Hope You're Rich

[usaone]

Nov 12, 2013 13:04:43 GMT -5 @investorbob said:

Nov 12, 2013 12:17:52 GMT -5 usaone said:

Before the 1980's profits from a company were for the most part dispersed to the owner and employees in various ways. You worked your 40 hours or so a week and that was it.

Now profits go into the stock price and you work your 40 hours and try to chase your companys profits before the big boys can get it.

Please post data to back this up.  Nothing about company ownership structures change in the 70s or 80s.

I have first hand knowledge. My Dad worked as a VP of several major insurance brokers from the late 1960's until 2006. He worked at Marsh & McLennan in the 1980's until he retired in 2006.

Starting in 1982, no more company cars, expense accounts slashed to nearly nothing, bonuses almost eliminated and yearly salaries slashed.

Everything from that point forward was focused on the price of the stock. They were advised to buy as much of the company stock as they could afford. That's how it was until he retired in 2006.

[workpublic]

tethering upper management compensation to the stock price is what's killing employment on all levels.

[Deleted]

Nov 12, 2013 19:48:46 GMT -5 djAdvocate said:

Nov 12, 2013 17:05:33 GMT -5 @gdgyva said:

so bad decisions means one is a "slacker"

whatever. i think it is a close enough synonym for purpose of discussion. but let's not get hung up on language. you think that people that make "bad decisions" should be written off, then. better?

no...not okay.....again people putting words into other peoples mouths.....
written off? so that is what i said? i said throw them away? please show me where......
how about we educate them to the realities of life instead......
how about we SCARE THEM into doing the right things.....i know it worked for me....and many of OUR generation
what is happening now is NOT working......maybe it is time to change it
if you drop out of high school, the chance of you having a decent future is greatly reduced.....the "would you like fries with that" career path
if you have a child at 14, 15, 16.....you have a much larger chance of ending up in bad situations

[Deleted]

Nov 13, 2013 0:35:05 GMT -5 resolution said:

I think sometimes we lose sight of the fact that half of the population has below average capabilities. I believe that as long as they are putting in the effort they should have a decent standard of living.

i totally disagree with this

below average capabilities.....what the hell does that mean

another reason or rationale for why Johnnie isnt doing so well in school

okay...not everyone is cut out for college....we all agree on that

i have more than a half dozen guys with zero college working for me that are making 150k +

college is not the answer for everyone

skills are.....self promotion and marketing are.....ambition, work ethic, a can do attitude......

and no....i refuse to believe MOST people cant succeed.....in one way or another

and one of the things i learned a long time ago.....set the bar high

even those that dont quite reach it, will go much higher than those where the bars are set too low

[Deleted]

Nov 13, 2013 9:05:35 GMT -5 usaone said:

Nov 12, 2013 13:04:43 GMT -5 @investorbob said:

Please post data to back this up.  Nothing about company ownership structures change in the 70s or 80s.

I have first hand knowledge. My Dad worked as a VP of several major insurance brokers from the late 1960's until 2006. He worked at Marsh & McLennan in the 1980's until he retired in 2006.

Starting in 1982, no more company cars, expense accounts slashed to nearly nothing, bonuses almost eliminated and yearly salaries slashed.

Everything from that point forward was focused on the price of the stock. They were advised to buy as much of the company stock as they could afford. That's how it was until he retired in 2006.

This doesn't really jive with what you said.  Your comment was about "employees", but then you gave an example of how fringe benefits for an executive were cut.  One could also assume they were trying to cut waste, which is a legitimate business decision.

And those things ebb and flow like the tide.  Right now, I think my company has gone overboard in terms of certain expenses because times are good and we seem to have lost sight of the value of a dollar to some extent.  That's what happens.  Then when times are bad, they tighten the purse strings.  This is cyclical, not something new in the 80s.

[usaone]

Nov 13, 2013 9:56:38 GMT -5 workpublic said:

tethering upper management compensation to the stock price is what's killing employment on all levels.

It has affected all levels of employees except the very top.

[usaone]

That thinking started in the early 1980's and continues today. Is it 100% across the board? No, but enough to severly affect the economy.

And it wasn't just fringe benefits. It was every aspect of his employment from yearly raise to all benefits.

[Deleted]

Nov 13, 2013 9:56:38 GMT -5 workpublic said:

tethering upper management compensation to the stock price is what's killing employment on all levels.

I think this statement is too broad.  Tethering upper management compensation to SHORT TERM stock price is what kills unemployment.  Compensation must be structured to encourage long-term thinking.  And this applies to more than just upper management.  For example, most people at my company have compensation tied to the stock price over the next 5 years.  Problem is, they really don't make any effort to talk to people about how their efforts today impact their bonus 5 years from now.  So even though we have a long-term compensation plan in place, a lot of people really don't even think about it when making decisions.

[Value Buy]

I know dj lives in a small protective business environment where he over pays his staff and life is good for everyone.

In the real world of American business of hard knocks, it works a little different with the associates who are hired in.
A recent new hire, who "just had to have the job he was offered, because he was broke and had bills to pay" called off for a shift last week, eight days after he was hired.
He stated, he was out of town and would not be in for his eight hour shift, three to eleven.
I asked, could I know where out of town was, if he did not mind.
It was the town north of ours, three miles away, four miles from his employment.
I asked if it was a transportation issue. He said, no, his car was fine.

This was his second call off in eight days.
It was also his last call off............

This happens all the time with the 20 to 25 year old group.
Our entry level jobs start $2 above minimum wage, with a fifty cent increase after six months. Experienced help based on actual experience start about $12 an hour. Granted not, a huge amount but not minimum wage either. 
When listening to newly hires associates, you hear all the excuses why they cannot pay their bills, etc, and yet, try calling someone in for a shift to cover a call off.
Always, "running errands" visiting friends,  not feeling good, etc. An extra eight hour shift is the easiest way to get ahead in the real world of hard knocks, but this demographic group, has the mentality, if I am not scheduled, I am not working.
Reading a potential applicant's job experience, hopping from job to job, you can do a mental note how long they will be with you before they even start the job.
I like to go into the breakroom, and look at notes left by employees.
One or two always post a note, if you want to give up a shift, call me, I will work anything.
And you can bet, if I have to call to cover a shift, they will be available for it. These are the people who will get ahead economically in life. They get it.
In the real world, we have to earn your way.
You do not have to be the smartest person in the room, just have the desire to do it, and put in the hours.
Does not guarantee success, but it does assure a person of being ahead of the game.

[Deleted]

Nov 13, 2013 10:39:17 GMT -5 usaone said:

That thinking started in the early 1980's and continues today. Is it 100% across the board? No, but enough to severly affect the economy.

And it wasn't just fringe benefits. It was every aspect of his employment from yearly raise to all benefits.

Like I said, It only started in the 80s in your particular example.  And it is a function of competition, plain and simple.  Competition is not a bad thing.  Globalization has slowed the growth of compensation, and that I'm sure is a big part of what you are seeing.  But over the long run, globalization has still been a good thing.  Without it, our economic growth would have come to a halt a long time ago.

While you might not like the changes, the alternative is usually worse.

[usaone]

We need a better balance. Less profits short term and higher employee pay will give us better long term results.

[Deleted]

pat--It all goes in cycles.  Old is new, new is old.

[Value Buy]

Nov 13, 2013 10:48:13 GMT -5 @patstab said:

It's like I read not long ago.  Used to be companies looked at budgets annually and maybe slow and steady growth.

Now they are making even weekly planning to try and maximize profits only.  Nothing is left for future growth, its all sacrificed for that higher stock price the execs get bonuses only for achieving that and they will one way or another. You see companies selling off assets to achieve it for that one year. Their compensation packages then get to the point its sucking the company dry and they are focusing only on immediate gratification, the higher stock market.  That does not bode well for the future.  I've read some companies have quit doing that and are trying once again to focus on quarterly and semi annual revenues and trying to set up their companies for future growth.  Wonder how pervasive that attitude is becoming?

I do not disagree with this.
Now what caused this change?
For some reason, ever since RJR (Is this the right company? Read the book, Lions at the Gate) was taken over, and dismantled, and sold off divisions, it has been a train wreck for good companies in the business world.
Leveraged buy outs, Unwanted take overs, billionaires making unwanted takeovers to break up companies for the intrinsic value locked up in the company.......
Management has to be at the highest level of performance these days. You have corporate vultures who buy a million shares, demand board seats, and cost cutting to maximize corporate profits for the immediate present, whether it is good for the company in the long run.
And it is the employees that always pay the price for this.
The Carl Icans of the world are not in it for the good of the workers. 

[Deleted]

Nov 13, 2013 11:08:11 GMT -5 @patstab said:

The romneys are not in it for the good of the workers either.

You have seen over the last 20 years, good profitable companies being dismantled to sell off pieces for a big onetime payout. What good does that do except for a very few, just adds to that 1% that are getting it all at the expense of millions.

Sorry, but that is not how it works.  Taking a stable, profitable company and dismantling it does not earn anybody a profit.  The Romney's of the world take failing companies and make the best of what is left.  Completely different from the picture you have in your mind.

[Deleted]

Nov 13, 2013 8:54:46 GMT -5 happyhoix said:

Nov 12, 2013 16:37:14 GMT -5 @gdgyva said:

well there are countless studies on income disparities between high school grads versus college grads

care to ponder the even bigger discrepancy between high school dropouts and college grads?

i know it is only ONE decision in a long line of them.....

but you have to admit....the numbers are pretty glaring

whether or not someone has ACTUALLY made a study of peoples decisions...and the results.......probably not......

why dont you get on it.....i am pretty sure what the results will already be.......

Those studies are out there, and yet kids still drop out of high school. That doesn't make sense, does it? Unless we assume all those kids are just stupid, or lazy, or set out on purpose to be moochers off the public dime?

no.....

i see a totally different reason and rationale

the kids dont see the downside to not finishing.....why? 

why arent they scared shitless about not graduating, and not having any career path?

if you can answer that, you will see my side of the equation.....

[Sum Dum Gai]

So start your own companies, keep the shares privately held so nobody can ever perform a hostile take over, and run them Japanese style with a 50 year business plan and a focus on long term profits and market share while ignoring short term stock price fluctuations completely. It's a free country, if our current businesses are cocking it all up, open a competing one and show them how it's done.

[Deleted]

Nov 13, 2013 11:05:11 GMT -5 @patstab said:

And no, I do not believe growth would have come to a halt.  We were doing very well as a country until globalization.  All that did was drive outsourcing for lower and lower prices and erode the labor market here as we cannot produce and have our society maintain itself on low cost labor.  All these free trade agreements have done is flood the market with low cost goods and not allow us to ship our higher priced goods and sell them to emerging markets competitively which in turn drove more outsourcing.

This does not jive with reality.  Globalization created massive opportunities for economic growth.  US manufacturing and goods production has NEVER declined except maybe during a recession.  The type of manufacturing we do has simply changed.  Yes, jobs have been lost, but replacement jobs have been created elsewhere (in the US).  And right now, manufacturing is actually coming back as we have the lowest energy prices in the world.  Until the recession hit, remember that unemployment was at historically low levels.  Now unemployment is high, but that is not at all the fault of globalization.

[Sum Dum Gai]

Nov 13, 2013 11:15:47 GMT -5 @investorbob said:

Nov 13, 2013 11:08:11 GMT -5 @patstab said:

The romneys are not in it for the good of the workers either.

You have seen over the last 20 years, good profitable companies being dismantled to sell off pieces for a big onetime payout. What good does that do except for a very few, just adds to that 1% that are getting it all at the expense of millions.

Sorry, but that is not how it works.  Taking a stable, profitable company and dismantling it does not earn anybody a profit.  The Romney's of the world take failing companies and make the best of what is left.  Completely different from the picture you have in your mind.

Bullshit. Toys R Us wasn't struggling until they loaded it with short term debt to finance the leveraged buyout. Bain fucked that company. They weren't in trouble prior to being "saved" by the masters of the universe.

[Deleted]

Can you please post more details?

[AgeOfEnlightenmentSCP]

Nov 13, 2013 12:01:44 GMT -5 @investorbob said:

Can you please post more details?

Probably not.  We've been over this topic ad-naseum and as much as I dislike Mitt Romney as a politician, two things came out of the truth sifter the last election:  1.  Mitt Romney wasn't at the company during the years when the "worst" of the accusations took place; and 2. The "worst" of the accusations were just the same old leftist claptrap-- that Bain 'screwed' the workers, stripped the equity, and left the rotting carcasses.  I think there are some people that are just uncomfortable with genuine market valuations of their work, or their company.

[djAdvocate]

Nov 13, 2013 10:08:55 GMT -5 @gdgyva said:

Nov 12, 2013 19:48:46 GMT -5 djAdvocate said:

no...not okay.....again people putting words into other peoples mouths.....

dude- i NEVER do that intentionally.  i read your posts (and those of others) VERY CAREFULLY, interpret them, and reply.  if my INTERPRETATION is wrong, then PLEASE CORRECT ME.

written off? so that is what i said? i said throw them away? please show me where......

that is how i interpreted what you said.

how about we educate them to the realities of life instead......
how about we SCARE THEM into doing the right things.....i know it worked for me....and many of OUR generation
what is happening now is NOT working......maybe it is time to change it
if you drop out of high school, the chance of you having a decent future is greatly reduced.....the "would you like fries with that" career path
if you have a child at 14, 15, 16.....you have a much larger chance of ending up in bad situations

ok, fine.  would you support subsidizing post high school education or training programs?

[Sum Dum Gai]

Can you please post more details?

Bain Capital purchased Toys R Us in a leveraged buyout.  They paid more than the share price of the stock on purchase.  In order to pay for it they loaded Toys R Us with short term debt.  3-5 year bonds.  Pretty standard.  The problem is they purchased Toys R Us in 2005 when interest rates were ridiculously low.  As the bonds came due later, rates had risen, and we were in the middle of a massive recession, so their sales had taken a hit.  They keep having to churn the bonds at higher interest rates.  They were a fully grown out company with reliable sales and profits.  Now they're struggling in large part due to the massive bond payments they have to make.  Sales dropped in 08 and 09 during the height of the recession, so their outlook was downgraded by all the agencies due to declining sales and profits, which made the bonds more expensive than they already were when they had to roll them over.  They're slowly strangling under the debt payments, which are a direct result of the buyout and didn't exist prior to the arrival of Bain.  Their C level execs have been turning over almost annually since Bain came in, as each year the board wants the head of whoever was in charge since they haven't found a way out from under the debt obligations, or been able to make their IPO window, which is about to expire.

The scuttlebutt in the toy industry is that they're considering a structured bankruptcy.

[djAdvocate]

Nov 13, 2013 13:13:03 GMT -5 Sum Dum Gai said:

Can you please post more details?

Bain Capital purchased Toys R Us in a leveraged buyout.  They paid more than the share price of the stock on purchase.  In order to pay for it they loaded Toys R Us with short term debt.  3-5 year bonds.  Pretty standard.  The problem is they purchased Toys R Us in 2005 when interest rates were ridiculously low.  As the bonds came due later, rates had risen, and we were in the middle of a massive recession, so their sales had taken a hit.  They keep having to churn the bonds at higher interest rates.  They were a fully grown out company with reliable sales and profits.  Now they're struggling in large part due to the massive bond payments they have to make.  Sales dropped in 08 and 09 during the height of the recession, so their outlook was downgraded by all the agencies due to declining sales and profits, which made the bonds more expensive than they already were when they had to roll them over.  They're slowly strangling under the debt payments, which are a direct result of the buyout and didn't exist prior to the arrival of Bain.  Their C level execs have been turning over almost annually since Bain came in, as each year the board wants the head of whoever was in charge since they haven't found a way out from under the debt obligations, or been able to make their IPO window, which is about to expire.

The scuttlebutt in the toy industry is that they're considering a structured bankruptcy.

this might seem ok, or excusable, if there were not a pattern, here.  Bain routinely loads up companies with debt, only to have them end up in bankruptcy.  it happens often enough that one might consider the question of if it is intentional.

[Deleted]

Nov 13, 2013 12:49:37 GMT -5 djAdvocate said:

Nov 13, 2013 10:08:55 GMT -5 @gdgyva said:

no...not okay.....again people putting words into other peoples mouths.....

dude- i NEVER do that intentionally.  i read your posts (and those of others) VERY CAREFULLY, interpret them, and reply.  if my INTERPRETATION is wrong, then PLEASE CORRECT ME.

written off? so that is what i said? i said throw them away? please show me where......

that is how i interpreted what you said.

how about we educate them to the realities of life instead......
how about we SCARE THEM into doing the right things.....i know it worked for me....and many of OUR generation
what is happening now is NOT working......maybe it is time to change it
if you drop out of high school, the chance of you having a decent future is greatly reduced.....the "would you like fries with that" career path
if you have a child at 14, 15, 16.....you have a much larger chance of ending up in bad situations

ok, fine.  would you support subsidizing post high school education or training programs?

why does it have to be post high school

dont we have an inkling or an idea or who the students are that will graduate by 9-10th grade? 

i know not all....but at least the majority?

can we also agree that we "should" be able to identify those who "probably" will not be graduating

why not change their curriculum....add in real world skills

see what they are good at....good with hands, mind, people

setup secondary high schools....that teach life skills

they dont teach history, or english vocabulary......they teach welding, or plumbing, or mechanics

or they teach basic med tech skills, or hell you get the idea

make it voluntary.....but i bet a lot of kids would jump at a chance to learn real stuff

yes....i support all of this.....and the money spent would come back in spades as some of these young people open their own businesses

small business which grows to bigger business is how our economy works

it isnt "would you like fries with that"

[Sum Dum Gai]

I'm sure Bain looked at Toys R Us and saw opportunity.  They had no real online presence to speak of.  I'm sure Bain figured they could compete online, increase sales, increase profits, and the bonds wouldn't have mattered if they'd gone public as planned and used the cash to pay off the bonds.  Instead Walmart used their entire toy and game category as a loss leader, something they'd already been doing by the way, to put the screws to the competition.  They also brought back layaway on toys and games during the Christmas season shortly after the Bain buyout.  Meanwhile Amazon was growing in popularity, and driving prices down in certain categories, toys being one of them.  Toys R Us lost market share during the crucial Christmas season due to that, and the recession on top was more than they could cope with.  In short, Bain placed their bet and Walmart/Amazon cleaned their clocks.  Now they're stuck with a struggling company, a ton of debt, a rapidly closing IPO window that won't generate the money they need anyway due to downgrades, debt, declining sales, and no real way out.

[Deleted]

all good news for an aspiring new toy store owner

[djAdvocate]

Nov 13, 2013 13:22:42 GMT -5 @gdgyva said:

Nov 13, 2013 12:49:37 GMT -5 djAdvocate said:

ok, fine.  would you support subsidizing post high school education or training programs?

why does it have to be post high school

dude.  you were the one making the huge to-do about the difference between highschool and post-highschool incomes/success.

please make up your mind what you are talking about, and then we will try again.

[djAdvocate]

Nov 13, 2013 13:22:42 GMT -5 @gdgyva said:

Nov 13, 2013 12:49:37 GMT -5 djAdvocate said:

ok, fine.  would you support subsidizing post high school education or training programs?

yes....i support all of this.....and the money spent would come back in spades as some of these young people open their own businesses

small business which grows to bigger business is how our economy works

it isnt "would you like fries with that"

thank you.  no further questions.

[Sum Dum Gai]

I have no problem with Toys R Us going under, personally or professionally.  They're the only large toy chain left.  If they fold they'll be replaced by small mom and pop shops to begin with, which only helps me.  However, we were discussing the business practices of private equity firms, not Toys R Us in particular.  Without the buyout Walmart and Amazon would still be eating their lunch, presumably, but they'd also still be a profitable company with no debt.  Loading a company with short term debt, especially short term debt at historically low interest rates, was a pretty stupid business decision with the clarity of hindsight.

[djAdvocate]

Nov 13, 2013 13:48:48 GMT -5 Sum Dum Gai said:

I have no problem with Toys R Us going under, personally or professionally.  They're the only large toy chain left.  If they fold they'll be replaced by small mom and pop shops to begin with, which only helps me.  However, we were discussing the business practices of private equity firms, not Toys R Us in particular.  Without the buyout Walmart and Amazon would still be eating their lunch, presumably, but they'd also still be a profitable company with no debt.  Loading a company with short term debt, especially short term debt at historically low interest rates, was a pretty stupid business decision with the clarity of hindsight.

it was stupid if your OBJECTIVE was to make the business successful.  having reviewed half a dozen of their transactions, i don't think that is Bain's general objective.