Wednesday, April 29, 2009

Memo to my Boss

Memo

From: Norm

To: Boss

Subject: Executive Compensation

According to the media, we are living in desperate times, and desperate times as they say call for desperate measures. Take the Treasury Department restriction on executive compensation to just $500,000 a year for banks that (reluctantly) receive federal bailout money. Call me a socialist (on second thought don’t!), but I believe this could perhaps be extended to the private sector – to our very own company even. You’re thinking: Norm, you talk a good talk, but are you prepared to walk a good walk? (In these shoes?) Yes, I am! I am prepared to make this supreme sacrifice here and now.

Specifically, I propose that effective immediately my compensation be adjusted to $499,999 per annum (that’s per year in case you’re not fluent in Latin). That is well within the $500,000 cap imposed upon the banking industry, the very backbone of our economy (which reminds me I need to book an appointment with my chiropractor, my back is killing me). I understand that this means foregoing the deferred compensation package I have been receiving in the form of company backed collateralized debt obligations (please remind me again, exactly how do I cash these in?) I am also prepared to give up the executive perks that had been generously bestowed upon me including the all expenses trip to the company’s annual arm wrestling tournament in Indianapolis . Fortunately my team building skills are fairly well honed by now.

You are probably thinking, this makes a great deal of sense, but how do I justify this rather substantial increase in salary at a time when management has been charged with reducing expense and headcount? The answer is simple: Ever wonder why the Yankees pay ARod $28 million a year when the Yankees fail to make the playoffs or why the head of Merrill Lynch pulled in a $15 million bonus last year while his firm went down the tubes. It’s called pay for performance, not results. Not only past and present performance, but potential future performance, weighted by probability and discounted for net present value. In other words, you’ve got to look beyond the numbers. Downsizing and cost cutting are part of the problem, not the solution.

Sure, you can pay me what I’m worth - and you know what - that’s exactly what you’ll get. Or you can pay me far more than what I’m worth, in which case, you’ll get all that and then some. As any economist will tell you, you get what you pay for. If you want to hire the best people, you need to pay top dollar, and in all humility, I am best people material. So why arbitrarily limit compensation in the first place you might ask? Good question for President Obama!

This is a classic case of viewing the glass as half empty as opposed to half full. Needless to say I am not in the glass half empty camp, and neither I trust are you. When I see a glass, with a few drops of water or even with no water in it, I look beyond that to the water that could potentially inhabit the glass. I see not only a glass overflowing with water, I see a flood of water. I’m thinking, somebody grab a mop for Christ sake and clean up this mess. A mess not in the negative sense, but a positive mess, a mess of abundance and happiness. That’s why during last summer’s so called drought, I continued to water my lawn in full view, notwithstanding the dirty looks from some of my neighbors, in full knowledge that the so called drought was merely an opportunity to accommodate the deluge of rain that would inevitably follow. Interesting fact: the human body is composed 78% of water, give or take.

The bottom line is that somebody has to step up to the plate and make the necessary sacrifices imposed by the government, so it might as well be me. I say together we can make a difference, and once again please refresh my memory on the company backed collateralized debt obligations.

A great man once told me, Norm, your opportunities are limited only by your imagination; your success is limited only by your enthusiasm; your upside is limited only by your desire, and for goodness sake, go out and buy yourself a decent set of cufflinks already. That great man was you.

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