Lucent Execs Get Richer

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MP_UK 12/4/2012 | 11:06:52 PM

re: Lucent Execs Get Richer [optigirl]

2. Yes, I would like to see them get paid on performance but it just ain't gonna happen if we expect to see people earn no salary for bad years. If that was the case, we would all be working for free this year...from the CEO who makes the decisions right down to the engineers who's code fails or sales people who don't make quota.

[Me]

An interesting point, but is it really appropriate to compare the CEO with sales persons and engineers? Surely the job of an exec team is to know their markets and protect the future of the company - from the tone of this discussion, it sounds like those at LU (and Ciena?) have failed to do so. I suspect that an engineer who writes no working code, or a sales person who sells nothing would not be around for long - working for free or not. Why is the performance of exec's (apparently,) not subject to the same scrutiny?

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gea 12/4/2012 | 11:06:51 PM

re: Lucent Execs Get Richer Optigirl (and others):
I really don't see why you would assume that Lucent (and other) top management salaries are somehow the outcome of "perfect" competition.
Are you really so naive as to believe that the US somehow represents the perfection of the capitalist model?
Outside of the salary debate, one can see plenty of examples where this ideology does not apply. Several examples are oligopilitically-fixed prices (happens all the time), mob-controlled industries, and (to name a legally permitted example), the "insider information" that is actually permitted when one company is in the process of buying another: the investigating company has access to all sorts of information that regular (and even institutional) investors have no access to, thus they are able to determine much more accurately what the "real" share price would be (having worked on Wall Street, I know this is a major bone of contention with some big analysts).

Given that there are numerous examples of this "perfect" system breaking down, why would you (or anyone) assume that this is not the case here as well? Look at those salaries! Look at how Lucent not only lost lots of share price, but market share as well. Finally, talk to the many ex-Lucent employees: you hear the same old story of bureacracy and lack of coherence, and a management that just doesn't get it.

No, those salaries were not driven by pure competitive reasons. As Beezlebutt has said, they are really a subset of a much larger club of high level execs that have somehow shielded themselves from the consequences of their own actions and from the marketplace.

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DocGonzo 12/4/2012 | 11:06:50 PM

re: Lucent Execs Get Richer Some of you seem to believe that the stock prices and shareholder valuations of the 1999-2000 craze were justified. I personally don't know of any networking industry company which experienced the booming effect of this period that hasn't been subsequently grounded back to current reality-based valuations. If you perceive that inevitable grounding effect as an executive failure or a loss of shareholder value then you are mistaken. Those high valuations were never earned or substantiated and therefore were subject to the whims of the financial markets.

The history is just that; what really matters is who deals best with the current and future market/industry opportunities.

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zipple 12/4/2012 | 11:06:50 PM

re: Lucent Execs Get Richer "Anyone know the secret handshake? I could use a few million."

And before we give it to you, just what percentage of shareholder value do you feel qualified to lose?

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optigirl 12/4/2012 | 11:06:50 PM

re: Lucent Execs Get Richer Who said anything about "perfect" competition? I certainly didn't. Whatever is happening at LU and other companies is a reflection of HOW THE MARKET WORKS. And, it seems to me that you are living in some world of idealism that sounds nice on paper but does not exist in the real one.

$400K in base compensation? I know sales people who pull that figure in every year. Is it excessive? Maybe. But then again, the going rates are the going rates. I, and many others, would take that amount in a heartbeat. Tell me you would turn down a compensation package like that.

Bottom line, if the board is paying that amount and that amount is available in other companies than that is THE market rate in that instance. Who sets it, what influences it or who you know is immaterial. I never said it was "fair", "moral" or "deserved".

Get off the soap box already. There are plenty of things that we can all point to that are not in synch with our own personal sets of beliefs.

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mrcasual 12/4/2012 | 11:06:49 PM

re: Lucent Execs Get Richer $400K in base compensation? I know sales people who pull that figure in
every year. Is it excessive? Maybe. But then again, the going rates are the
going rates. I, and many others, would take that amount in a heartbeat.
Tell me you would turn down a compensation package like that.

optigirl-
Remember, people love to complain.

That being said, I think what galls most of us is NOT the fact that the CEOs have big base salaries and get lots of options. More power to them.

What really burns most of us is that in the face of dismal results, when these people eventually get fired, they are pretty much guaranteed to have a severence package that would let most of us would consider as winning the lottery.

This basically puts them into a no-risk, no incentive to perform situation. I agree that that's the way the game is played, but I can still complain about it.

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rjmcmahon 12/4/2012 | 11:06:48 PM

re: Lucent Execs Get Richer subsequently grounded back to current reality-based valuations.
_______________________________

Be careful about believing that "reality-based valuations" have returned. It's very much a case by case analysis. Many more will go out of business within the next few years.

PS. To the many on this thread feeling like victims and to those who believe they deserve more, take your next spare moment and find a worthwhile volunteer activity with the only goal to help someone else. These selfless acts will help you meet your psychological needs and those around you will have pride in your behavior.

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manoflalambda 12/4/2012 | 11:06:48 PM

re: Lucent Execs Get Richer optigirl emotes:What would make for a VERY interesting story would be a list of Top Ten Boards of Directors both on the plus and minus side. (Note to editors: Not that you folks don't already have enough to do.)

Here's Forbes take, from May, on the worst --

http://www.fortune.com/indexw....

Of course Lucent is present. :)

Salute,
Manoflalambda

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optigirl 12/4/2012 | 11:06:48 PM

re: Lucent Execs Get Richer I don't blame people for b_tching about it. What would make for a VERY interesting story would be a list of Top Ten Boards of Directors both on the plus and minus side. (Note to editors: Not that you folks don't already have enough to do.) This way, we could see who is responsible for the lack of oversight on the executives and for their failure to represent the shareholders. Perhaps if there was more scrutiny at that level then things might change.

Just a thought....

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Twistall 12/4/2012 | 11:06:47 PM

re: Lucent Execs Get Richer a couple random thoughts:

One thing the top level execs have that Joe Shot-with-an-arrow-in-the-cafeteria doesn't have is the trust of the board. Top execs are a known quantity. The board at least thinks they know how these people will act under a given circumstance. Most importantly, the board knows that these people can handle the pressure that comes with the wealth and decision-making power, without embarassing them socially. (very important!)

Look at all those stories of big lottery winners who crash and burn. If you know you've already hit the lottery when you take charge, and that no matter what you do, you still are going to end up a winner, it frees you to make the hard decisions without fear of consequences.

Think about it: You've got to lay off 60,000 to save a little shareholder value (hypothetically). You can't think too much about the X who will never earn as much again, the Y who end up in divorced, the Z who break and end up in a mental hospital, and all the other human upheaval executive decisions might cause. You've got to do what's right for the company, and that can really hurt a lot of people.

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