Are executive's compensations imoral?

The financial crisis is submerging us and recent events have led to enormous discussions on the compensation packages of ceo's and the like. 

Senior managers of close-to-bankruptcy-banks receive golden parachutes to leave their company and are scapegoated for the amounts they receive. The ready-to-critique public opinion is inventing unheard terms to describe the unlimited greed of these managers.

But is it true? Are they really the greediest human beings on earth? Should we outcast them? Or are they the product of our own collective personal greed? We, the shareholders, we the investors, we the customers?

And if the answer is 'yes', than didn't they become what we indirectly asked them to become? Are we treating them fairly now that the economic downturn is shuffling the deck of cards?

Isn't it all too easy to put the blame (solely) on them?

After all, when the big severance packages where negotiated, nobody bothered to criticize? Where were we to refrain and settle for lower profit expectations for our financial institutions? Or should we omit we were at least as greedy?

Sure, what I'm saying is against the grain, against the vox pop. But I have had it with everybody jumping the band wagon of easy critiquing the current evolution and putting the blame on the executives (only).

Please bear in mind that we, the shareholders have set the expectations for performance. We wanted those banks to perform according to the then applicable world's standards.

I remember we were all proud when "we" succeeded in stopping the raid of Mr De Benedetti at the Generale Maatschappij back in 1988. We were evenly proud when we succeeded in keeping the Generale bank out of foreign shareholding of ABN Amro. "Lokale Verankering" ("Keep it local") was the buzz word.

When the remuneration committee (at Fortis) decided on the packages of the executives and sought approval of the shareholders meeting in 2004 we kindly approved the plan.

I'm sure that if all would have gone well, we would have been proud to have succeeded in having a major Belgian bank that mattered on an international scale. But unfortunately it turned out otherwise. So I guess it's easier to shoot the pianist and blame it all on the executives.

Is it ok to have managers earn vast amounts of money, and even bigger amounts when they are fired?  The least we can say is: we did not oppose when it was proposed.

Are contractual agreements to be honored or can we just unilaterally decide to breach the agreement? Well, know this: some of those people had many years of service at their organization and applying the strict formula Claeys could have led to higher amounts of severance.

Organizations are in constant struggle to attract and retain high quality people and in order to succeed in the process one has to follow the supply/demand mechanisms. When those CEO's were attracted their benefit plans were in line with their market value. 

Has their market value shrunk? Sure. Have the oversold their hand? Maybe. In any case I pleed for some fairness. I am sure that none of them needs me to come to their defense. They're perfectly capable of doing so themselves. But to my opinion their primary driver is (was) not greed. I'm convinced that they genuinely wanted to build value for all stakeholders involved: shareholders and customers alike.