Manager Compensation

It’s how amaze a lousy, underperforming company gives their managers (cum director most of the time in some companies) a handsome paid plus huge bonuses. As far as I could understand, the objective of giving out bonuses is when a company performs an above average result compared to its peer. I am puzzle what’s the goal of giving out this huge bonuses if the manager does not perform. I also wonder is it a company corporate culture where the managers receiving handsome paid no matter how’s the company he manages perform, being it good or bad. If this is a case, I would not hesitate to run far away from the company, not mention to be its investor.

Let’s examine paid received by top management of Wesco Financial Corporation, including Chairman, President and CEO who is Charles T. Munger

1) Jeffrey L.Jacobson Salary Bonus
Vice President and
Chief Financial Officer
of Wesco and
MS Property Company
2003 186,000 -
2004 204,000 -
2005 210,000 -

2) Robert E.Sahm
Vice President of Wesco
and President of MS
Property Company
2003 188,400 16,100
2004 198,000 16,900
2005 207,900 17,750

3) Charles T. Munger
Chairman of the Board,
President and CEO of Wesco
2003 - -
2004 - -
2005 - -

Source: www.wescofinancial.com

The following graph compares the value at each subsequent year end of $100 invested in Wesco capital stock on December 31, 2000 with identical investments in the Standard and Poor’s (“S&P”) 500 Stock Index and the S&P Property-Casualty Insurance Index, assuming reinvestment of dividends.

Need me to say more? Compare the figures with the companies you invested....

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