Friday, March 14, 2008


Dear Chief Executive Officers,

We, the shareholders of your companies, have held an extraordinary Internet meeting. We know that government oversight is burdensome, and is after all, an intrusion into affairs that you believe is none of its business. Apparently, it gives our free market the appearance of being somewhat un-capitalistic. At least, that is what your reports have suggested. But, never mind that, . . . it has been brought to our attention that you have been less than humble demonstrating questionable behavior while we were voting for the next American Idol and being mesmerized by CNN’s earnest coverage of something terribly important, . . . can’t remember quite what it was, but it was really important. OK, perhaps humble isn’t the right term, but you know what we mean? No? Come on now, you know what we’re talking about. It’s those absolutely astronomical, insane, through-the-roof-of-common-sense pay packages that you paid yourselves. The “perk” indiscretions are only slightly less annoying, but still, they emanate fumes we would rather not be exposed to. Having given the whole situation much thought we have elected to set some guidelines. Guilt can become very debilitating. Trust us on this. So, for your benefit, here are some rules. Please accept them as benediction favorable to your long-term good health and stress fee comportment.

• First a reminder: This company is not yours. It is ours. You are employees.

• The Directors didn’t do a very good job of keeping an eye on your activities, but then why would they? They’re all your friends and half of them are getting this letter anyway since they’re also CEOs.

• Effective immediately, you will no longer be Chairman. None of you. Nada. That’s it. Finished. We just feel that this business of “reporting to yourself” just isn’t right. We’re still trying to figure out when this objectionable conversion took place. It used to be that the Chairman was, THE CHAIRMAN, but slowly you sneaky guys changed the game and made all of yourselves, “Chairman, CEO.” No more. Do you remember Marshall McLuhan asking, “if the temperature of your bath rises one degree every ten minutes, how does the bather know when to scream?” That’s about what happened here. The change invaded all boardrooms and no one noticed. So we’re screaming now.

• You will not appoint anyone to the Board of Directors. We don’t care what you think. In fact, we hope you don’t particularly like them. We’ll decide who sits on what Board. Tell your friends to get lost. Your job is to manage the company.

• Your compensation package will be comprised of salary and bonus. That’s it. NO OPTIONS. The bonus will be directly related to corporate objectives. Long term objectives. Not what brokers demand. You don’t have any clue about the stock markets so take your eyes off the stock fluctuations and pay attention to doing your job. If the company does well over the long term, and pays attention to its customers, it will succeed and we’ll be satisfied. Please quit crowing every time your stock price goes up. You have nothing to do with its level. NOTHING. You don’t work for the company’s brokerage firm, you work for us. Stop answering its phone calls. They can get the news and announcements from the Board, . . . the NEW Board.

• Stop believing your own press and stick to your knitting. Do what you were hired for, ...managing the company and its employees.

• The new Board of Directors will be responsible for establishing your targets. Don’t meet the goals set, and you’re out of here. On your way out don’t expect any absurd ‘sweetheart deals’ from the Directors sending you off with golden parachutes, they'll no longer be your friends.

• Composition of the Boards and appointment of Board members will be based on the anticipated, expected, and demonstrated level of independence of the individual candidate as well as dimension of ethos. We will make sure all members are capable of reading a financial statement. Then of course, we will absolutely make sure they can understand them. Here we’ll also look for individuals with very discerning senses capable of detecting transgressions. If we can, we would really love to find the capacity of perceiving the fetid essence of arrogant illusions or chimera. OK, that’s a little over the top, but we’re trying to make a point. We have not been happy, so pay attention, we’re not done.

• No more “Poison Pills” strictly benefiting senior management. How this egregious strategy found its way into corporate America is another one of those aberrations implemented while we were languishing in our warming baths. If there is going to be any benefiting from a takeover, feigned or otherwise, ALL shareholders and employees will benefit, not just a few, and you’ve already read our note above on golden parachutes. That means no golden parachutes as part of any poison pill deal. In any case, if there’s a potential take over on the horizon, we want in on it.

• Please don’t let us catch you getting any more newly issued shares on the latest hot deals from the company’s Wall Street brokers. The company’s employees don’t get such bennies and we don't either, so from now on, neither will you. It’s the broker’s way of “hooking” you, you fools. How else could you have been so stupid as to purchase those companies that had no value . . . for billions? Particularly those new ones based offshore that the company's brokers had positioned themselves in. Two part-time engineers in their mothers’ basements could have achieved more for you. Just stop it. It’s unbecoming. And the rationalization, “well, everyone else is doing it,” sounds downright morally bankrupt. Plus, you’ll feel guilty one day. We want you to sleep well. Kick-backs are just indecent. OK, so they’re also illegal, but just because you’ve been getting away with taking them doesn’t make them right. Enough already. We’ll talk to the government flacks who let you get away with this later.

• Please stick to the facts and provide some truth in all your future management reports. We no longer need detailed accounts of your risk management exploits and the more flavorful ingredients of your regulatory compliance or your disciplined approach to effective management. Give us the facts and clearly stated strategies, with less smoke. Our lungs can’t take it anymore and we’d rather you leave the ambivalent dithering pronouncements to those with more waffling experience like the experts at the Federal Reserve.

• Now, about those undeclared offshore bank accounts under dummy companies some of you feel are absolutely essential. We know it’s been really convenient to access that extra cash when you’re on holidays, and it’s very handy when you need to provide a loan to a really dear friend, but no more. Do that when you retire. If you get caught, it doesn’t look good for us, plus it’s just illegal. We’ll talk to the brokers as well and make sure they don’t stack your private offshore company accounts with shares of companies of no relevance to us. Just pay your taxes and stop whining.

• Consider this notice that we will be looking for related-party transactions. Some of you think it clever to sell goods and services to our company, from your private company. Yes, we mean the one owned by your spouse. Those inflated prices you charge our company are grossly excessive, but that's not really the point here is it? The vague accounting practices on this need tightening up, and while we will not hod our breaths, until then we will be paying closer attention to all such transactions.

• We don’t want to hear any more tantrums about your needing a private jet. Particularly one you want personally as a gift because you work so hard. We hear the new Bombardier Jet travels at Mach 1. We don’t care. Learn to make more use of video conferencing. That gets you to Europe instantly. Much faster and so much more cost effective than Mach 1. Think of the gas you’re saving.

• You’re not moving the company headquarters offshore. Please don’t pretend that you want to be closer to your customers. Everyone understands how important it is to want be close to your own money. We realize the prying eyes of the IRS and other regulatory bodies is uncomfortable. But we are the shareholders and that is why we want headquarters to stay here, so NO moving vans.

• Consider this notice that we want you to demonstrate some ethics while managing the company. Treat all employees as human beings, as you would want to be treated. That includes those in foreign countries. If slave labor isn’t right here, it’s not right anywhere.

• While we’re dealing with ethics, could you pay attention to the pollution of water and air being unnaturally inflicted by corporate facilities and factories, here and abroad? Just a little. We’d feel so much better, and so would you.

• Show some decency and common sense, remembering where you live and the freedoms you enjoy, when treating with foreign governments, or foreign companies owned by foreign governments. Any of them. Placing your country at risk, or exposing trade secrets as some have done, particularly those technologies sensitive to your own country’s well being is, well, do we need to say it? Treacherous, and some have even called it, treasonous. By any other name this disloyalty stinks.

• Audit Committees will report to the newly independent Board of Directors. Not you. Sorry. This is just too personal. We have to take this one away from you, completely. It’s the price of no longer being Chairman AND CEO. And one more thing, NO Board Directors on the Audit Committee. Members will all be outsiders. Don’t ask why, that would be insulting to your intelligence. If good winds prevail and we’re extremely lucky, we’ll find a few Audit Committee members who will surprise us and actually be able to “smell” problems. Glory be that day. A member who can detect any delicate allusions of malfeasance and distinguish the subtle indiscretions, or discrepancies, insinuated ever so elegantly into the statements, well, that’s a real find. For that, we’ll pay even more than what you’re getting, . . . just kidding. Yes, we will make sure such capability also sits on the Board of Directors. Please ensure that any and all documentation provided to any outside accountants and auditors are also made available to the committee, . . . just because. All original Audit Committee reports will be provided to the Board of Directors first and management second. Why? Hmmm . . . let’s see, just because. Sounds strange? Excellent. Now listen up, one more thing.

• If something goes sideways on the path to candor we’ll accept the Audit Committee’s responsibility. Wrong again. No more passing the buck, tag you’re it.

• The recent demands made by the SEC requiring better disclosure on executive pay in proxy statements may have provided that distinguished and venerable body with a degree of self satisfaction and image polish. However, the requirement was and is, let’s be delicate here, moronic. It accomplishes NOTHING. This after-the-fact-reporting is intended to accomplish what exactly? Make you feel guilty for standing neck deep in green stuff?

• Please assume that any financial reports presented to the Board or issued to shareholders containing financial statements audited by one of the big four will be considered suspect. A few of us weren’t born yesterday and think that just maybe, an accounting firm that also does the audit, is well, let’s see, it’s exactly like a CEO reporting to let’s say, the CEO. What? Not funny? Exactly. We don’t trust them. We would rather have Uncle Bob do the books and have Auntie Irene run the audit. At least they’re not likely to risk the house on cooking something that leaves a trail of perplexing puzzles. Directors have been effectively bamboozled long enough. Size of these accounting auditors concentrated way too much power to the hands of too few. Pleadings to the contrary like, “we’re improving our methodology,” are just dumb. What also rubs us strange is that these guys also audit your brokers. An auditor should be just that. AN AUDITOR. Just suck it up. We expect some ethics and integrity, and we’ll do what we have to do to get it.

• Although it is too much to expect a cultural shift, though we’ll keep dreaming, we are prepared to give you some room for latitude on integrity. Oops. Not really, we’re just kidding.

• One more thing, did we already say that? . . . For those CEO’s of the companies you originally founded. We don’t care about that either. The bad news is, you’re now an employee, not an entrepreneur. The good news is, you’re employed. Once you go “public” and you have tapped into public money, you’ve leveraged your original asset a multiple higher than the number of years you’ve lived, so be grateful. Infinitely grateful. You got lucky. Good for you. Now pay attention to the above precepts. They apply to you just as much as they do to any other CEO. An employee is an employee. If you don’t like it, buy back the shares and go private.

We may not be the arbiters of good taste but we will attempt to be arbiters of good behavior. Perhaps on occasion we would enjoy finding ethical conduct demonstrating common sense and sensitivity to fellow human beings. We will trust that such sentiment finds widespread encouragement. Nevertheless, we’ll be watching. All the best in your new job.

Very Sincerely,


  1. Awsome post.

    Who are you really?

  2. I agree, great post. I'm sure a conspiracy of silence surrounds most of the higehr echelons when it come sto ethics. Make a noise and you're out (as apparently happened with Lehman bros, to their misfortune, or rather their shareholders' misfortune)

    I also think you could add in a point about distributing other products/practices that are morally questionable in shareholders' eyes through THEIR company without consultation. For instance the flood of filth on music videos and TV that I doubt pensioners (generally the owners) would agree to being responsible for.

    To be fair this isn't really a popular point of good governance that gets published a lot so I suppose you couldn't expect the CEo to give a rats ass about what shareholders think on this.

  3. Great post. There are some real gems in this article.

    Can I send it to Lehman Bros.? Nevermind... too late.

  4. Very nicely said. The CEOs and their cohorts have acted like feudal lords for far too long. If this new feudalism is allowed to continue we will accelerate instead of reverse the slide into a new "Dark Age".

  5. Absolutely right on the mark.

    All shareholders should read and forward this post.

    The feudal lords and their egos need some oversights.

  6. Hits the nail right on the head!


  7. A CEO needs to follow these rules in order to have a better 21st century corporation. Not a Classical Management 20th to 12th century corporation. The rules of business management have changed.