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Would Sun Execs Get AIG-style Bonuses?

03.18.2009
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As rumours fly around the Net about a possible Sun acquisition by IBM, one of the questions that probably comes to a few people's mind is what it will mean for the upper echelons of Sun management.  The bigwigs may stay on for a bit and the bulk of middle management will probably part ways -- who knows?  What is almost certain though, as is always the case in such high profile acquisitions, is that hefty incentives and bonuses will most certainly be showered upon the Sun leadership team.

But is now the time to reward any executive team? As hundreds of thousands of jobs are shed throughout the U.S. economy, and many millions more worldwide, there has been much public fury over lofty bonus payouts in general.  While the A.I.G. case is clearly an example of public bailout money being misused, and perhaps not directly related to the possible acquisition, it still raises the question -- how much should executive teams really be rewarded during an economic downturn? Should there be a "bonus cap" imposed on all incentive payouts, including those made after an acquisition?

Yes -- the instruments of capitalism are at work here and it is probably not the job of the government, nor public distaste, to interfere with/affect such private dealings. Yet many others would beg to differ.

We'd love to hear your thoughts on the matter...

 

Published at DZone with permission of its author, Nitin Bharti.

(Note: Opinions expressed in this article and its replies are the opinions of their respective authors and not those of DZone, Inc.)

Comments

Harris Goldstone replied on Wed, 2009/03/18 - 10:47am

So not only are you speculating about whether Sun is going to be sold, you're also speculating that its management is going to be rewarded exorbitantly for doing so? Wow.

Wai Ho replied on Wed, 2009/03/18 - 11:03am

What is almost certain though, as is always the case in such high profile acquisitions, is that hefty incentives and bonuses will most certainly be showered upon the Sun leadership team.

But is now the time to reward any executive team?

 

It is almost certain that Sun's excuse will be that their executive team needs to be rewarded for the hard work they have done. But is now the time to even tolerate those kind of excuses? We should find Jonathan Schwartz right now and drag him in the streets by his pony tail. How dare Sun almost certainly make excuses of this kind!

Kevin Slater replied on Wed, 2009/03/18 - 11:13am in response to: Wai Ho

Drag him into the streets?! I think you have the U.S. confused with some third world dictatorship. Or do you..

Kevin Slater replied on Wed, 2009/03/18 - 11:16am

And after we have the government help us set the maximum amounts executives can get for bonus or salary or whatever, then we can have them help with the middle manager positions and then surely help with the exorbitant amount of money some Sr. Engineer's pull in. And so on.

Rick Ross replied on Wed, 2009/03/18 - 12:15pm in response to: Harris Goldstone

Harris, I think it's clear from coverage in the Wall Street Journal, Marketwatch, and every other major financial publication that Nitin is not the author of the specualtion about this potential acquisition. It seems only reasonable, in light of the current AIG situation, to wonder whether this would play out similarly. I didn't sense that he made any assertion that it would, but certainly it might (and who would be surprised?)

Rick

Neeraj Vora replied on Wed, 2009/03/18 - 12:33pm in response to: Kevin Slater

Yes dictatorship or no dictatorship (not the issue here) the crux of the problem is that if a senior engineer screws up, a senior engineer can be summarily fired, whereas if an exec sinks the ship they want to still get a handsome bonus without any accountability.

Heck, the problem is accountability. Something is screwed up, someone is responsible. At the high level, at the middle level, at the low level. With this and only this, can the freedom loving capitalistic society enjoy success and prosperity. Small risk, small reward, bigger risks and bigger rewards. The execs and the homeless not owning responsibility are no different in any sense.

So yes, come on and do drag them on to the streets of this fair and free country..

Harris Goldstone replied on Wed, 2009/03/18 - 12:52pm in response to: Rick Ross

It is completely mad to start pointing fingers at Sun for something that they haven't even done. It's bizarre to even be speculating about 'what if Sun is sold and then what if its executives get paid exorbitantly'. Slow news day?

Neeraj Vora replied on Wed, 2009/03/18 - 12:59pm in response to: Harris Goldstone

Not at all. The fact that WSJ reports this, there has to be some fire under the smoke. And you do care about the what ifs if you have seen the lovely baby grow up and become a beautiful young adult before your very eyes.

Mike P(Okidoky) replied on Wed, 2009/03/18 - 1:19pm

IBM would buy Sun with their earned money, not public money. If some of that money finds its way to execs, it just proves that business works. It'll be an incentive for future business that is the backbone of our modern society.

Danno Ferrin replied on Wed, 2009/03/18 - 1:24pm

We've found a witch! A witch! A witch! A witch! A witch! We've got a witch! A witch! A witch! Burn her! Burn her! Burn her!

http://www.mwscomp.com/movies/grail/grail-05.htm

Very good. We shall use my largest scales.

Weights the same as a duck! pays bonuses like a duck!

Build a bridge out of her! err.... Burn her!

Eric Burke replied on Wed, 2009/03/18 - 1:30pm

This article is completely out of place on a technical web site. How about a Java-related article instead of an opinion piece on AIG-style executive bonuses?

Neeraj Vora replied on Wed, 2009/03/18 - 1:41pm in response to: Danno Ferrin

Am I the only one who cannot understand the point that is waiting to be made by this rhetorical anaphora?

Neeraj Vora replied on Wed, 2009/03/18 - 1:43pm in response to: Eric Burke

There might indeed be no more Java related articles, they may become sections within the z series related articles.

Neeraj Vora replied on Wed, 2009/03/18 - 1:45pm in response to: Mike P(Okidoky)

Yes indeed all that would be very dandy, but what if the innovative eco-system that Java was founded on gets damaged in the process?

Danno Ferrin replied on Wed, 2009/03/18 - 2:17pm in response to: Neeraj Vora

Ok, it is mixing Monty Python's Holy Grail with hasty generalization. The fact it includes a duck is merely gravy.

Really what the OP is doing is applying duck typing to corporations that lose money. If they lose money, and pay bonuses, they are evil. Evil like a witch, and should be burned. Just because a corporation loses money and pay bonuses (the duck typing operation) doesn't mean they are the same type of corporation (mostly owned by the US government vs. not owned by the use government). So the failure to check static typing results in an inappropriate calling of the BurnWitch method, since Sun Microsystems is not a witch, even though the OP dressed her up like a witch. Yes, Sun has warts. But instead of burning her we could build a bridge out of her, whether or not she is made of stone or wood.

Have I made my point clearly enough?

Jeroen Wenting replied on Wed, 2009/03/18 - 3:06pm

Sun doesn't get tens of billions of government "bailout money" in order to turn it into aloss of half a billion dollars a day. It's REALLY hard to loose money that quickly guys, it's a major achievement on the part of AIG that should not be marginalised. Obama has, in AIG, found the best way to destroy the dollar that he could hope for, of course those execs deserve to get rewarded for their success!
Sun has done none of that.

Richard D. Jackson replied on Wed, 2009/03/18 - 3:30pm

And just why shouldn't the exec team get a bonus? I mean come on take a look at what the rumours are indicating the buyout price is. So as a stock holder why would I not want to give them some cash for getting such a good price for my stock (my stock will double in value)? Is this not what it is all about getting as much as they can for the stock holders of the company. And shouldn't they get a cut for negotiating such a good deal for me the stock holder? Or should I demotivate them and tell them they are not going to get one red cent. At that point why would they even attempt to get more than the current market value for my stock? As a stock holder I want them to get a bonus that is tied to how much they get me above the market price for my stock. 

Mark Haniford replied on Wed, 2009/03/18 - 3:47pm

As rumours fly around the Net about a possible Sun acquisition by IBM, one of the questions that probably comes to a few people's mind is what it will mean for the upper echelons of Sun management.
No, it's just you and this thread is offtopic.

Alex Zuroff replied on Wed, 2009/03/18 - 3:52pm

Bonuses for executives at Sun is a private matter between those executives and the owners (shareholders) of the company.  After all, those shareholders would have to approve any sale of the company.

 In the case of AIG bonuses, the American taxpayers now own 80% of the company (for better or worse), and as such we have every right to complain loudly about those bonuses - especially since they're being given to the very division that would have bankrupted the company if not for the government stepping in.

Christopher Gardner replied on Wed, 2009/03/18 - 4:08pm

"Yes -- the instruments of capitalism are at work here and it is probably not the job of the government, nor public distaste, to interfere with/affect such private dealings. Yet many others would beg to differ." I suppose right now all this is conjecture. Nonetheless, who cares that others beg to differ? It's up to IBM and Sun to figure this all out. If this deal works out and proves successful, appropriate people will deserve significant bonuses.

Rick Ross replied on Wed, 2009/03/18 - 6:43pm in response to: Eric Burke

I dunno, Eric. In my mind this article raised an entirely reasonable and appropriate question, and it is a sign of the times. Just today, I saw on CNNMoney.com that the normal "Latest News" section was literally bumped down from its normal position at the top of the page. In its place was an extraordinary section with NINE different headlines about the current AIG outrage (unlikely to be the last.)

If you were (or perhaps are) a Sun shareholder, then I think the very first question on your mind would be whether or not the execs who steered the ship on its way to this current juncture should be rewarded for their performance? The example set by the AIG execs is almost certainly not unique, but rather is being repeated around the world in lots of slightly different ways and slightly different situations.

It doesn't matter to me that this question is unpopular. I still feel it is one that warrants consideration, and I believe it is relevant to many of us because of our significant investments in Java, regardless of whether we own any Sun shares.

Let's frame it a different way. Would anyone here like to bet me $100 that Sun execs receive multiple millions in bonuses and payouts if this fire sale to IBM is consummated?

Rick

Rick Ross replied on Wed, 2009/03/18 - 6:50pm in response to: Jeroen Wenting

Jeroen, your point about AIG being an excellent way to destroy the dollar is well taken. AIG execs are really is in a different class than Sun's, whose principal successes have been focused solely on the erosion of shareholder wealth. Your point is almost inarguable.

Rick

Harris Goldstone replied on Wed, 2009/03/18 - 7:17pm in response to: Rick Ross

Let's frame it a different way. Would anyone here like to bet me $100 that Sun execs receive multiple millions in bonuses and payouts if this fire sale to IBM is consummated?

It's bizarre. Are you going to ask the same question whenever a company is taken over by another company? Why pick on Sun? How is Sun especially evil? What about the BEA-Oracle story? Did you ask that question then? Are you asking it now? The only way that this article and this question is justifiable is if it is republished every time one company takes over another company, with a search/replace for "Sun" with whatever the name of the other company is. Would anyone like to bet me $100 that this won't happen?

PS: Here's wishing I could vote this article down twice, because it is just so bad.

 

Andy Gibson replied on Wed, 2009/03/18 - 8:48pm

This is like bizarro world. Since when did bonuses to execs become such an offence. The AIG scandal is due to the fact that the bonuses are being paid out on the back of AIG receiving billions in tax payers money as part of a misguided bailout package/ lobbyist pay off without transparency, oversight or consideration of how the money is spent.  Chris Dodd (D- Conneticut) even added bonus protections to the bill that passed and the rest of them signed off on it. Not surprisingly, Obama and Dodd were the largest recipients of camipaign donations from AIG at over $100,000 each (at least AIG got their money's worth).

While everyone is getting upset over the 167 Million (with an M) paid out in bonuses, nobody is saying a word about the 93 Billion (with a B) that AIG sent out to foreign banks in Britain, France and Germany among others.

 Back to the case in point, whether or not Sun gives execs bonuses is up to them since they aren't backed by tax payer money, and it would be of concern to the board of directors and shareholders. Even then, since people willingly bought stock, and held on to it, at least nobody is twisting their arm unlike AIG's money which was taken from taxpayers at gunpoint.

Similarly, I suppose that since over half the country voted in Obama, they have no reason to complain how he runs the country either.

Hantsy Bai replied on Wed, 2009/03/18 - 8:58pm

If Sun is bought by IBM , I think all  open source products of Sun will shut down except Java. This is bad for developers.

IBM only want to buy Java privilege .

 

Murali VP replied on Thu, 2009/03/19 - 1:12am

and this article has so much to do with Java language because...?

Guido Amabili replied on Thu, 2009/03/19 - 1:16am in response to: Eric Burke

I think this is JavaLobby not JavaHowto!

I am not an American citizen, nor do I live in the US, but I think you are seeing communists everywhere..... ;-)

Why should'nt we talk about what could be motivating Sun's exec to sell Java(tm) to IBM ?

 

Regards,

Guido

 

 

 

Jeroen Wenting replied on Thu, 2009/03/19 - 9:19am

Rick, another difference between the companies is that Sun AFAIK never paid a bonus (oops, 'campaign contribution') to Obama: http://patdollard.com/2009/03/aig-mccarthyist-barney-frank-wants-names-how-about-obama/

Toni Epple replied on Thu, 2009/03/19 - 10:19am

Ladies and gentlemen, er, we’ve just lost the picture, but, uh, what we’ve seen speaks for itself. The Corvair spacecraft has been taken over — ‘conquered’, if you will — by a master race of giant space ants. It’s difficult to tell from this vantage point whether they will consume the captive earth men or merely enslave them. One thing is for certain, there is no stopping them; the ants will soon be here. And I, for one, welcome our new insect overlords. I’d like to remind them that as a trusted TV personality, I can be helpful in rounding up others to…toil in their underground sugar caves.

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