Archive for March, 2009
The headlines about the millions in bonuses paid to AIG executives with our tax dollars have struck a chord with many people. But for minority shareholders of many small, closely held businesses, this issue has struck a raw nerve because it is reflective of what is going on in their own business. How could the situation at a huge conglomerate like AIG that has taken billions in bailout money bear any resemblance to the inner workings of a construction company, or small manufacturer, owned by just a handful of people?
One would expect that certain sacrifices would have to be made by those in charge of such businesses in today’s dismal economy. If revenues are down twenty percent, forty percent, or even more, one would think that salaries, bonuses and certain perks would have to be reduced. However, those in charge of running and operating small, closely held businesses often simply refuse to decrease their own salaries when such a cut clearly warranted; worse, they keep taking huge bonuses that the company can no longer afford. In fact, the sight of one majority shareholder (who sets his own salary, of course) recently driving away from a car dealership in a brand new Mercedes was considered by one of his minority shareholders to be the “last straw;” litigation is about to be filed.