# Chrysler Execs to get Bonuses from Federal Bailout



## Acct2000 (Sep 24, 2005)

This is egregious. (I voted for McCain to put this into perspective.)

Apparently, this is to keep them from quitting.

Where in this economy are these folks going to go to work?

If they are so irreplaceable, how is Chrysler in its current situation??

Wow.

Wow.


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## Quay (Mar 29, 2008)

:crazy:

Good grief. I know Chrysler is a privately held company, but shouldn't Chrysler, GM and Ford be _firing_ upper management right now and replacing them with people to get things to a new track? Keeping the folks that steered them into the ditch seems nonsensical.

And I'm one of the ones paying for this, eh?


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## the law (Sep 16, 2008)

Aren't GM and Chrysler in merger talks? 

These guys will be even more useless in a few months. 

I'm not down with the idea of rewarding failure with taxpayers' money. 

But the Democrats seem to have no problem with it.


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## Acct2000 (Sep 24, 2005)

I don't think they were envisioning executive bonuses, to be fair.


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## Quay (Mar 29, 2008)

forsbergacct2000 said:


> I don't think they were envisioning executive bonuses, to be fair.


Indeed, several Op-Ed pieces from those who are either advising President-elect Obama or the Democratic leadership are calling for massive restructuring in the industry and no payments of bonuses to the guys (mostly guys) who drove the companies into the ditch. Also to be fair, _no one_ seems to be calling for bonus pay except perhaps the executives themselves, albeit in very quiet whispers around the third drink.


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## Stringfellow (Jun 19, 2008)

Here's something I don't understand. Conservatives hate the idea of wealth redistribution, or in other words, the moving of resources from the rich people to the poor people. At the same time Conservatives love to trumpet the statistic that the upper (1-10%) of tax payers pay (50-90%) of the taxes (numbers changing depending on where you get your info). It seems to me that taken together, the bailout is merely the government taking money from rich people and giving it to other rich people to help all rich people stay rich. For instance, bailing out the auto industry helps the shareholders of the automakers and the owners of the companies who make parts for the manufacturers. If the auto companies were to fail there would be lots of unemployed poor people (factory workers and such) who would all have access to unemployment insurance, which, because rich people pay all the taxes would be paid for predominantly by rich people. 

Thus, the rich have two options. 1) bail each other out and maintain wealth or get richer or 2) not bail each other out and pay for poor people. You would think the Conservatives would love the idea of the bailout. It's supply side economics at its panicle.

I HATE the idea of all of the bailouts but that's just me.


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## radix023 (May 3, 2007)

Supply side is about removing barriers to creating things of value.

Bailouts are about robbing Peter to pay Paul.

apples and oranges


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## Kav (Jun 19, 2005)

I was denied the $300 incentive check because ( drumroll) I received unemployment the preceeding year. 
Then I got a state notice of unemployment benefit extension eligability.
I reapplied. I was informed after a long paper chase of lost files and unanswered inquiries that I was disqualified. I was disqualified, because I hadn't worked since my benefits ran out. 
I'm on the last of my 401 K I cashed out just before the crash of '08. I took a major penalty of $2000 for doing so. Now, I hear people will be allowed to access 401Ks without penalty. I called the IRS. I am ineligable because I acted before the ruling.
I'm learning about the underbelly of this economy; medical free clinics ( they aren't) food stamp applications, underemployment at minimal wage for maximum work and experience,selling possessions @ 10 cents on the dollar.
And I'm in good shape, seeing plenty of people sleeping in cars ( if they have one) and selling gold dentalwork for cash.
To quote Utah Jack Phillips " These people have names and addresses."


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## MarkfromMD (Nov 5, 2008)

Bailing out the autos won't help because they have broken business models and giving them more money will just postpone their fall another couple months. What is the point of giving them money to stay afloat for 6 more months if they are still going to fail? Letting the automakers go into chapter 11 is not bad. The companies will still make cars, they will still have employees, they will still function. Yes, some plants will get cut and some workers will be laid off but let the companies go through chapter 11 and attempt to reorganize themselves.

The current leaders of these corporations shouldn't be shouldering all the blame, the problems in the auto industry are the result of years and years of mismanagement and failure to adapt to a changing world. If all the past executives made bad choices and received bonuses and are happy then is it fair to lay all of the blame and punishment on the current management? 

I don't have an opinion on the matter of executive compensation but I think everyone puts too much blame on the current leadership and doesn't realize that the problem is much deeper.


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## Helvetia (Apr 8, 2008)

This is why Joe Six Pack doesn't trust big business. They have no restraint. They're addicts. Their addiction - money.

Why do they make it so easy for people to dislike them?


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## Acct2000 (Sep 24, 2005)

Mark, the problem is much deeper, but there is no logical economic reason to give these folks bonuses in times like this; especially when they will have to ask the unions to sacrifice.

I have always disputed the notion that executive talent is so scarce that they have to pay multi-million dollar salaries to get people to do the jobs anyway.


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## Leather man (Mar 11, 2007)

Its happening here too - with bankers, and Chief Execs in the public sector - two stories : 1. Royal Bank of Scotland Senior Bankers ( they've taken £20 billion from the tax payer for their failures) go on a £300,000 party spree in Edinburgh 2. A Chief Exec of E Yorkshire Borough Council gets 35% pay rise whilst telling staff to take no more than 1.9%


I suspect the rich are so addicted to filthy lucre that they cannot give it up - really - it does read like addiction. Problem is goverments don't know how to stop it and I suspect don't have the backbone to either. I begin to wonder if banks and others shouldn't have been allowed to fail after all. Problem is its heads they win, tails we lose.


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## Leather man (Mar 11, 2007)

forsbergacct2000 said:


> Mark, the problem is much deeper, but there is no logical economic reason to give these folks bonuses in times like this; especially when they will have to ask the unions to sacrifice.
> 
> I have always disputed the notion that executive talent is so scarce that they have to pay multi-million dollar salaries to get people to do the jobs anyway.


You are not alone. Polly Toynbee writing in the Guardian ( hate figure of the right wing) wrote a brilliant article proving that there are no market forces pushing up execs pay. 86% are recruited internally! Very few move country for work. Yet execs constantly whine that if they aren't paid vast amounts of money someone else will snap them up. Toynbee's research was devastating for their shakey case. It really is "snouts in the trough".


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## Kav (Jun 19, 2005)

Our automakers should have looked to the demise of the UK auto industry and it's root cause. 

We bailed Chrysler out once before. Enough, is enough.


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## pt4u67 (Apr 27, 2006)

Helvetia said:


> This is why Joe Six Pack doesn't trust big business. They have no restraint. They're addicts. Their addiction - money.
> 
> Why do they make it so easy for people to dislike them?


We're all addicted to money. I want execs that are greedy and love money. If by creating more value for shareholders allows them to profit handsomely, so much the better. But I also want them to make is honestly and play by the rules.

This is a prime example of why the government should not be in the bail out business. Its leads people that normally have no stake in the goings on of a company to all of a sudden start commenting on its operations.

Government money, to the extent that it is made available, should not come with strings attached. Otherwise, it should no come at all. I don't hear taxpayers complain when junior gets a stafford loan so he can major in Medieval Russian Literature at Dartmouth.


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## PedanticTurkey (Jan 26, 2008)

Having been a Saints fan for a long time, I understand how frustrated you can get when people are paid outrageous salaries to lose, and lose hard, over and over and over.

But where's the outrage and shameless left-wing populism promising to punish professional sports players?


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## Acct2000 (Sep 24, 2005)

I'm not a left winger, and the sports salaries are paid out in something that approaches an open market with real bidding as opposed to the cronyism that leads to a lot of the corporate salaries. That said, it's a shame that our society values entertainment more than some other things and pays out money for entertainment that permits the budgets for the sports salaries. However, that is a result of people freely making choices with their own money.

I have no problem with someone who creates and/or owns a company making whatever profits he can earn and spending them how he wishes.

What happens in our corporations has a lot more to do with cronyism than any sort of an open market.


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## PedanticTurkey (Jan 26, 2008)

I'd love to hear an explanation of how this "cronyism" works, if you don't mind.


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## jackmccullough (May 10, 2006)

Forsberg, if you don't watch out they're going to kick you out of the conservatives' club!

Great posts. I don't think you've said anything in this thread that I disagree with.

These corporate CEO's and directors are playing with OPM. The directors are dependent on the CEO for their cushy and lucrative board seats, so naturally they want to lay out the big bucks to keep the CEO happy.

And because of the stock ownership patterns, you and I, as small share holders, have less chance of successfully challenging a CEO's salary than we do of mounting a successful write-in campaign for president.


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## Acct2000 (Sep 24, 2005)

I've not been all that conservative. I voted for Ford, Carter, Mondale, Dukakis, Clinton, Clinton, Gore and Kerry before voting for McCain. While I'm not conservative, I'm also not a good predictor of who will win an election.

There generally not bidding wars for these executives, and I seriously doubt that it would require multi-millions to get anyone to take these positions. Because there is not a free, open market for these positions, we don't know what the salaries should be. 


Turkey, once you have decided something, there is no convincing you and I won't try.


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## PedanticTurkey (Jan 26, 2008)

I'm not changing my mind because your explanation is sorely lacking and bordering on nonsensical. 

Explain the relevance of " I seriously doubt that it would require multi-millions to get anyone to take these positions" and why there is not a "free, open market for these positions."


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## Acct2000 (Sep 24, 2005)

Why?

I'm not engaging in this with you.

I think something and you think something different. 

If it makes you feel good that you have achieved victory, enjoy it.


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## Miket61 (Mar 1, 2008)

PedanticTurkey said:


> Explain the relevance of " I seriously doubt that it would require multi-millions to get anyone to take these positions" and why there is not a "free, open market for these positions."


Because these are _retention_ bonuses, not _performance_ bonuses.

They're not getting paid extra money because they've done such a wonderful job (and frankly, with so many external forces reducing demand, it's not so easy to prove they haven't), but because the departure of a lot of executives might create a knowledge vacuum that makes it difficult to continue to run the company.


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## eagle2250 (Mar 24, 2006)

I was reading an article about a week ago that suggested in a free market economy, these domestic auto giants should be allowed to succeed or fail on their own merits. In the event the taxpayers don't bail these buffoons out, the companies will not necessarily disappear. In all likelihood they will restructure and (we could witness the Mutha of all miracles) they just might start producing vehicles for which there is a present day demand! Following any other path seems disconcertingly reminiscent of the failed Soviet approach to their economy. I say let em stand or fall on their own!


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## PedanticTurkey (Jan 26, 2008)

I say let them collapse and stop paying $150,000+ per year for 40 hours a week of high-school-educated labor.

Of course those folks (who put thousands every year into union dues) are the ones who are really being bailed out, so it won't happen.


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## Acct2000 (Sep 24, 2005)

Turkey, I'll agree with you about that. There is plenty of inefficiency and buffoonery built into the car companies' business models and management is ultimately responsible for it.

If their employees refuse to see that a model that refuses to let employees be assigned efficiently and used for what is needed at the moment instead of allowing outmoded work rules to continue (These rules create a lot of standing around because only certain artificially created groups of people are permitted to do certain jobs.), let them see what a world is like without a union to protect them when they drink on the job, etc.


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## XdryMartini (Jan 5, 2008)

PedanticTurkey said:


> I say let them collapse and stop paying $150,000+ per year for 40 hours a week of high-school-educated labor.
> 
> Of course those folks (who put thousands every year into union dues) are the ones who are really being bailed out, so it won't happen.


This is the first I have read about this. What companies are paying $150k for what kinds of jobs? What is your source? I'd like to research this further.


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## PedanticTurkey (Jan 26, 2008)

XdryMartini said:


> This is the first I have read about this. What companies are paying $150k for what kinds of jobs? What is your source? I'd like to research this further.


It's a fact that's been repeated numerous times in numerous sources over the last couple weeks.

Here's one: https://www.usatoday.com/money/economy/2007-06-22-181234878_x.htm



> Ford, according to its annual report, paid $70.51 per hour in wages and benefits to workers last year. GM's annual report says its labor costs average $73.26 per hour, while Chrysler's costs average $75.86 -- all well above the average $48 hourly cost incurred by Toyota, Honda and Nissan.


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## 16412 (Apr 1, 2005)

the law said:


> Aren't GM and Chrysler in merger talks?
> 
> These guys will be even more useless in a few months.
> 
> ...


The Democrat method is not to fix problems but to throw more money at it and say it's fixed.


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## 16412 (Apr 1, 2005)

forsbergacct2000 said:


> I have always disputed the notion that executive talent is so scarce that they have to pay multi-million dollar salaries to get people to do the jobs anyway.


Pre 80s the lie of "they have to pay multi-million dollar salaries to get people to do the jobs" didn't exist. This extreme pay has gotten so way out of hand. And their bounes are just as ridiculus. What people of the past thought was extreme doesn't even compare with the extreme of today. The extreme of today is outrageously ridiculus and clearly unethical.


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## 16412 (Apr 1, 2005)

_'Ford, according to its annual report, paid $70.51 per hour in wages and benefits to workers last year. GM's annual report says its labor costs average $73.26 per hour, while Chrysler's costs average $75.86 -- all well above the average $48 hourly cost incurred by Toyota, Honda and Nissan.'_

How much of this is in tax that the company pays on top of the wage. In Washington State, in the past, if you pay your employees $10 and hour then there is are taxes of $10 or more on top to pay, nowadays, insurance to be paid on top. So the actual cost is over $20 an hour. Out of the employees $10 taxes for Federal and SS are taken out, too. Take home for the worker is less than $10.


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## MarkfromMD (Nov 5, 2008)

WA said:


> _'Ford, according to its annual report, paid $70.51 per hour in wages and benefits to workers last year. GM's annual report says its labor costs average $73.26 per hour, while Chrysler's costs average $75.86 -- all well above the average $48 hourly cost incurred by Toyota, Honda and Nissan.'_
> .


GM, Ford, Chrysler = Union wages
Toyota, Honda, Nissan = not

I am pretty sure that is the main source of the wage discrepancy


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## PedanticTurkey (Jan 26, 2008)

WA said:


> Pre 80s the lie of "they have to pay multi-million dollar salaries to get people to do the jobs" didn't exist. This extreme pay has gotten so way out of hand. And their bounes are just as ridiculus. What people of the past thought was extreme doesn't even compare with the extreme of today. The extreme of today is outrageously ridiculus and clearly unethical.


Unethical? I really do not understand this line of argument. I hope you're more willing to explain your viewpoint than others--

What exactly is unethical about it?


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## Miket61 (Mar 1, 2008)

PedanticTurkey said:


> It's a fact that's been repeated numerous times in numerous sources over the last couple weeks.
> 
> Here's one: https://www.usatoday.com/money/economy/2007-06-22-181234878_x.htm


Labor costs, not pay.

FICA taxes are a deduction of 7.65% of the person's paycheck, and the employer has to pay an identical amount. Then there's health insurance, which could cost $1000 per employee per month and they only pay $60.

Also, an hourly rate assumes 2,080 hours per year, which no employee actually works. Subtract 40 hours per week of vacation, of sick leave, of paid holidays, etc.

My guess is the employee probably gets $70,000 out of that $150,000.


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## Stringfellow (Jun 19, 2008)

Isn't it labor's job to try and get paid as much as possible? People like to act as though it is labor's fault the car companies are in trouble but last I looked management had to agree to labor's demands. Detroit is a failed enterprise because of poor management. 

If government would create decent pay and benefit standards there would be no need for unions. Unions gain power when labor is exploited. If everyone was paid a living wage and given decent benefits from the get go they would not feel the need to unionize. Plus, it would eliminate the high transactions costs of unions.


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## PedanticTurkey (Jan 26, 2008)

Miket61 said:


> Labor costs, not pay.


I never said the ee's actually get that, I said that's what it's paying for the labor.



> My guess is the employee probably gets $70,000 out of that $150,000.


My guess is that it's closer to 50.


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## Laxplayer (Apr 26, 2006)

PedanticTurkey said:


> I never said the ee's actually get that, I said that's what it's paying for the labor.
> 
> My guess is that it's closer to 50.


My uncle is in the UAW, and he would make about $70k w/o overtime. With overtime, he makes over $100k. He has worked at his plant for close to 30 years. He works 3rd shift so he gets to celebrate holidays like Christmas and Thanksgiving and still benefit from the double or triple time (if the holiday falls on a weekend) pay. My cousin is an engineer for GM, and she makes $65k. She doesn't work any overtime or holidays. Luckily for her, enough engineers at her plant took the offered severance package and she is keeping her job for now. She has the most seniority now, but I doubt she will be getting a raise any time soon.

Both of them would tell you that their job is not all that hard, though my uncle in the UAW has better benefits and he has the opportunity to make more.


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## 16412 (Apr 1, 2005)

Stringfellow said:


> If government would create decent pay and benefit standards there would be no need for unions. Unions gain power when labor is exploited. If everyone was paid a living wage and given decent benefits from the get go they would not feel the need to unionize. Plus, it would eliminate the high transactions costs of unions.


The problem is what is decent pay? If you live near downtown Seattle the _decent pay _is way higher than somebody living in the town of Washtucna of the same state for buying the same house. Seattle is high demand, so prices are high. Washtucna is like you all most have to pay people to come there, much more live there. The only attraction near Washtucna is Polouse Falls, which almost got damed out of site.

Unions in some industries work really well. Some jobs they are a disaster. Other jobs they are neither a plus nor a minus.


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## Miket61 (Mar 1, 2008)

PedanticTurkey said:


> I never said the ee's actually get that, I said that's what it's paying for the labor.
> 
> My guess is that it's closer to 50.


Semantics. When someone states that a company "pays" a certain amount for an employee, it's generally understood to be the base salary (or possibly with a bonus) that the company actually pays to the employees.

I still stand by my $70K figure.


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## Miket61 (Mar 1, 2008)

Stringfellow said:


> Isn't it labor's job to try and get paid as much as possible? People like to act as though it is labor's fault the car companies are in trouble but last I looked management had to agree to labor's demands. Detroit is a failed enterprise because of poor management.


Unionized labor has the ability to strike. Not meeting their demands means a complete shutdown, with no revenue and no profit until things are settled. On the other hand, I'm not sure why the Big Three Automakers haven't figured out that there's not a whole lot of other places for the striking employees to go if they lost their jobs.



> If government would create decent pay and benefit standards there would be no need for unions. Unions gain power when labor is exploited. If everyone was paid a living wage and given decent benefits from the get go they would not feel the need to unionize. Plus, it would eliminate the high transactions costs of unions.


People should be paid according to what they contribute - in terms of the education and skills they're bringing to the job, and what they're actually doing. There will always be jobs that don't pay well because if they did the companies would lose money to have those positions.

There are a lot of companies where the employees feel no need to unionize because they're paid well. Unions have lost their relevance in many industries, and are an unnecessary expense in others.

I've only heard this from political commentators, but allegedly the Democratic Congress wants to put through a bill that would ban secret ballots for unionization votes. They claim that this will prevent intimidation by the employers, but it definitely allows intimidation by the unions.


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## PedanticTurkey (Jan 26, 2008)

Miket61 said:


> Semantics. When someone states that a company "pays" a certain amount for an employee, it's generally understood to be the base salary (or possibly with a bonus) that the company actually pays to the employees.


I agree. That's why I said it like that-- to draw emphasis on how much it costs to _actually_ employ these workers.


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## jbmcb (Sep 7, 2005)

I may be biased as I'm from Detroit, but, as much of a fan of the free market as I am, I think a "bailout" is a good idea here. 

Chrysler was in the same boat in the late 70's, got the secured loans, and paid them back with interest, successfully turning around and doing rather well until getting raped by Daimler. The domestics were doing pretty well before the collapse, they were successfully restructuring and have a slew of very nice, fuel efficient vehicles coming down the pipe within a couple of years.

The alternative is allow them to implode. They'll take out a good chunk of GDP with them, along with huge pension and health care funds, hundreds of dealership networks and thousands of suppliers. The liquidity markets are still hosed, so there will be little capital available to buy out the assets (EVERYBODY is hurting) Stock and bondholders will take huge hits. Welfare, Medicare and Medicaid rolls will swell. Parts will become scarce, as the foreign companies rely on the same suppliers. There will be far fewer vehicles available for purchase, so car prices will shoot up. This might take out a foreign car company as well. Also figure on a few more bank implosions. 

To put it in perspective:

Gross Revenue (Factors into GDP of the entire country)

GM - $181 Billion
Ford - $172 Billion
Chrysler - Figure around $60 Billion (they don't release figures, at last count it was $67B)
= $413 Billion

HP - $113 Billion
IBM - $99 Billion
Dell - $61 Billion
Microsoft - $60 Billion
Intel - $38 Billion
Apple - $32 Billion
AMD - $6 Billion
nVidia - $6 Billion
= $415 Billion

So, if the big three go under, imagine the economic impact of HP, IBM, Dell, Microsoft, Intel, Apple, AMD, and nVidia all going out of business at the same time.

In strict economic terms, a $45 billion secured loan for a few years is comparatively cheap.


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## PedanticTurkey (Jan 26, 2008)

Miket61 said:


> Semantics. When someone states that a company "pays" a certain amount for an employee, it's generally understood to be the base salary (or possibly with a bonus) that the company actually pays to the employees.
> 
> I still stand by my $70K figure.


Turns out the actual figure is about 58k, so I was closer.


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