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One news item that may be getting lost in the din of the Black Sunday developments is that Fannie Mae (NYSE: FNM ) and Freddie Mac's (NYSE: FRE ) outgoing CEOs aren't going to receive the millions of dollars in severance that had previously been expected. That might be a bright spot in a gut-wrenching time, when many of us feel like we're footing horrific bills for other people's massive mistakes.
The Federal Housing Finance Agency said it will block the severance payments for Fannie's Daniel Mudd and Freddie's Richard Syron, which together had been estimated at up to $23 million.
I have to say I'm down with that. When I begged Uncle Sam to please let something fail recently, I brought up the idea that when companies require bailouts, maybe top brass should be required to jump with no golden parachute whatsoever. Why do we give top executives a cushy landing when they're let go? Doesn't that sound suspiciously like an incentive to screw up, or at least give a message that screwing up wouldn't be that bad for them?
Take the Big Three's recent hope for government loans in the $25 billion to $50 billion range. How short are the memories of those who forget that Chrysler is headed up by Bob Nardelli, who left Home Depot (NYSE: HD ) in shame -- OK, maybe not that much shame, seeing as how he got a $210 million goodbye present on the way out. Somehow it seems ironic that his company is among the ones asking for government help. Perhaps some of these rich dudes could kick in some cash when their companies are floundering? Call me crazy.
Shareholders should pressure their companies for say-on-pay policies and reasonable salaries. It's not unheard of. Costco (Nasdaq: COST ) and Whole Foods Market (Nasdaq: WFMI ) jump to mind as two companies that have been ahead of the curve when it comes to reasonable pay for CEOs, and some of the most brilliant minds in business and investing, like Peter Drucker and Berkshire Hathaway's (NYSE: BRK-A ) (NYSE: BRK-B ) Warren Buffett, have taken stands against excesses in CEO pay.
I think golden parachutes in particular should be viewed as symbols of decadence and thievery, not to mention the antithesis of true free-market dealings. Failure should not pay. In the case of bailouts and government assistance, then both shareholders and the public at large are the ones who get their pockets picked for a whole lot of nothing. I don't see why this stuff has gotten by so easily for as long as it has -- it's low on both ethics and logic. So many of these guys have been paid millions year-in and year-out anyway, sometimes making terrible decisions that don't come out in the wash until years later (like now).
Surely we can strive for better than this. Now is a good time to be furious -- and start rethinking the policies of a decadent phase that encouraged greed, ego, and self-absorption over ethics, prudence, and the pride of corporate excellence. It's a time we must put behind us.