Nothing grinds my grits more than generously rewarding failure. Large corporations have routinely given their top executives ‘golden parachutes’, which is money paid upon takeover or termination. Part of the reason for these packages is to make a company unattractive as a takeover target. However, when an executive does a poor job and is terminated, they still get that golden package, although not as lucrative as the takeover scenario but still obscene, especially considering they’re being terminated for failure. Wouldn’t it be nice if Joe Lunchbox got terminated for incompetence but was given several years pay anyway? This trend is slowing down a bit as shareholders hold their Boards to account for such waste but in Canada there is a particularly egregious example of this nonsensical excess. While not a ‘golden parachute’ it is still an example of the stupidity of executive compensation inherent in the golden parachute culture and they are being paid with our money.
Bombardier has been the beneficiary of billions of dollars of public money over the years. The support could be classed as a sound investment as Bombardier struggles to eke out a niche in the jet liner and rail transport market which would create many jobs. This has been a bad investment though. Bombardier suffers from extremely poor management and has missed all kinds of deadlines in developing its C-series passenger jets and we are all familiar with the deadlines they continually miss with the new TTC streetcars.
Now they have trod their well-worn path to the trough once again seeking more money while laying off 7,000 workers and then giving their smiling top executives a 50% raise. People are rightfully up in arms and Bombardier has agreed to delay the increase (not eliminate it) for years. This is worse than a golden parachute because the same awful management is still there collecting a continuing series of bonuses rewarding their incompetence.
Rewarding continued failure and poor performance really disturbs me, especially when you consider where the money comes from to subsidize companies like Bombardier. Pierre Poilievre shows us who actually pays for these bailouts in his comment in the Financial Post of May 10, 2016 (regarding Bombardiers last trip to the well):
The Liberal government has now offered a billion middle-class tax dollars to a company that paid $8 million to just one of its executives in 2015. A company has the right to pay its leaders anything it wants with its own money; but this bailout represents a massive transfer of wealth from the working class to the wealthiest of the wealthy. According to Statistics Canada data, the lion’s share of federal income tax that will fund this bailout comes from people earning between $45,000 and $90,000 a year. The federal government got more money from this cohort than any other, money that it will use to bail out a company whose controlling family is said to be worth $1.77 billion.
It seems that Joe Lunchbox is feathering the nest of a bunch of well-connected botchers. It doesn’t seem right to me, and perhaps society would be better served in letting Bombardier go broke as it deserves and invest the money in other business ventures such as solar/wind energy, biotechnology/healthcare and Internet security. I don’t want to pay wealthy people for wasting my money and then claim big bonuses for their efforts.
That’s how I see it, anyway.
Yours in the Zone
© 2017 David Jones