CEOs out of control

Birdseye · Post by **Birdseye** » Tue Oct 24, 2006 4:26 pm

New Record for CEO Gluttony: Last week William McGuire, CEO of insurer UnitedHealth and a centerpiece of the latest corporate-boardroom scandal (backdated stock options) agreed to leave the company.

The Wall Street Journal estimated that for his 14 years running UnitedHealth, McGuire pocketed a total of about $1.6 billion. That's $457,000 per day, or $57,000 per working hour. So McGuire paid himself more per hour than the median American annual household income. And this was during a period when UnitedHealth was cutting benefits to those it insures, cutting benefits received by its own workers, and cutting payments to physicians and hospitals for health care. Obviously this greedy little man is beyond disgrace: To experience disgrace, one must have a conscience.

But why isn't McGuire's $1.6 billion simply considered theft from shareholders? UnitedHealth is a public company, and there is no possibility the fantastic amount was justified by market forces -- that is, that the UnitedHealth board could not have found a similarly qualified CEO for less than $1.6 billion.

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Sad. Is there no way for us to regulate this?

Will Robinson · Post by **Will Robinson** » Tue Oct 24, 2006 4:56 pm

I guess it all depends on his contract....
My guess is he's got to have broken some agreement or law to pocket that kind of cash! Either that or the original board must have been a bunch of idiots.

I hope these recent discoveries of outrageous compensation and under the table payment schemes will cause the board of directors of every company to re-write their contracts and adopt some better rules so guys like this can be prosecuted.

Paul · Post by **Paul** » Tue Oct 24, 2006 8:48 pm

Probably the board thing... without doing any research, I'm guessing he was probably pulling in close to $100 million a year salary, and got frequent and large bonuses and stock options on top of that... but yeah, it is rather sickening.

Beowulf · Post by **Beowulf** » Tue Oct 24, 2006 9:23 pm

WHY does one man need that much money? What the hell does he do with it? I don't even know if I could spend that much in my lifetime if I tried.

Will Robinson · Post by **Will Robinson** » Wed Oct 25, 2006 6:18 am

A long time friend of my family was the CEO of Levi Strauss' american operations, he was payed over 1 million per year plus stock options (which the company bought back when he retired since it's a privately held stock and they wanted to maintain control of as much of it as they can). I don't know the exact dollar ammount of the stock but it was definitely in the multi-millions.
During his reign he improved the profits of the company in a big way and when he left they started losing ground fast. Once he retired he was sought by a number of other similar corporations to lead their operation and I'm sure the offers were in the same range of compensation or higher!

You can't blame the guy for accepting the offer no matter how high it is but a lot of these guys do nothing for the company and steal big chunks of cash while they are there, i think this applies to the one in Birdseye's example. Those are the ones who need to be jailed.
But if you want to put a cap on the salaries you have started down a slippery slope that will lead to far worse problems than the net profits of shareholders being a few percentage points lower than they could be if not for the greedy CEO leeching too much for himself.

Duper · Post by **Duper** » Wed Oct 25, 2006 10:31 am

Beowulf wrote:WHY does one man need that much money? What the hell does he do with it? I don't even know if I could spend that much in my lifetime if I tried.

Lobbying. Influencing those in power.

ccb056 · Post by **ccb056** » Wed Oct 25, 2006 9:33 pm

I see no problem with this. If you guys want to make that kind of money, become a CEO, no one is stopping you. More power to the CEO's. If no one bought their product, they wouldn't make any money.

Duper · Post by **Duper** » Wed Oct 25, 2006 11:42 pm

no other CEO around the world make that kinda money. this is greed on a huge level.

No one needs that amount of money. He is only a CEO, not the owner. This is money that should be put back into the company for new product development, funind the insurances and given to share holders. If he was getting even half that much, that's a lot more revenue any company would be tickled to see.

ccb056 · Post by **ccb056** » Thu Oct 26, 2006 8:33 am

No other CEO around the world make that kinda money. this is greed on a huge level.

I tend to think of it as success, playing the game and winning.

No one needs that amount of money.

Thats whats great about America, you have the opprotunity to obatin more than you need, nothing wrong with that. If everyone only had what they needed, we might as well be a terriroty in Africa.

This is money that should be put back into the company for new product development, funind the insurances and given to share holders.

And youre qualified to make that decision because you've looked at their budget, R&D department, and talked to some investors?

If he was getting even half that much, that's a lot more revenue any company would be tickled to see.

Again, success, he played the game and won. Are you a disgruntled looser?

fliptw · Post by **fliptw** » Thu Oct 26, 2006 10:36 am

ccb, you suck at being a devil's adovcate.

Testiculese · Post by **Testiculese** » Thu Oct 26, 2006 10:56 am

If anything, a lot of that money should go into the wages of the workers, the ones that actually produce something. Not some golfing, pink-shirted ballbag that sits around all day and pretends to be working by holding endless meetings.

Herculosis · Post by **Herculosis** » Thu Oct 26, 2006 11:11 am

Actually, in the case of the UHC CEO, I don't think it's the employees that are the ones being screwed.

UHC is my insurance provider in a midwestern state. My wife and I are in our 40s with 3 kids, all in good health. In-network deductible is $2000 per individual with a max of $6000 per family.

The monthly premium paid is $1200!!

Everyone knows that the cost of healthcare is a huge problem, and costs keep skyrocketing. This year, our increase was 15%, and many years it's been higher than that. Then, we hear that the scum-bucket at the top is walking with this much cash. It would be interesting to figure out how much the premiums could be lowered just by applying a little intelligence to the package the CEO gets.

ccb056 · Post by **ccb056** » Thu Oct 26, 2006 12:11 pm

The price for healthcare isn't determined by one guy at the top getting paid millions of dollars, it's a function of supply and demand.

ccb056 · Post by **ccb056** » Thu Oct 26, 2006 12:13 pm

fliptw wrote:ccb, you suck at being a devil's adovcate.

There is nothing "devilish" about profits, I don't see how I'm playing devils advocate.

Duper · Post by **Duper** » Thu Oct 26, 2006 1:16 pm

ccb056 wrote:The price for healthcare isn't determined by one guy at the top getting paid millions of dollars, it's a function of supply and demand.

You obviously don't work for a living. And yes I am qualified, not that, that concerns you however. The cooperate mind is a constant and people that alot themselves that kinda payrole are all pretty much the same.

Herc is right. what we pay in premiums line this guys pocket.... and his staff. I don't know about you, but I can barely scrap by on what I make. Many of us here do. $1200 /mo for healthcare is insane. In this country, there should be cause for that.

fliptw · Post by **fliptw** » Thu Oct 26, 2006 1:57 pm

ccb056 wrote:The price for healthcare isn't determined by one guy at the top getting paid millions of dollars, it's a function of supply and demand.

supply and demand factors into setting prices, but so do operating costs - those millions have to come from somewhere.

How's that hard drive btw?

Will Robinson · Post by **Will Robinson** » Thu Oct 26, 2006 2:13 pm

ccb056 wrote:The price for healthcare isn't determined by one guy at the top getting paid millions of dollars, it's a function of supply and demand.

And of politics, lobbiests and outright thievery too!

There is an effort to pass legislation that says we can shop for health insurance from out of state providers because, for example, in New Jersey they pay something like 4 times the average for basic coverage because there are laws that say the insuror must cover all sorts of things like acupuncture, aroma therapy and tarot card readings (Ok, not sure on the tarot card thing but you get the idea).

Why do you think those kind of riders make it into law? So the insurer can charge more. The insuror lobbies the state and federal legislators to get these profitable mandatory conditions put into the law.

Outlaw lobbiests and soft money campaign donations and solve literally thousands upon thousands of problems!
You could start a new political party that has only that as it's platform and based on only that you could legitimately and sincerely promise to solve more problems if elected than all the fake promises made by both halves of the republicrat party going back to their inception!!!

PS: Herculosis I got a Sams club business membership and through that was able to buy coverage from Golden Rule Ins Co. for a family of four for @ $450 per month it has a $5000 deductable total family then 100% coverage. I'm setting up a health care savings account to cover the under $5000 per year stuff.....
It's not a great deal but it was the best I could find.
Health care cost is the one issue I've found that makes me want to be a liberal....almost anyway.

ccb056 · Post by **ccb056** » Thu Oct 26, 2006 2:34 pm

fliptw wrote:
ccb056 wrote:The price for healthcare isn't determined by one guy at the top getting paid millions of dollars, it's a function of supply and demand.
supply and demand factors into setting prices, but so do operating costs - those millions have to come from somewhere.

How's that hard drive btw?

Sent in (RMA) the 120GB one that failed (bad sectors) last week, just found a 20 GB lying around that was having smart errors a few months ago, and I've been limping with that. Got a few more SCSI drives for the server and am planning to implement RAID 0+1 in that.

TIGERassault · Post by **TIGERassault** » Thu Oct 26, 2006 2:41 pm

Old Nick wrote:I tend to think of it as success, playing the game and winning.

I tend to think of that stance as 'the end justifies the means'.
And, as nearly all of the people on this forum are caring and ethical, you just made yourself rather hated now.

ccb056 · Post by **ccb056** » Thu Oct 26, 2006 3:42 pm

It's not ethical to make a profit?
It's not ethical to charge what the market demands for services?
It's not caring to provide health insurance?

Shadowfury333 · Post by **Shadowfury333** » Thu Oct 26, 2006 6:50 pm

ccb056 wrote:It's not ethical to make a profit?

It is neutral at best, and unethical when said profits are being gained through overly inflated prices.

ccb056 wrote:It's not ethical to charge what the market demands for services?

What the market demands is partly affected by the current prices(along with supply/demand, inflation, and stock trading, of course), so this falls under the above.

ccb056 wrote:It's not caring to provide health insurance?

Not if said health insurance is so expensive that it would be better to simply save the money and pay for any medical issues out of pocket.

ccb056 · Post by **ccb056** » Thu Oct 26, 2006 6:52 pm

Unless youre retarded, you'll stop paying for insurance if it costs more than the medications themselves.

Shadowfury333 · Post by **Shadowfury333** » Thu Oct 26, 2006 6:57 pm

ccb056 wrote:Unless youre retarded, you'll stop paying for insurance if it costs more than the medications themselves.

I wasn't sure if it was mandatory in some states. It's mandatory here, in a way. We pay our taxes, they pay our healthcare workers.

ccb056 · Post by **ccb056** » Thu Oct 26, 2006 6:59 pm

You think every company who makes a profit is unethical at best?

Shadowfury333 · Post by **Shadowfury333** » Thu Oct 26, 2006 7:39 pm

ccb056 wrote:You think every company who makes a profit is unethical at best?

No, I simply don't think that the profit-gaining could ever be considered ethical in and of itself. That does not mean that it is necessarily unethical either.

dissent · Post by **dissent** » Thu Oct 26, 2006 8:52 pm

Sounds to me like the main problem with this situation is a lack of competition, allowing UHC to charge whatever they want and be unaccountable to their customers.

Shadowfury333 · Post by **Shadowfury333** » Thu Oct 26, 2006 9:49 pm

dissent wrote:Sounds to me like the main problem with this situation is a lack of competition, allowing UHC to charge whatever they want and be unaccountable to their customers.

Interestingly enough, that doesn't always happen. In Alberta (province directly east of mine) the auto insurance is mandatory (as it is here in British Columbia), but ours is government provided (though we still need to pay) and theirs are private, yet all of their insurance providers charge much more than they do here. It surprised me at first, but then I realized that insurance follows different market rules. In particular the fact that you are running a corporation that relies on the majority of it's customers not requiring assistance. Since that is rare, the premiums and deductibles must be high enough to keep them in the black, despite giving out a great deal of money.

Herculosis · Post by **Herculosis** » Fri Oct 27, 2006 8:25 am

ccb056 wrote:Unless youre retarded, you'll stop paying for insurance if it costs more than the medications themselves.

Ok, now it's sounding a bit like you don't understand health insurance. First off, if the insurance (as a whole) didn't cost more than the benefits paid out (as a whole), there wouldn't be any reason to be in the insurance business.

From the individual customer's perspective, most pay a LOT more than the cost of any doctor visits and medications they're on themselves. It's the catastrophic stuff that the non-retarded realize they can't afford to risk not having coverage for.

Shadowfury333 · Post by **Shadowfury333** » Fri Oct 27, 2006 5:36 pm

Herculosis wrote:
ccb056 wrote:Unless youre retarded, you'll stop paying for insurance if it costs more than the medications themselves.
From the individual customer's perspective, most pay a LOT more than the cost of any doctor visits and medications they're on themselves. It's the catastrophic stuff that the non-retarded realize they can't afford to risk not having coverage for.

Yeah, but with premiums and deductibles in the thousands, I'm not certain how useful it would be. Could someone please inform me as to the average costs of these big medical procedures?

Topher · Post by **Topher** » Fri Oct 27, 2006 5:56 pm

Shadowfury333 wrote:Yeah, but with premiums and deductibles in the thousands, I'm not certain how useful it would be. Could someone please inform me as to the average costs of these big medical procedures?

Heart/lung transplant is $135,000 to $250,000

No, not everyone needs a heart or lung transplant. But if you do it would wipe you out for a good long time (that's the cost of a house). So a $1000 deductable doesn't seem so large when the savings are in the hundreds of thousands.

Shadowfury333 · Post by **Shadowfury333** » Fri Oct 27, 2006 9:24 pm

Topher wrote:
Shadowfury333 wrote:Yeah, but with premiums and deductibles in the thousands, I'm not certain how useful it would be. Could someone please inform me as to the average costs of these big medical procedures?
Heart/lung transplant is $135,000 to $250,000

No, not everyone needs a heart or lung transplant. But if you do it would wipe you out for a good long time (that's the cost of a house). So a $1000 deductable doesn't seem so large when the savings are in the hundreds of thousands.

Ah, I see. In that case I must agree that my last point is moot. The first two remain valid, though.

Dedman · Post by **Dedman** » Sat Oct 28, 2006 9:53 am

All this talk and outrage over the \"greed\" of this CEO and I haven't heard one person discuss what the company's stock did during his tenure. The CEO really has only one job; to increase the wealth of the stock holders. If he increased the stock price and thereby the wealth of the stock holders, then he deserves to be rewarded. There are many ways to increase stock holders wealth. Some are ethical some are not. I haven't heard anything about the ethicality of how he performed his job.

I am not arguing that what he did was ethical because I don't know the details. But all I am hearing is a lot of generalized anti-corporate sentiment. In this country, it isn't what is fair; it's what you can negotiate. Obviously this CEO can negotiate a good salary. But as Will suggested, maybe the board were idiots. I don’t know.

Mobius · Post by **Mobius** » Mon Oct 30, 2006 1:32 pm

ccb056 wrote:obatin... terriroty... funind... youre... looser...

Let me tell you something for free ccb: you are NEVER going to make $30 an hour, let along $55,000 an hour with your English skills.

kurupt · Post by **kurupt** » Mon Oct 30, 2006 2:32 pm

Beowulf wrote:WHY does one man need that much money? What the hell does he do with it? I don't even know if I could spend that much in my lifetime if I tried.

I could do it in a matter of weeks. Would you like to play battleship...in the pacific ocean?

i agree though. no way was that guy doing so much for the company that he was worth the paycheck. its just not possible. 1.6 BILLION is a hell of a lot of money. and if he has any financial sense, which i'm gonna go out on a limb here and say that he does, he's probably worth more than that amount now.

its sick, thats for sure

ccb056 · Post by **ccb056** » Mon Oct 30, 2006 11:17 pm

Mobius wrote:
ccb056 wrote:obatin... terriroty... funind... youre... looser...
Let me tell you something for free ccb: you are NEVER going to make $30 an hour, let along $55,000 an hour with your English skills.

is it "let alone" and not "let along" ?

arent you missing a comma after the scond "hour" ?

my english is probably better than yours, im just lazy on internet forums

TIGERassault · Post by **TIGERassault** » Tue Oct 31, 2006 6:42 am

ccb056 wrote:
Mobius wrote:
ccb056 wrote:obatin... terriroty... funind... youre... looser...
Let me tell you something for free ccb: you are NEVER going to make $30 an hour, let along $55,000 an hour with your English skills.
is it "let alone" and not "let along" ?

arent you missing a comma after the scond "hour" ?

my english is probably better than yours, im just lazy on internet forums

*Counts up mistakes in quoted post*

Seven!
We have a new winner!

Lothar · Post by **Lothar** » Tue Oct 31, 2006 9:39 am

Dear last few posters not named kurupt,

you seem to have missed a turn on your way to the grammar nazi forums. You may want to use the google on the internets in order to locate them.

Love, the guy who will \"disappear\" any further posts of this type

Testiculese · Post by **Testiculese** » Tue Oct 31, 2006 12:08 pm

CCB, the problem is not that he's successful, sure, he should get a good paycheck..whatever he can manage..but:

this was during a period when UnitedHealth was cutting benefits to those it insures, cutting benefits received by its own workers, and cutting payments to physicians and hospitals for health care.

Lothar · Post by **Lothar** » Tue Oct 31, 2006 12:20 pm

I think that's probably why he took a big payday -- he somehow managed all those cuts, which was probably good for the company's bottom line in the short term, and definitely was good for company stock (I'd guess that's where the vast majority of his $ came from -- the company didn't pay him $1.6 billion out of pocket; he convinced stock buyers to pay him $1.6 billion for the stock/options he accumulated over 14 years.)

Will it be good for the company (and its stock) long term? I doubt it. If what he did is considered \"theft\" from anyone, it should be considered theft from those who bought his $1.6 billion in stock.

Birdseye · Post by **Birdseye** » Tue Oct 31, 2006 5:23 pm

I think you are just playing devil's advocate, but I'll play along

It's not ethical to make a profit?
It's not ethical to charge what the market demands for services?
It's not caring to provide health insurance?

Normally I'm the one yelling back at liberals about simple economic supply/demand type things. I don't have a problem with CEO's making money. I think in your mind, you probably have already shorted my and others understand of this issue. Will has said it well - this is an abberration.

To answer your questions:

It's not ethical to make a profit?

Of course profit is ethical; you present a false dilemma. The questions here is not whether profit is ethical, the question is if profits are ethical while at an extreme health disavantage to the customer, a customer who *does not have any viable alternatives*. This is an economic special-case, where classical scenarios of perfect competition break down. Captialism does need regulation because of these special case scenarios -- health care is a great example, because the customer of a company often does not have a choice or has no viable alternative.

It's not ethical to charge what the market demands for services?

Again, I think health care is a special case. For example, what if there was a cancer drug that cured cancer. What if pmax (profit max) was at a price height of 1 billion dollars, such that only the truly wealthy could afford it? Is that ethical, just because the market bears that as the optimal price for the owner of the technology? No, it isn't.

It's not caring to provide health insurance?

And now you expose your inconsistency -- your first two questions are cold embraces (though not well understood) of \"basic\" free market systems. But then you now claim the companies \"care\" because they provide health insurance. Can't have it both ways, sorry...

it sounds like either you are just being devil's advocate, or you listen to too many monetarists or generic republican talking points...