Free Markets, Free People


Ducati Execs Do the Right Thing

It’s no secret that the recent worldwide economic downturn has seriously affected motorcycle sales, sending them plunging by a third.  Now here in the United States, it’s become a common thing to see executives at big firms take huge bonuses, even when the company isn’t doing so hot.  The most egregious example of this was when failed insurer AIG took billions of dollars in Federal money for a bailout of the company, then promptly paid off millions and millions in executive bonuses with it.

Apparently, things are different in Italy, where senior executives at Ducati, faced with slumping sales, did the right thing.

Senior executives at Ducati have taken a 10 per cent cut in their pay and will not receive any bonuses because of the decline, while [Ducati CEO] Mr [Gabriele] Del Torchio said he had taken a 20 per cent pay cut.

Let’s leave aside any legalistic or other arguments about whether the executives should be compensated or not.  At the end of the day, when you’re cutting production, and laying off staff, it seems only right that the pain should be shared by everyone else in the company, all the way to the top.

Kudos to Ducati for setting an example of shared sacrifice.

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8 Responses to Ducati Execs Do the Right Thing

  • I agree. This sort of sacrifice by senior management is quite rare these days.

  • It is a shame that the old European concept of noblesse oblige seems to have remained in Europe. That is one old world tradition that would have been worth bringing to the new world.

  • Good Job, Dale, buying into the “populist AIG” rage…the folks who got AIG bonusses, by-and-large, were the people WHO STAYED TO RIGHT THE SHIP, not the folks who ran it aground….but please don’t reality stop you, or as they said of Belushi in “Animal House”, “Shhhh, he’s onna a roll.”

    If the Ducati management has changed, then yes, this is a good thing….if it has changed, mayhap not so much….

    As we say where I work, “Details matter.”

  • the folks who got AIG bonusses, by-and-large, were the people WHO STAYED TO RIGHT THE SHIP

    So what?

  • Meaning that they, not having caused the problem(s), but having agreed to FIX the problems asked for a high degree of compensation….in the form of BONUSES.

    And that you, Barack Obama and a whole bunch of silly people decided that a contract isn’t valid even after it’s signed, and that working hard, as you agreed, to sort out a problem doesn’t deserve compensation….

    You don’t think the people that turn around troubled corporations do it because they love doing it, do you? No they intend to be recompensed, handsomely, for their efforts?

    Are you SURE you passed the “libertarian” test?

  • Let’s rehearse here.

    1) This has nothing to do with barack Obama, or the law, or anything else. It’s about the wisdom of giving bonuses without a track record of performance. It makes you look venal. And stupid. So, it’s counterproductive from a business point of view.

    2) AIG failed. It took public money. Maybe down the road, after the US taxpayers have been paid back, and the compnay shows a profit, then bonuses would be appropriate. Getting paid a bonus for saying, “Give me lots of money, and I’ll turn this thing around. Maybe.” is silly. The proper attitude is, “If I turmn this thing around, then pay me lots of money.” That’s how entrepreneurs work. Getting the big payout up front, before you’ve proven that you can even keep the company alive, is just rent-seeking.

    3) If you want to be recompensed handsomely, turn the company around first. If you kite in and say, “Pay me a bonus for having done nothing other than accepting a job–oh, and pay me with taxpayer’s money.” Then don’t come all surprised when people think that kinda makes you look like an ass.

    4) If you know anything at all about me, then you should know that if I’d have been in charge, the issue wouldn’t have come up, because AIG would have gone down the tubes before I allowed a cent of taxpayer money to go to them.

    5) Being a libertarian means I don’t want the government to pass a law voiding the contracts. It doesn’t mean that I can’t call someone an ass.

    So, if you can’t understand why taking taxpayer money, then paying out bonuses to executives of a failed company before there’s any evidence that they can turn the compnay around makes you look bad, then you’re just obtuse.

  • Ahhhh, “Obtuse” be sure to throw out “Un-American” or “evil”, while you’re at it….

    AIG Agreed to pay the bonuses….AIG had restructured, the people doing the restructuring were kept on, in anticipation of the compensation via bonuses…they fulfilled their end, and you give them grief?

    Also Ducati isn’t AIG, Ducati may not need RESTRUCTURING, just resizing, but AIG needed more extensive work…different problem, different solution set. In Ducati’s case the management team hadn’t failed…or as far as we know they hadn’t failed, so it’s not throwing the bums out for new bums…In AIG’s case it was…and the new bums wanted a compensation package that paid them for their efforts.

    Bottom-Line: restructuring a failing company is different than riding out an economic down-turn in an otherwise healthy company….the restructuring company may well need bonuses, the otherwise healthy company may simply need belt tightening, and the executives are, commendably, doing some for themselves, too…but just because Ducati is doing it doesn’t make it the best strategy for all companies.

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