Friday, March 20, 2009
Lingle wants to keep bonuses from Hawaiian Telecom employees—Why?
by Larry Geller
Let’s see.. according to today’s Advertiser story by reliable reporter Rick Daysog, here reframed by me, Hawaiian Telecom, in order to improve its business performance, used the common tool of employee incentive bonuses, and is now getting stomped on by the governor.
In other words, meet these goals and you employees will be rewarded. Lots of companies do this. It works.
The company is in bankruptcy, so they are asking the bankruptcy court if it is ok to pay the bonuses. According to the story, the CEO has turned down his bonus entirely, and senior managers have agreed to defer half of their bonuses until the company emerges from bankruptcy. The article says that nearly $3.6 million is to be paid to non-senior management, in other words, ordinary employees.
None of that is taxpayer money. This is not an AIG situation. The employees probably could use their reward in these troubled times. What they get will mostly be spent in Hawaii’s economy, and could be looked at as a kind of stimulus payment if we stretch just a little. Besides, the way things are going at Hawaiian Tel, maybe they would be wise to put something away against the possibility of future staff reductions.
Lingle doesn’t want the employees to have that money, even though there’s a clear benefit to the economy that they should have it.
Hawaiian Telecom’s bankruptcy is due to the huge load of debt the company was saddled with in 2005 by the Carlyle Group when it purchased the company from Verizon, and also no doubt in part to Carlyle’s lack of experience in managing a telecommunications company. Compounding its difficulties is the national (worldwide?) growth trend of cellular communications at the expense of traditional landlines.
Since the company is bringing the matter to the bankruptcy court on its own, I wonder what motivates Lingle to intervene, and also what standing on the matter she might have. Will the court pay attention to her complaint? Obviously, we’ll see. They could rule either way, and employees could get their bonuses or not, but the court will decide. They could even disallow CEO bonuses while allowing others, or set other conditions.
Just add this to the growing list of Lingle moves against the average citizen, and look at the emerging pattern. She herself is a lame duck, though perhaps an ambitions duck as well. But she’s also a Republican duck in a town where Republicans are a shrinking minority in government. I don’t think this will help, unless the few Republicans left in the Legislature disavow themselves from this and other harmful actions and pronouncements of their party leader.
I'm surprised by your position this matter. HawTel should be focused on restructuring their business,not lining their employees with more money. On that note, HawTel must've had low financial
targets that triggered these bonuses. After all they had to file for bankruptcy, losing money and
bleeding landline customers.
Offering bonuses or other incentives is a standard business practice. At this moment it is being used by countless other businesses. I don't see anyone objecting to it. Why target Hawaiian Telecom? Also, they certainly are restructuring their business, with shiny new management and probably other steps as well. They are also under the supervision of a bankruptcy court with the expectation of restructuring.
The Wall Street bonuses, paid to those who caused the economic crash in the first place and paid for periods of collosal loss, would not be an issue at all if it were not for the taxpayer-funded bailouts.
For this company it seems from the news account that they are quite properly taking the matter to the bankruptcy court, since creditors are involved etc. Unless information surfaces saying otherwise, they did this on their own, and the court could decide anything. They could stop the payments, or they could approve the payments. If there is a reasoned public decision, we may learn more about it.
There is a huge issue of pay inequity in this country, but that also is a separate thing.
I hope I stated my reasons adequately in the main article, I was trying to rein in my tendency to write too much.
Larry - Having had experience with HawTel as both a residential and business customer I would have to agree, on the face of it, with Larry Geller's position. However, I believe she should be paying attention to State regulated industries (i.e., electrical utilities). Certainly these sort of bonuses are symptomatic of a sick and wasteful business culture that appears to be all too prevalent, but this is the private sector and they can do what they want with their money, within reason, and in the context of bankruptcy within the limit of the Court's decisions.
That said, I am surprised that Larry Geller has this take on the issue. He is usually so knee-jerk liberal about things...
Oh, I suppose I still am a knee-jerk liberal. On this issue I'm consistent in that I got pissed at Lingle trying to take away the bonuses that would go more to the ordinary employee.
In a past life I was an executive at GE. Before that, as a technical guy, I pointed out that the sales force routinely got awards and bonuses, yet we techies, who made their sales possible (and in those days, often worked alongside salespeople) got nothing. This was convincing, and we techies were recognized monetarily.
Not at GE, but at some companies, back in the day, salaries were fairly low (maybe deliberately). By being savagely aggressive a salesperson could clean up on incentives, and some did well enough to have second and third homes and enjoy the good life in many ways. These were not evil CEOs, these were lower-level grunts, just grunting hard.
It would be better if everyone got fair wages and if the productivity of labor vs. management were correctly rewarded (is that liberal enough?). The reality, though, is those crazy CEO salaries and bonuses. At Hawaiian Telecom, Lingle is trying to separate folks who I understand to be the worker bees from the honey. Not fair. If it really is her business to do this, perhaps she'll clarify how so.
All I get from this is that Ding-a-Lingle is so generally despised that she’ll do anything to pump up her sagging poll numbers- she sees the outrage at AIG and thinks she can cash in on that politically by criticizing some bonuses at home, even if the two situations don’t even remotely correlate... pretty pathetic yeah?