- The gravy train has passed. You have learned a lesson in humility.
- Companies cannot afford high union wages.
- Your greedy refusal of $16 an hour cost you your jobs.
- Companies are asking workers for better job performance for less money. Refuse and lose.
- Child care workers make $10 per hour, office workers maybe $15. Caterpillar offered a fair wage.
The other common argument doesn't so much attack EMD workers as defend Caterpillar. The argument goes like this: Despite all the condemnation of Caterpillar for enormous greed, it is doing what all large corporations are required to do in law: act in their own self interest. A corollary to the above is that corporations must first worry about delivering profits to their shareholders. CEOs worry more about shareholder profits than workers salaries, and this is as it should be.
The folk prattling on like this are at best naive. I could find other suitable adjectives but I'll stop with naive.
As I retired fellow, I follow the markets. I have a number of self-directed RSP plans in two banks. I bought my first stock when I was around ten or twelve --- I still have my Richardson Securities receipts misplaced somewhere in my hoarder's basement. In my years of investing, I have come across lots of examples of stuff that flies in the face of the above naive beliefs.
The gravy train hasn't passed. It is just stopping in far more upscale neighbourhoods. Check out the massive increases in the annual pay to CEOs. Companies seem to have no problem paying shockingly high salaries, plus bonuses, even to CEOs of money losing companies. Even the threat of impending bankruptcy does not knock all the zeroes off many a CEO's wage. And performance does not seem to be demanded of CEOs. When a company is going down the tubes, how can a CEO call his performance worthy of a seven or ten figure income?
Let's take a look at some recent CEO pay and how the companies they managed, managed. My favorite in this list is Yellow Media. I owned this for a time. It came highly recommended by Scotia McLeod as a core investment in an income portfolio. Luckily, my ScotiaBank adviser encouraged me to dump it. Accept my losses and run, he said. I did.
The worst shareholder reward for the highest CEO pay may be Yellow Media (YLO). CEO Marc Tellier took home $8.9 million despite constantly declining profits and stock price. YLO racked up recent total annual return number greater than negative 90 percent! A company that just a few years ago was set to hit $20 a share is selling today for 20-cents.
A few years ago Amanda Lang interviewed Tellier for a ROB report. She caught up with the CEO on the ski slopes outside Montreal in the middle of the week. Lang tells us: "This interview is taking place on a Monday — technically speaking, it's work, even though Tellier is wearing ski goggles and mustard yellow ski boots."
Read the story, One good run, and ponder the question: "Just who is riding the gravy train?"
The CEO of Air Canada (AC.B), Calvin Rovinescu, earned $4.5 million while the Canadian airline racked up frequent annual losses. While Rovinescu basked in the glow of a seven figure income, investors suffered the pain of a very rough landing. Air Canada delivered a five-year return of negative 43.5 percent.
According to How To Invest Online, the source of this CEO pay info, it is a mystery why Stephen DeFalco, CEO of Nordion (NDN), merited pay of $13.1 million. The small company under his leadership, he has since been replaced, made large losses and shrunk considerably taking investors on a steep downhill ride.
CEO pay and bonuses are wildly out of line. One need look no further than the daily paper to know this. Recently it was learned that CEO Cliff Nordal, while heading the two hospitals in London, pocketed about $730,000 a year, plus another $100,000 in taxable benefits, a $1.17-million bonus and a pile of privileges like a leased Lexus and country club membership.
During Nordal's tenure at St. Joe's my daughter gave birth there. The washroom adjoining her room was dirty. There were drops of blood on the floor. The staff were informed but because of staff shortages, no one was available to clean the bathroom for hours. My daughter didn't need the bathroom, she was busy delivering a baby, all went smoothly, the staff was excellent.
Still, I have to think that a hospital that cannot find the staff to clean a patient's bathroom before they are admitted should not be paying bonuses to its CEO for his superior performance in running the place.