• You’re Fired. Now, Where’s My Raise?

Today Microsoft announced a shaving of 5,000 jobs internally and a reduction of thousands of external jobs with its contractors or suppliers. This is rationalized by “economic conditions.” Did we read anything about wholesale compensation cutbacks? Not much.

This is not a condemnation of Microsoft, but a statement on Executive responsibility and attitude. Management in companies across this continent, particularly senior management, holds meetings on how and where to cut back roll calls, and diminish hard, non-discretionary costs weighing on the cash flow statements. The purpose of these thousands of meetings in fluorescence filled rooms is first, to save the most senior jobs, and second, to save the most senior jobs. Why? Because they can. Why? Because they’re more senior than the rest. If you are a senior executive in this economic climate you would have to commit evident fraud to get fired. The economy gives you all the rationalization for failure you will ever need, “It’s not my fault, and the economy sucks.”

None of these meetings are discussing the extermination of options from compensation packages. Starting with the CEO on down the layers of each corporate pyramid, each individual has been convinced that options are the way to riches. Middle and lower ranks dream of the day when they will get a taste. Wall Street pulled all of corporate America into its game. Brokerages influence companies through their prejudice of CEOs and Boards of Directors, and as well as through their control of the public trading markets of the companies these executives manage. Employee options are one key to that control. There are other schemes used to control CEOs, however, for the manipulation of the senior crowd, options are a perfect and very effective tool. Corporately, options can be argued to be effective in up-markets. The effectiveness argument looses fervency when options are under water, as is the case for many in the markets we are now experiencing. So why is no one arguing against them as an effective tool in the motivation arsenal? Options don’t work in a down turn. So why use them? DON’T.

Employees, including CEOs, should not be preoccupied with stock markets. Doing their jobs effectively will strengthen the company and that will, or should, satisfy shareholders. Forget the broker. This employee option business is a Wall Street subterfuge and everyone is familiar with the refrains that attempt to legitimize the practice. Any executive hiring a consultant who sings the “equity compensation” song to his board or to the shareholders, should be fired. Their rhyming couplet about, “aligning executive interest with shareholder interest,” is a fraud. Throw them out.

Middle America has been lulled into accepting that those at the top of the corporate food chain know something it doesn’t. Middle America has come to accept that the lofty layer of American capitalism somehow deserves hundreds of millions in annual compensation. The practice should be stopped and all shareholders should demand an end to it. The senior ladder of success should be compensated with salaries and bonuses structured around objectives intended on building the business. Objectives such as growth and profitability. You don’t need a complex algorithm to establish actuals against quotas for sales or margins that could be employed to dictate an employee’s compensation.

None of the above mentioned corporate meetings are having serious discussions on ethics, moral standards, sustaining the human community, or sustaining jobs through the recession by dramatic overall cuts in salaries and bonuses. Have any companies announced immediate 20% pay cuts to the top half of the employee spectrum? Is anyone making over $100,000 in total compensation getting chopped by 20%? Is anyone making over $250,000 getting a 25% haircut? As for anyone taking over $500,000, … hmm, OK, for you maybe we’ll, hang on, ... let’s talk about a loan back to the company, could we? You get the point. Implement major cut backs in salaries and bonuses, and save jobs. You can’t save all, but save as many as humanly possible. This will require an attitude shift in senior management.

Such a strategy would allow people to continue supporting their families, buy food, make car loan payments, and pay their rents or mortgages. I’m not suggesting that corporate America turn into Sally Ann, however, the whole economy needs creativity injected into its limbs if it is to by-pass a depression. Don’t keep positions that are not required or redundant, but most of the employees now being fired were hired for good reason. As markets shrink so too will payroll, but in these times of bailouts, the escalated compensations of senior staffs need revisiting. These senior levels must take compensation diet pills. Big ones. Such therapy can only be prescribed by those taking home the largest piece of the pie. All CEOs should make a visible and public effort to save the rank and file.

The economy does not need to read about any more cuts in work forces, as 3 million already lost their jobs last year, but it really needs to read that you, the CEOs, implemented drastic cuts in compensation. Even if you personally take one cut of $30,000 to save one job, that is a move in the right direction. Each company can do its part. The positive PR will do wonders for your frame of mind, for your company, and most importantly, you will be forever grateful. Really.

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• LETTER TO CEOs OF FORTUNE 1000 COs

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,
JAMES RAIDER

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