Friday, March 31, 2006

April 1: Compensation This Weak

What an incredible couple of weeks it has been in the world of compensation. I intended to blog much earlier but the deluge of media stories kept me reading instead of writing. Here’s a recap:

Job Bank for the Jobless
General Motors has a program, known as the Job Bank, that provides full pay and benefits for workers when there is no work for them to do, if they continue to report to the workplace or an alternative facility. Following innovator GM’s lead, Silicon Valley firms have established a Job Bank for software developers displaced by offshoring of their jobs. There will be a facility where the unemployed will be able to solve theoretical math problems that have no practical application, write poorly functioning code, and send email to each other. “This is just like working at that big software company” said one unemployed programmer “except we’re required to actually show up for work, there’s no telecommute option.” Plans are underway for a similar facility on Sand Hill Road for venture capitalists displaced by the movement of VC activity to India. This program will allow the unemployed to spend their day playing Monopoly and sitting in conference rooms listening to presentations of untenable business plans.

Living Wage Legislation
Outraged by the soaring cost of jet fuel, illegal domestic staff, and defense attorneys, an influential group of CEOs has proposed “living wage” legislation in Congress. “I don’t know how anyone is supposed to live on $10 million per year” said one CEO. “And now that there’s an expectation of performance in return for the money, it’s just gotten ridiculous. What’s wrong with America?”

SEC Disclosure Rules Struck Down
The SEC’s proposed rules for increasing disclosure of executive pay have been struck down by the Supreme Court citing the community standard for obscenity. Justice Potter Stewart’s quote “I know it when I see it” was cited in the unanimous opinion. Several Court Justices were reportedly unexpectedly aroused by reading about executive pay levels in US companies. “We can’t have our nation’s youth seeing this sort of information” said one Justice who requested anonymity.

Option Expensing Rule Reversed by the FASB
In a surprise move by the Financial Accounting Standards Board, the requirement to report stock options as an expense has been deleted from the US accounting standards. “We had no idea this was going to reduce company profitability” said the head of the FASB. The rule change is expected to immediately improve profitability of all US companies, with the exception of airlines.

Airline Industry Lobbies for Accounting Rule Change
The US airline industry has urged the FASB to adopt a new accounting rule that would exclude the cost of labor and jet fuel from the calculation of profit. “This change is long overdue” said one airline CEO. “If we had changed this rule 20 years ago think of the number of airlines that could have avoided bankruptcy.” The proposed change was applauded by airline executives participating in profit-based bonus plans.

NASDAQ to Restate Stock Prices
Citing a series of calculation errors, and following in the footsteps of companies having to restate their financials, the NASDAQ will be restating stock prices for all listed companies for the years 1998 through 2001. “It turns out there wasn’t a bubble after all” said the head of NASDAQ. Stock prices have actually only moderately increased since 1998. We apologize for the error.” Class action lawsuits are expected by shareholders seeking to obtain refunds from employees who became wealthy from stock options, and executives whose bonuses were tied to stock price who now seem to have been overpaid.

Google Adopts Severance Plan
Google, continuing the streak of innovation reflected in its Dutch Auction IPO, AdWords, and Google Maps, is implementing a unique severance plan for employees. Employees who are terminated will be required to repay to Google an amount based on the formula of $1 million for every year of service. A Google spokesman said “they make way too much money anyway and this is an opportunity for them to really serve the Google shareholders.” In addition, following the lead of General Motors under the new Google Buyout Plan employees who elect to retire early will repay Google a flat amount ranging from $5 million to $10 million. This program is aimed at the lower-paid workers in the company, prompting claims of discrimination from administrative assistants and software testers who argue that it would be burdensome to write a single check to the company covering one month’s pay. For the record, a Google spokesperson denied that it has any poor performers, pointing out that it has only hired the smartest people but the Company got even smarter rendering some employees relatively dumb.

Happy Aprils Fools Day to our Blog Readers. Let’s all hope that this time next year I have much less material to work with as I try to point out the absurdity of some compensation practices.

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