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A Reflection On Sun Executive Payouts For Failure
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."
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.
We were all warned a long time ago that MS products sucked, remember the Magic 8 Ball said, "Outlook not so good"
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
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.
mmmm...forbidden donut
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.
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.
Bruce Perens.
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
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.
- None can love freedom heartily, but good men; the rest love not freedom, but license. -- John Milton
Hence the deaths of DEC, SGI, the real HP, and many many others. CRAY is still barely holding on.
I wonder when we'll see Apple and Motorola eventually walk this path?
An operating system should be like a light switch... simple, effective, easy to use, and designed for everyone.
Golden parachutes aren't a Republican phenomena, and the Silicon Valley tech companies aren't exactly fertile ground for the GOP as far as fundraising goes.
Nor is rewarding mediocrity limited to the upper-echelons of society (see: Detroit).
What the author did get right is that the boards of directors make these decisions. In companies where a scant few hold lots of sway, they look out for themselves instead of the working minions. Think Carl Ichan ever got a raw deal on a company he came in and dismantled?
The fixes are simple, but neither political party has the political will to do it. The tax reforms in 1986 allowed most of this, and it benefits wealthy interests (read: donors) on both sides of the aisle. Think Bear Stearns was a high-time GOP operation? How about Fannie and Freddie?
1. Tax stock options as regular compensation, taxed at normal income tax rates. Tax it at the stock's full price on the day the option is exercised. If the option is never exercised, fine. The executive doesn't pay the tax.
2. Place a time limit on option execution.
3. Tax fringe benefits as compensation (hello, "Cadillac" health plans).
4. Encourage firms to hire executives on fixed-term contracts with fixed compensation. Stop making compensation based on stock price performance.
But it'll never happen. And, while I'm glad to see that they're taking notice, the stupid from dKos burns. It burns a lot.
Yea, the problems of shareholder value and agency theory. After I tried to submit a submission twice that have lots of links on this issue and got rejected, I submitted it to the reddit instead. Here is the links to the submissions: http://slashdot.org/submission/1159318/The-problems-of-the-shareholder-value-ideology http://www.reddit.com/r/reddit.com/comments/axwzw/the_problems_of_shareholder_value_and_agency/
Selfishness is the most important natural characteristics of all lives -- from virus and bacteria to human beings -- that's why they compete and evolve. Even though they may act cooperatively sometimes but ultimately they are striking for their own interest. You can blame God or natural selection, depending whichever you believe.
There is no known system that can effective suppress selfishness. Communism tried that but resulting in power concentrated in a handful of dictators while rest of the people refused to work. Socialism tries that, through high tax, but resulting in stagnant economy. Capitalism does not try to suppress but to take use of that; it works the best still, though often resulting in concentration of economy resources. If you can come up one with a perfect system, we will award you with a Nobel Prizes in Peace and Economy.
If you think the top level executives make too much, try to start you own company and see how hard it is to even make the minimal wage for yourself and how much you have to bet your life on it up front. Then if you do succeed, you will promptly become one of the selfish executives. If you ever try managing people, you can also see how selfish or lazy your employees can be, especially in the time of company crisis.
That's being the case for the last millions of years and may probably be true for the next 1000 years. Maybe until eventually human beings become pets of robots (who will then fight for their own intergalactic interests.)
Not to mention acquiring Sun gives Oracle some serious advantages. One it gives them a "top to bottom" solution, from the hardware to the OS to the software, allowing them to say "the buck stops here" and giving customers a single entity to deal with when problems arise. Two by having Access to the Solaris and SPARC teams old Larry can walk in there and make damned sure their focus is making Oracle as fast and rock solid as it can possibly be on Solaris/SPARC, which I am sure will pay off in future revs, and because unlike Unbreakable Linux he controls Solaris now he can do it, and now that he owns OO.o he can invest in his idea of a cloud based Open Office just to piss Billy off, which you know Old Larry quite enjoys ;-)
So I don't really see Oracle having the problems Sun did. Sun never really seemed to have a cohesive vision of where they wanted to go, and their flip flops on x86 just seemed to make them look more out of touch, while old Larry may be a bastard, he is a bastard with a vision and knows where he wants his company to go. And that is to be the "Big Blue" of databases and to rule the database market the way big blue ruled big iron, which I really wouldn't be surprised if in 5 years they have MSFT level of dominance in the market.
ACs don't waste your time replying, your posts are never seen by me.
Oh, thank God and it's About Damn Time. Not only did someone post something like this, it got modded to "+5 Insightful."
Finally, please God, finally let the tide turn.
I was around in the late 70s/early 80s when Carl Icahn and T. Boone Pickens started their "Big Lie," that corporations and corporate leaders have no duty but to enrich themselves. When they first started crowing "maximize shareholder value, maximize shareholder value...," they got laughed out of the room. Of course corporations had responsibilities beyond the bottom line. The whole point of giving them tax breaks and the corporate veil against liability was because they promised to benefit society as a whole in their corporate charters.
The raiders refined their argument a bit and started arguing "Maximizing shareholder value benefits society most." (see Danny Devito in "Other People's Money" for a taste of it)
But then Ross Perot and his ilk got their hands around our schools, and a whole generation of kids came out moaning like zombies, "Corporations have no responsibility but to themselves, Corporations should only look to the bottom line..." I've been trapped in this farmhouse for 20 years now, nailing boards over the windows as fast as I can, screaming truth into the dark.
In exchange for the liability shields and massive tax considerations they are given, every corporation ever formed has given us their sworn commitment in their corporate charter that they will benefit society as a whole.
Goid bless you, Man, posts like yours give me reason to hope.
He put his boots up on the table and made a face. "The sig," he smirked. "You can waste your life in search of the sig."
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.
The executives are different then the stockholders in that they make the future. They have inside information before it becomes inside information and act on it to their own benefit. Watch the insider trading of a company.
They regard employees as assets. They don't layoff people they liquidate assets.
I've got a merger pen. I've helped put 2 CFOs and 1 CEO away. As a result I'm unemployable. That doesn't matter though because it's about honor not money.
These execs aren't being paid because they failed. Their failures are now irrelevant, because they're leaving and the company is being changed by the new owner.
They're being paid to leave. They have contracts and other leverage that could do damage to the new company if they didn't leave quietly. It's cheaper to pay them to leave than to let them stay, to fight them, or to let them do whatever they can do with their access or knowledge of the inner workings and the people who do stay.
This is also the reason the bankers who crashed the economy are getting paid, though their failures were epic.
You don't get paid for your work. You get paid for what it costs to get rid of you or to keep you, depending on what you do in return for getting paid.
--
make install -not war
Jonathan made it clear well over a year before the Oracle offer was on the table that they were trying to find a buyer.
Sun had, at one recent point, enough CASH RESERVES to take the company private again, and stayed public, aggressively driving the stock price lower and lower.
This is a big success for the executives--they crushed Sun, forced an acquisition, and got richer. That was their goal, they succeeded, and should therefore get their money!
So it goes.
"People who do stupid things with hazardous materials often die." -- Jim Davidson on alt.folklore.urban
There's actually a lot more to it than this... plenty of conspiracy around whether or not WMB was actually about to fail or not. The administration at the time had put rules in place to keep bank stocks from being shorted. Turns out WMI and Indymac were not on that list... and guess which two failed? Any wonder that the only two banks that weren't protected failed? And why weren't they protected? Couldn't possibly be a slurping of cash from west coast to east coast? Anyone curious how it is that two of the west coast's largest banks managed to get handed over to east coast banks for pennies on the dollar? Did you know that WMI was shopping out WMB prior to the seizure, and couldn't figure out why no one was interested...? Turns out the FDIC had already gone to all the suitors and told them a seizure was in the works. Small wonder no one wanted to buy at market value, knowing they could get it for pennies on the dollar from their FDIC buddies. The FDIC directly and intentionally caused a huge loss in value to WMI shareholders. I highly recommend some googling, specifically look into the lawsuit brought by WMI's shareholders against Chase and the federal gov't.