Thursday, July 12, 2012

Rewards for success or failure

Paying Workers More to Fix Their Own Mess, David Leonhardt, New York Times, March 2009
" 'We cannot attract and retain the best and the brightest talent to lead and staff the A.I.G. businesses — which are now being operated principally on behalf of American taxpayers — if employees believe their compensation is subject to continued and arbitrary adjustment by the U.S. Treasury.' — Edward Liddy, chief executive, American International Group
"Ah, retention pay. It has been one of the great rationales for showering money on chief executives and bankers regardless of how well they are doing their jobs. It’s just that the specific rationale keeps changing.

"...Now comes Mr. Liddy, the government-appointed chief of A.I.G., defending multimillion-dollar bonus payments for the people who run the small division that brought down the company. If the government doesn’t let them have their money, they will walk away, Mr. Liddy says, and nobody else will know how to clean up their mess.

"We’ll get to the merits of his argument in a moment, but it’s first worth considering the damage that the current system of corporate pay has wrought. The potential windfalls were so large that executives and bankers had an incentive to create rules that would reward them no matter what. The country is now living with the consequences..."
Enbridge Execs Got Big Pay Raises After Continent's Costliest Pipeline Spill, Andrew Nikiforuk, The Tyee, July 12, 2012
According to Enbridge's 2011 "management information circular" the company's 12 directors voted to raise their own annual retainers by $30,000 and increased compensation for CEO and president Patrick Daniel from $6 million to $8.1 million in 2010.

Stephen J. Wouri, president of liquid pipelines, also saw his income increase from $1.9 million to $2.7 million in 2010. In fact all executives received substantial raises.

Earlier in 2010, on July 25, an Enbridge pipeline carrying diluted bitumen ruptured, pouring the toxic mixture for 17 hours into the Kalamazoo River near Marshall township in Michigan. The two-year clean-up has cost $800 million.

"The Marshall incident was factored into the 2010 short-term incentive awards for all of the named executives," said the circular.

A year after the disaster the Enbridge board again upped compensation for five senior executives under a short term incentive program that increased their pay by "$4,571,730 including $2,396,000 to the president and chief executive officer." The company says that it has a "pay for performance philosophy..."
Blame spills all over Enbridge, Editorial - Detroit Free Press, July 11, 2012
"It will be very difficult to give Enbridge credibility going forward on any pipeline project. Tuesday's National Transportation Safety Board discussion of the 2010 break in the company's pipeline near Marshall was damning.

"Enbridge knew five years before the rupture that the pipeline had corrosion and cracking problems in that area. The company's response plan was inadequate for the location, with the nearest team 10 hours away in another state. Control room crews restarted the pipeline flow twice despite alarms. A tweet from the NTSB said the chairman compared Enbridge's handling of the rupture to the Keystone Kops.

"It's also becoming clearer that Michigan's pipeline disaster is making history. It is the most expensive onshore oil spill in history, in terms of cleanup costs that are now expected to exceed $800 million..."
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4 comments:

  1. If I were a shareholder in embridge I would be at the next shareholder meeting to find out why they were paying these idiots so much money. The money they pay the executives is money not coming to the shareholders. I'd say there might just be some sort of crime there.

    If the executives won't work for a reasonable salary I am sure the shareholders can find someone else to do the job, for less, just like the executives are always telling workers.

    Embridge doesn't care what it did to the Kalamazoo & won't care what it does anywhere. They have their huge salaries & can vacation far away from any oil spill. Not until we start to send these executives to JAIL will they pay attention. a yr or so at a regular jail might give these executives the attitude adjustment they need.

    ReplyDelete
  2. And by the sounds of it, just maybe it'll be one of their own "private prisons".

    ReplyDelete
  3. Geo Group Inc.and Management and Training Corporation (MTC) ...... there’s a connection between the company and Enbridge Inc.: a man named J. Richard Bird, who also has a strong connection with the federal government...served as a member of the Minister of Finance’s Advisory Committee on Financing from 2009 to early 2010...the lucrative contract arrives at a time Macleans Magazine is reporting that Enbridge has two new best friends in Canada: Ottawa and Prime Minister Stephen Harper.

    The company has profited from 9/11, the economic meltdown and recent anti-immigrant crackdowns in the U.S. It has profited from privatized corrections and detention operations in Australia and the UK. In South Africa, the company is connected with the African country’s unveiling massive prison privatization efforts. In the late 1990s, GEO was involved with Australia’s notorious Woomera Immigration Detention Center, once described by UN officials as a “great human tragedy” and likened to a “Nazi concentration camp.”

    ReplyDelete
  4. If these guys like to take credit and the monetary reward for these companies so called good fortunes than they should be prepared to pay the price for the enormous screw ups.

    Being frog walked into court and prison than dressed in a nice orange jumpsuit and sent to help clean up the mess until the job was finished would be, what I would consider, a just reward for their maleficence.
    Bleeding them white with monetary fines should be mandatory.

    Do this a few well publicized times and it would sure wipe the smile off every CEO and their cohorts faces when the time comes to pay the piper.
    CGHZD

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