Should_the_Top_Executives_of_the_Major_Banks_That_Received_Bailout

Should the top executives of the major banks that received bailout money be allowed to receive large bonuses' Corporations have come to rely on executive compensation packages to attract and retain a CEO or top executive. Compensation packages usually consist of retirement benefits, incentive plans, and gains from stock options, while including perks such as use of the corporate jet, a chauffeured limousine, health insurance, and membership to elite country clubs. Benefits that often paid out after employment with the organization have ended. Payouts or severance agreements are even included in the packages if organizations release some executives. For example, Steven J. Ross, co-chairman of Time Warner walked away with 1.4 million dollars after he were terminated for poor performance. Excessive Executive Bonuses often require wage cuts, downsizing, and restructuring in order for the organizations to remain competitive in the marketplace. After a large bonus pay out, organizations have gone to the extent of declaring bankruptcy to stay afloat. All while the average hardworking employee suffers. Therefore, is it not ethical for executives to receive excessive bonuses, payouts, benefits, or golden parachutes while the banks and employees are struggling to survive' Several years ago anyone who wanted to live the “American Dream’ could. Banks were lending money based on no income verification loans, stated income loans and even no documentation loans. This was great for everyone for the first few years until the loans all turned into an adjustable rate mortgage and everyone’s payments doubled. This created a financial crisis and raised the number of foreclosures in America tremendously. The financial crisis caused a large number of Americans to lose their homes, jobs and the “American Dream.” The combination of the real estate market, banking industry, automotive industry, the war in Iraq and all other negative aspects of the crisis all lead to the Federal Reserve’s bailout plan, which was initiated to revive the nation and stimulate growth in the economy. It is difficult to understand how Merrill Lynch CEO, John Thain, spent over $1.2 million dollars of company money to redecorate his office. He also paid out between $3 and 4 million dollars in bonuses to top executives, all while the company was severely struggling and in the process of being sold to Bank of America. (Chuchmach, & Rood, 2009) The main contributor to the whole economic fiasco was be poor decisions made by top AIG officials. Just after receiving the first $85 billion of bailout money to save their business and possibly the world economy, top executives enjoyed an exclusive, all expenses paid retreat at a resort in California. AIG allegedly spent $440,000 for its executives, $200,000 for rooms, $150,000 for meals and $23,000 for the spa. (Sullivan 2008)Another poor decision that appears to have been made by top officials at AIG is paying back their top trading partners at 100% on the dollar. The problem is that those partners (Goldman, Bank of America, Merrill Lynch, UBS, JPMorgan Chase, Morgan Stanley, Deutsche Bank, Barclays, and more) were already receiving bailout money from the government called TARP (Troubled Asset Relief Program). (Spitzer 2009) For example, an incredible amount of the $12.9 billion of taxpayer money went from AIG to Goldman. The monies should have been used to reconstruct AIG as a last effort to save them and the economy. American taxpayers were dumbfounded and equally outraged over the use of bailout funds because of insufficient data reporting, corporate bonuses, and insufficient duty based ethics. These packages were given to executives without consideration for the employees and the concessions that that were made by them to keep the organizations in operation. Conclusion In life, decisions are made every day. Choices can be clear, with an easy right and wrong answer. Sometimes the choices are not so clear and each alternative can be compromising to ones values. Ethics involves moral issues, choices, and influences daily decisions made by individuals and organizations. Today many organizations do not like to use the term “bonuses” due to bad impressions; they use the term “payouts.” It does not matter what term is used, excessive compensation packages are still being given to and taken by executives. If the bonuses were used to offset losses and return into the organization, then the possibilities of downsizing would be minimal. Surely, the executives could do without the benefits so that the hardworking employees can earn enough money for their livelihood. The recipients of the bonus were not concerned with providing the greatest good for the greatest number of people; they were only concerned with themselves. If their actions weren’t unethical, then what is' References Chuchmach, M, & Rood, J. (2009). Report: Merrill Lynch CEO Spent Over $1M to Redecorate Office. Retrieved on June 20, 2010,retrieved from http//abcnews.go.com/ Sullivan, M. (2008). After Bailout, AIG Execs Head to California Resort. Retrieved on June 20, 2010, from http://www.nowpublic.com/world/after-bailout-aig-execs-head-california-resort. Spitzer, E. (2009). The Real AIG Scandal. Retrieved on June 20, 2010, from http://www.slate.com/id/2213942/Nelson, K. & Trevino, L. (2004). Managing Business Ethics: Straight Talk About How To Do It Right (3rd Ed.). New York: Wiley