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As the economy continues to struggle, in part because of the hopefully past poor lending practices of banking institutions, it strikes me as odd that salaries for higher-level executives continue to grow ("Things Are Looking Up," November).
I understand that top executives deserve high salaries, especially when their respective companies are doing well because of decisions they made. But when the very same companies are losing millions, or even billions, of dollars, I guess I just don't get it.
Aren't salaries and wages a type of payment for sound business judgment? If so, corresponding wages should be on the downturn since most businesses' balance sheets are not looking very healthy, because of decisions the very folks that are being compensated have made. That is one of the reasons why the economy continues to be in a downward spiral, even after the ill-planned Wall Street bailout was enacted.
What do politicians know about the fragile nature of our economy anyway? That, however, is a discussion for another day.
Dr. Gary Lysik
Via E-mail
Earlier, Not Bigger
According to the chairperson of the Private Company Financial Reporting Committee, if an alternative method of inventory valuations becomes mandatory under international financial reporting standards (IFRS) there will be "much bigger tax liabilities" ("Small Companies Will Lag, but by How Much?" Topline, November). I disagree. Financial reviewers who defend the LIFO (last in, first-out) method often forget that the tax is the same, only the timing is different. The reason why IFRS threw out LIFO is that it gives garbage on the balance sheet. You have to calculate FIFO (first in, first out) anyway, in order to disclose the real tax liability (hidden away in the notes and misnamed "LIFO reserve").
Stephanie Campion
Via E-mail
Back to Bottom-Up
"Local Knowledge" (November) is a well-written article on a common issue faced by most executives tasked with growing the Asia-Pacific region. The comment by Korn/Ferry International's David Hui regarding "expectations management" is bittersweet. There needs to be a move back to a "bottom-up" approach. Sometimes, deciding the key performance parameters helps, as that focuses the organization on fundamentally sound and sustainable growth.
Vivek Palta
Via E-mail
Save, Borrow, Repay, Repeat
I am most concerned about some of the recent discussions and suggestions to curtail access to monies using 401(k) loans, while encouraging withdrawals by waiving the 10 percent early-distribution tax penalty ("Swiping Nest Eggs?" Topline, November).
Modest access and careful, deliberate use of loans can help people save for retirement. Data from the Boston College Center for Retirement Research shows that participation declines where access to funds is limited.
Don't forget, the participant must first save to qualify for a loan. Most people I know who are disciplined enough to save, to defer consumption, are also circumspect about [borrowing].
We would be better served if we encouraged people to save more than they otherwise feel they can afford to earmark for retirement. Enable access to monies for short-term needs via a modest loan program. Save, borrow, continue your contributions, repay the loan, rebuild your account to an even greater balance. Save, borrow, contribute, repay, rebuild. Repeat, over and over — ultimately building your retirement savings.
Jack Towarnicky
Via E-mail
Walking, Er, Running the Talk
Congratulations to Michael C. Fina CFO Mark Ellis ("Happy Feat," Grapevine, November)! I love to see people actually putting the walk (or in his case, run) to their talk. What a tribute and what a commitment to obviously a great business and personal relationship.
Sandra Molnar
Via E-mail
In Praise of the Contactless Card
In "Cash, Credit, or Cell Phone?" (InTech, October) the author writes: "While contactless cards have faltered in the United States, mobile-phone banking has taken off...." I read nothing in the article that would support such a claim.
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