Executive Greed, Part 18,978

AP: AT&T execs would get $31M as part of SBC sale. Top executives of AT&T Corp. would receive $31 million in severance pay if the long-distance company's deal to be acquired by SBC Communications Inc. goes through as planned. The company would have paid an additional $10.3 million to chairman and chief executive David Dorman if he was not slated to become president of SBC after the merger, according to a filing late Friday with the Securities and Exchange Commission.

Of course, none of this loot had anything whatever to do with AT&T's decision to sell to SBC. Uh huh.

Comments

[John Hunter]

Actually it probably didn't influence their decision much. They probably would get the same payouts whoever they sold to. That seems to be part of doing business in America.

Hopefully, at some point, the cry over the shareholders money going to the "brooks brother bureaucrats" (my name for high paid USA bureaucrats who pay huge amounts to their friends and colleagues) will greatly reduce this practice. I am glad to see you point out these payments to your readers.

I don't believe those payments are justified. It is especially disconcerting to see the people who claim competitive forces require those jobs filled by people who don't wear expensive suits, and play golf with them at their country club, have to be shipped overseas pay themselves huge amounts. It is amazing the ridicules payments that are made to so many high paid American executives. In my opinion, very few who are paid over $1 million are worth it (though some are).

Yes they are able to get someone to pay them such an amount in the marketplace. But I think those that authorize the payments, do so, not in the interest of those they represent but to make their own lives easier (so they can get reciprocal unjustified large payments). I believe we are slowly reducing the level of this behavior, but that may be more my hope than reality.

[bob roberts]

This greed issue has gotten completely out of hand. In recent months it has been Carly Fiorina, formerly of HP; Dan Carp, Eastman Kodak; Tony Perrez, Eastman Kodak; and others, along with AT&T. No wonder prices are so high. Politicians have done nothing to prevent this kind of behavior. Thankfully, we have Warren Buffett who has been very vocal over this raping of industries. He has shown us that it is not about running a company but about exiting with more money than can be counted at Fort Knox.

[Thomas Hawk]

All that greed and they still want to ding me for another $20 per month.

This merger is about as consumer unfriendly as anything I've ever seen.

Line their own pockets while screwing over the little guy. Nice.

http://thomashawk.com/2005/03/why-cingular-wireless-sucks.html

[Bob Rosenberg]

High $ payments to corporate executives is *not* necessarily greed. It is simply responding to the incentives of the marketplace. Tax law is part of those marketplace incentives.

Congress got it *exactly* backwards when it eliminated the double taxation on corporate dividends. It eliminated the taxation on dividend *income*. This created an additional incentive on the part of *shareholders* to want dividends. It did *nothing* to incent corporations to pay those dividends.

The existing tax incentive remains in place to pay *lots* of money to corporate executives -- payroll is tax deductible. Those $'s cost corporations pennies on the dollar.

Had Congress, in its wisdom, rather than eliminating the tax on dividend *income*, instead created a corporate tax deduction for dividend *expense*, corporations would have the incentive to pay dividends that they now have to pay executives.

[Cranky Observer]

Bernie Ebbers killed AT&T by lying to Wall Street about profitability for 4 years. The Board forced Armstrong to gut what had (to me anyway) actually been a fairly good strategy (even though he also overpaid for the cable assets) in an attempt to match Worldcom's gross profits. Of course no one, including Worldcom, could have matched those profits because they didn't exist.

After that, it was only a matter of time until someone bought AT&T. The executive payouts are annoying, but if I were in their shoes I would have a hard time turning it down myself.

Cranky