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How many dinners can you eat?

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How many dinners can you eat?

Old 8th May 2007, 20:46
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How many dinners can you eat?

Have just read (ATA Smartbrief), of a plan to give the Northwest CEO $26.6 MILLION in restricted stock shares and options. Somehow, I don't see this man going hungry. Surprise, surprise, the unions are not happy bears. This is an airline which cut wages, cut the pension fund, fired numerous personnel, went into bankruptcy - sorry, Chapter 11 protection and out again. Yet just happens to have this much spare to hand out to one man. There is a queue for other senior officials, but, no public announcement of giving anything back to the people who keep the airline going. Perhaps they will get a lunch voucher with their paycheck.
Somewhere, I must have missed a very important maths class. The mind boggles. I don't see logic, justice or any goodwill being dispensed, just the usual upper level greed. Again. Between directors and security staff, it will surprise me if there will be anyone left in the front line of aviation in the near future.
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Old 9th May 2007, 05:17
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I'm a senior exec in a publically quoted (non-aviation) multi-national.
Unfortunately you don't know the half of it. Greed, short termism, cosy relationships between senior executives, merchant banks and stock market analysts. Just look at the record bonuses in Goldman Sachs this year related to massive fees for arranging "deals".

I know of one such deal to merge two large multi-nationals, where "professional fees and commissions" in the "deal" amounted to almost 200 million dollars, for bankers, lawyers and auditors. Incidentally this is apparently more than two years net profits of the combined organisation.

This effectively reduced competitive availability to customers and lost a lot of jobs, while the published synergies failed to materialise without those remaining having to cut costs and investments in future infrastructure in order to meet the wild goals of the advisors, who had been rewarded so handsomely.

However, a success story was presented on the surface to the markets, and the share price went up - for now.....................

Make no mistake, the stock market is the enemy of any kind of stability and long term planning in a business (and I guess that is exactly what an airline needs), but senior executives become willing accomplices due to the sizes of the rewards dangled in front of them, which are on a par with the so called "advisors".

Sorry if this isn't good news, but it is unfortunately the way of the world today, and Sarbanes-Oxley doesn't particularly help in these circumstances, neither do most shareholders as many of the largest interests are investment funds that benefit and belong to the same cosy circle, while private investors are the first to get fu@$ed when the ship starts sinking.
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Old 9th May 2007, 06:01
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Rmac speaks the truth. The modus operandi for some of the most successful outfits in the financial sector is to take other people's money and buy other people's companies with it, extracting HUGE fees all the while (Rmac's quoted 200 mill M&A fee is a one-off; it pales compared to the ongoing costs for some of the managed deals). I mean, where do you think all those City bonuses actually come from? The tooth fairy? Of course, the principals in all these deals -- those who could take a stand and make a fuss -- are also more than taken care of.

The companies themselves, Joe Schmuck on the ground trying to provide a service or make a product, find themselves run into the ground or rationalised away; their customers find the prices going up and the quality of what they get going down. Investment in infrastructure and innovation goes away, and in the end the people with all the money walk away to find new marks. If you've ever seen nature programmes about the wasps that paralyse their prey so they stay alive just long enough to be eaten from the inside by larvae...

That's before you get into the really fun stuff, where successful companies are bought and saddled with enormous amounts of group debt (if you've ever seen a huge acquisition followed a couple of years later by the acquired company being sold on at a massive loss - weep not for the original buyer). I've been there, and seen the personal devastation it causes.

All perfectly legal, and in fact all plumped up and promoted as savvy financial management. And this is what's happening now in the UK and across Europe to our ex-state infrastructure companies, which are seen as perfect vehicles (captive revenue streams, often from the state; relatively well run and solidly constructed - they can bear a lot of strain before falling apart) for this sort of thing. They're certainly the sort of organisations that'll continue to deliver fat fees even if the economy has a wobble.

One case in point: the UK's entire emergency service radio infrastructure is now run by one company called Airwave. It manages police, fire and ambulance communications, and gets 90 percent of its revenue from the Government. Try finding out who actually owns it now, as in whose money is behind it. Good luck.

You may think this is all less than ideal, but for the people with the money, it's absolutely perfect. And they'll say whatever they think is necessary to prevent outright revolt in the ranks or - even more scary - effective regulatory oversight.

R
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