which is the accumulated productive capacity we've inherited from the labor of ALL our ancestors - determines who and how many work, how much they're paid, what gets produced, etc. I'd say the Fed Chair (formerly Alan Greenspan, now Ben Bernanke) has way more power over our lives than the president - unless you're in the military."

The preceding is somewhat true. A Fed without the free economy it hopes to steer through various and hazardous economic waters is not much of anything.

It takes the right balance of public and private effort for prosperity to arrive and stick around.

You wrote:
"As to "2)" - Consider the example of Bill/Hil. Bill Clinton lost his bid for a 2nd term as Arkansas Governor in 1980 because he supported bill against the interest of one of Arkansas' richest guys. I believe the bill had something to do with trucking weights on the highways and would have cut into the profits of the Tyson chicken king."

Tyson was the rich schuck who told Hillary to buy chicken futures a day before his firm made a large purchase that gave Hillary an instant $100,000 profit.

Meanwhile, the chicken business is highly competitive. Higher taxes or higher expenses for Tyson could very likely mean lay-offs for employees. In my view, it's always a mistake to impose taxes if the likely consequence is unemployment.

You wrote:
"Thus, the '93-4 proposed health care plan gave a cut of the action to 5 of the biggest insurance companies, making it such a cumbersome, complicated plan that no one understood it, and the political support evaporated."

Believe what you want, but we can bankrupt the nation with a generous national healthcare plan. If we go national, then we must impose limits and rationing on the care or our expenditures will skyrocket to destructive levels. Moreover, a generous national plan would be a magnet for every citizen of an impoverished nation. Our illegal alien problem would multiply many times as pregnant women surged into the country hoping to cash in.

You wrote:

"Chris, don't you think we really think we have government "of the people, by the whores, for the corporate elite?"

With unemployment around 5% and the vast majority of Americans living decently, you can call it what you want, but it works.

Would you prefer the economic programs in place in North Korea, Cuba, the islamic theocracies of the middle east, or Zimbabwe?

Chavez has pretty much declared himself dictator of Venezuela. He says Castro is his god. In other words, Venezuela will soon became another economic backwater despite having substantial oil reserves. It is now officially on a downhill slide. Bolivia too.

You wrote:

"As to your posting Jan. 9 re the FACTS of Nardelli's compensation, you convinced me Nardelli can't be reasonably faulted for the lackluster performance of Home Depot's stock. But can you tell me what he DID do to "earn" that $210 million?"

He raised corporate profits from $2.5 billion to $5.8 billion in five years. That's a pretty good showing, but not good enough to move the stock.

You wrote:
"Assuming the median wage of HD workers to be $12.50/hr., and that we're talking a 5-year period, NARDELLI WAS PAID IN SEVERANCE 3,200 TIMES AS MUCH AS THE AVERAGE COMPANY WORKER EARNED DURING HIS TENURE."

His "severance" was not $210 million. That amount included all compensation up to the time of his departure. It included many deferred incentives and bonuses. In other words, compensation already earned but not collected.

You asked:
"What magical quality did Bob contribute that was worth more than the efforts of the people who actually serve the customers?"

He told them what to do. His guidance raised net income from $2.5 billion to $5.8 billion. If he hadn't changed the way the company did business, it might have continued to earn $2.5 billion a year. Or perhaps earnings would have fallen. Though there may be a clerk in the organization who has the capacity to become CEO and introduce similar or greater improvements, Nardelli was th guy who did it and he was paid according to his contract, which was approved by the board of directors before he showed up for work.

You wrote:
"If Bob could have squeaked by on a paltry $10 mil severance, the other 200 mil could have been used to give a $5/hr. raise for 16,000 employee-years!"

When the hourly-wage employees are in charge they can institute the pay practices you suggest.

It's obvious that workers prefer to shoot themselves in the foot by ignoring their opportunity to acquire meaningful ownership stakes when they work for public companies.

Even in companies where workers receive some stock compensation, the hourly people usually sell it and take the cash. They would do themselves a favor if they held it and built up enough of a group position to throw a little weight around. It doesn't take much.

You wrote:

"It would seem Nardelli was REwarded for being a good contract negotiator."

He raised profits a lot. You seem to suggest that doesn't count for anything. Meanwhile, US autoworkers, steel workers and many other union workers have seen their ranks shrink a lot because they negotiated big wage-and-benefit packages that gave off-shore competitors all the advantage they needed to underprice our products on world markets.

The auto-worker Job Bank program pays auto-workers full pay to sit at home. That was one of the great contract bamboozlements of all time. Meanwhile, Nardelli more than doubled profits at HD.

Personally, I don't think I would have given Nardelli the contract he got because I think there are others capable of doing the same job for less.

But, like sports stars, business stars are not hired cheap. HD is not an early-stage company. As a maturing company it needs the leadership of someone who knows what works at that stage of a corporation's life.

[Ceci]

...quoted from http://slashdot.org. Similar discussions have been discussed on this unix/tech forum over the past day or so.

(by dtjohnson)
"1) Extremely high executive compensation attracts people for management who are extraordinarily greedy and selfish. These traits lead them to make business decisions that are both self-serving and short term in outlook; exactly the opposite of what any business needs to grow and prosper.

2) A top management receiving pay that is so much higher than most of the people working in the business allows them to live in ways far beyond the means of most other employees. As a result, they lose touch with the day-to-day problems and issues of their workforce and consequently make poor decisions.

3) People who are paid far above others soon begin to think that they are somehow wiser, more intelligent, more creative, harder working, etc than others and begin to devalue their contributions and opinions. This can have disastrous consequences for any organization."

[Anarcissie]

If paying top management so much leads to bad results -- and Slashdot certainly isn't the first to make this claim -- we have to explain why shareholders are so willing to do it. In theory, the owners of Home Depot thought it was worth contracting themselves to give Mr. Nardelli hundreds of millions of dollars of their money (and, ultimately, our money) because of something he was going to do for Home Depot or at least its shareholders. What did they think, and why did they think it? Remember, everyone in this situation is supposedly well-informed and acting voluntarily. They may be delusional, but we should at least understand the delusion so that we can dispel it.

[realpc]

The only reason we have all this stuff that progressives love -- computers, air conditioning, cars, electronic entertainment, medical technology, useless nasty treatments for AIDS and cancer -- all that stuff you want every poor person to have -- the only reason we have it is free enterprise.

Yes, the Soviet Union did a remarkable job blah blah blah and if only the United States had cooperated with its noble mission of world revolution and kill the rich bastards blah blah there would be no poverty on earth today and everyone in Africa would have a hot tub and a hybrid car.

If you got the nicest, smartest, most progressive group on earth and put them in charge of creating and managing a peaceful, just, and prosperous society -- without free enterprise -- the result would be slavery, poverty and corruption.