Tuesday, December 23, 2008

Equity Job Choices

Nice to know that in some corporations, the heads that have to roll aren't all on the shoulders that do the work. Loss of construction work has trickled down to the manufacturers of construction equipment, and Caterpillar is getting the effects of that weakening. In announcing they will have to cut back, the company is including the management/executive sector in the cuts.

Caterpillar, the world's largest maker of heavy construction and mining equipment, is to cut white-collar pay by as much as 50 per cent.

The company, based in Illinois, said it would slash executive compensation, particularly its incentive and equity-based schemes, the Wall Street Journal reported.

It has also introduced a freeze on recruitment and plans to suspend merit pay increases for managers and support employees.

Caterpillar said executive compensation would be cut by as much as 50 per cent, and it will reduce compensation for senior managers by 5 per cent to 35 per cent in 2009.

Other management and support staff face a reduction of as much as 15 per cent, the Journal reported.

Caterpillar follows a number of other American companies which have begun to institute salary freezes and reductions instead of redundancies, because the cost of hiring and firing can be significant when looking to rebuild a work force after a downturn.

Management pay has been a particular focus of cuts.

While no one wants to see anyone lose, that isn't possible in the present business climate. Spreading the losses around is commendable.

If the heads of the financial institutions that committed the huge errors that got us into this mess were in any way threatened, we would all be better off. The massive indifference to the consequences would not have occurred if these executives hadn't known they were safe from any effect on their personal wealth. Even those few cuts occurring now in salaries is not aimed at reducing stock and benefit guarantees for those errant executives.

Our 'bailout' funds have made it possible for the CEO's to avoid any consequences from their mistakes. We get all the pain, they get all the gain.

Caterpillar has shown good sense in its approach to taking losses. Can we make them into a bank too?

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Anonymous Anonymous said...

Good for them - and good for you for saying something positive about a large company that deserves it!

3:01 PM  
Blogger Ruth said...

My pleasure. I look for more opportunities to do the same again, many times, in the future.

3:22 AM  

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