Sunday, March 9, 2008


Peculiar and disquieting sensations vibrate as you observe members of Congress affably probe Captains of Industry. Well rehearsed executives blow back the smoke of confounding justifications at the confused and flustered countenances of congressmen. You stare, disbelieving, as rationalizations of gross abuse are met with timid and ambiguous commentary. There is no valid explanation for the fact that some executives are taking, not 10, not 50, not even 100, but up to 22,000 times the incomes of bottom rung employees. Occasionally your head involuntarily shakes as the prattle of outright support from an interrogator recalls memories of a bad meal.

Why so much reticence to take a stand or state the obvious? Could we not be treated to just a little taste of some indignance? Not much, just a little. No judicial canons have been breached by these well dressed and pressed managers, but the laws of common sense and basic human reason have been thrashed by narcissistic misanthropy.

Some CEOs have paid themselves even higher “wages” reaching stratospheric billion dollar amounts. The average is over the 600 multiple. These are employees we’re talking about. Not kings or lucky entrepreneurs managing private companies, but simply employees of public entities.

What rational and independent mind condones average income increases of 50% from one year to the next for CEO’s of the top 500 U.S. companies? I’ve never met a CEO or other senior executive who didn’t think he deserved what he was paid. Not one.

Whether or not the executives’ companies were directly related to current burnouts in the financial sector is not relevant, although scapegoats are sought wherever they can be found. The point, I believe, is that there has been too broad abuse right across the board.

One theme we have been exposed to in the rationalization movement is, “I took risks.” We all admire risk takers. An entrepreneur putting everything he or she owns at risk to go for the gusto … that’s a risk. Corporate managers are generally a risk adverse lot. They play with other people’s money and that game is SAFE. The other explanation of “hard work” as defense for excessive incomes is rather disingenuous. The life shortening and oppressive labor of a coal miner in Apalachia, is hard work. A soldier in full battle gear sustaining 115 degree temperatures as he or she battles the relentless assault of enemy fire, is hard work. Being hired through a head hunting firm to slide into a multi-million dollar position … not so much. That doesn’t mean there aren’t stresses attached to running large corporations. Ample pay will reward sustaining such stress, and the beautiful part is that there is no downside. Ask the soldier about down-side. CEO failure seems to be rewarded just as well. Abusive compensation is simply that … abusive. The boards of directors are to blame but there is no law against incompetence, lack of foresight or basic indolence.

Defenders of this abuse claim that anyone who has a problem with the existing system is “anti business,” “un-American,” “left-wing,” “how else can we attract competent management” and the always effective, “this is the way of the free market capitalist system.” 
No it isn't.
 I’m a staunch capitalist and I find this exploitation distasteful. I also wish we could find more intellectually stimulating arguments supporting the excess. There are none. It is a simple cash grab. How hard is it to execute the take down when you've stacked the board of directors with intimates who have everything to gain by making sure you dip in the well. The accomplices know you will applaud from the warm seats on their boards when its their turn. This is more than just abusive.
 To ensure the back door is covered, boards of directors delegate executive compensation to personnel and compensation committees. These committees do the board’s bidding. Only occasionally do some get burned as scapegoats. Some head hunting firms also play their roles. They get hired to further confirm and support sky rocketing senior executive pay beyond reason. NO ONE is accountable. Why? Because EVERYBODY's doing it who is in a position to do so. So Congress sits, seemingly emasculated, either willingly or from sheer impotence.
Laws? Maybe not, but perhaps a few rules?

How about returning to compensation effectively tied to corporate objectives established with lavish doses of common sense? How about some discerning understanding and a little less selfishness?


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