I’ve noticed several articles lately dealing with the topic of intrinsic versus extrinsic rewards. I think it’s a bit simplistic to say, as some do, that money doesn’t provide any incentive to adults. Over time, though, the ceiling does turn into the floor; most of us tend to incorporate a raise into our base.
I often forget is that such incorporation continues right through the stratosphere. It took a messy divorce between former GE CEO Jack Welch and his second wife to reveal some of the incentives shoveled his way — um, offered to him by the GE board. Like memberships at five golf clubs. Or postage for his personal correspondence. Or vitamins.
I’m picking on poor Jack in part because I worked for GE, though not at his level of compensation. And, socialist that I am, I think that if your compensation comes to $12 million a year, you ought to buy your own vitamins. (Hint to Jack: they’re cheaper at Costco.)
Yesterday’s Washington Post had a similarly enlightening story about compensation for the bigwigs in the financial sector here. That sector includes outstanding performers like Sallie Mae, Fannie Mae, and Freddie Mac.
Richard Syron, chairman of Freddie Mac, had his bonus reduced 33% because of the institution’s poor performance in the past year — which means the bonus was only $2.2 million. (Boy, that would sting.)
A related story carried the same day noted that executives at firms like Capital One, Freddie Mac, and Sallie Mae received “executive financial counseling.” An “executive compensation consultant” explained that such financial advisors “can explain the company’s programs to the executive, explain what the executive is entitled to and how to get the maximum benefit out of it.”
Well, of course. Syron earned $14.5 million in 2007. After having $1.1 million whacked from his “performance bonus,” it would be far too much to ask him to pay for his own financial advice.
My favorite perk of all, though: Freddie Mac paid $100,000 for the lawyer who negotiated Syron’s contract. That’s negotiation on Syron’s behalf, not Freddie’s. True, the final package did have that 33% cutback in the bonus — but overall, Syron walked off with an 18% raise (nice way to beat inflation), as well as a $1.25 million “extension bonus” for agreeing to stay on the job till the company finds a successor.
Robert Graves wrote that, late in life, the emperor Augustus became somewhat forgetful. From time to time, he’d lose his train of thought while speaking in the Senate. Graves paraphrases Augustus’s fall-back phrasing, which seems especially apt:
My brother Senators, words fail me. Nothing I could add could possibly express the depth of my feeling in this matter.
Monopoly money photo by mtsofan / John.