Category: Business Ethics

Some random thoughts about the economy and ethics today.

1. President Obama took a small but welcome step toward curtailing corporate abuses yesterday, restricting CEO pay for those companies taking government bailouts to a “measly” half a million dollars. Tom Peters, author of In Search of Excellence, endorsed the idea but said it didn’t go far enough, noting that the myth of the irreplaceable CEO was just that, a myth. He’d like to max out CEO pay at the same level a top general or admiral receives. Not a bad idea!

2. For those CEOs who can’t imagine living on that amount, I assure you that it’s possible to live comfortably, even luxuriously, on far less. I remember when $10,000 per year felt like an enormous sum of money to me. I actually had a job in New York City as recently as 1980 that paid $82 per week of hard work–that was part of the “research phase” for my e-book on having fun cheaply, The Penny-Pinching Hedonist: How to Live Like Royalty with a Peasant’s Pocketbook. In fact, if you’re a CEO who finds this new “limited” income a hardship, contact me. I’ll give you a free copy of the e-book, and the $8.50 you save will be your first step toward frugality. ;-). It’ll save the typical reader between $500-$2000 per year. In your case, it might save you a million or so.

3. Talk about sleeping at the switch! Whistleblower Harry Markopolos not only claims (and, I understand, documented during his recent testimony) that he gave the Securities and Exchange Commission (SEC) enough info to break up Bernie Madoff’s Ponzi scheme as far back as 2000, but also laid it out for a Wall Street Journal reporter who was interested, but couldn’t get the go-ahead from brass, back in 2005. Markopolos had some pretty harsh words for the SEC:

I gift wrapped and delivered the largest Ponzi scheme in history to them and some how they couldn’t be bothered to conduct a thorough and proper investigation because they were too busy on matters of higher priority.

4. The left-of-center political action group MoveOn is jumping into the fray with a petition opposing the use of bailout dollars for executive bonuses. This is from the message you can send to friends after signing, which you can do at https://pol.moveon.org/bonus/?r_by=15503-5426570-ynLMRyx&rc=comment_paste:

Did you hear that Wall Street gave out $18.4 billion in bonuses in 2008? $18.4 billion to the people who crippled our economy with their recklessness and greed and then took $700 billion of our money. Outrageous, right?

Not only did I sign, but I feel any company that took our tax money and then paid even a dollar in bonuses should be made to pay it back. Just because the Bush administration was too incompetent to specify how this money was spent does not mean we have to tolerate this outrage. And forgive me for being out of touch, but I always thought bonuses were something you earn through stellar performance–not for running your company, and the economy, into the ground.

When I found out the other day that no sooner had insurance giant AIG accepted a huge bailout from the taxpayers–that’s us–that they had spent $400,000 on a posh weeklong retreat at the St. Regis Monarch Beach, a very expensive resort, including a $10,000 tab at the bar, and $24,400 on spa and salon services, I was too steamed to even blog about it. I knew that if I let my fingers loose on this one, I’d probably say something I’d regret. So I kept my mouth shut.

Today, I found out that they’d planned to have a similar retreat a week later, at the Ritz-Carlton in Half Moon Bay, California, but this one they canceled–not because they’ve come to their senses, but because of the very understandable public backlash about the first retreat. Meanwhile, they’ve got their hand at the public trough, asking for another $37.8 billion. And they have the nerve to complain about cancellation fees!

“We’ll certainly lose some money in cancellation fees, but it’s just beyond the point of trying to conduct these meetings given the uncertainty that’s taking place.”

Yes, there are usually cancellation fees when you cancel a large event at the last minute. These things are booked months in advance and the hotels can’t resell all that space on that kind of timeframe. But still–you pay the fees, grit your teeth, and at least pretend that you care enough about the taxpayers who are bailing you out that you don’t go on expensive and totally unnecessary junkets. And you sure as anything don’t stick the public with your bills at the bars and spas; those should be borne by the individuals consuming the services.

Rooms at these hotels range from $400 to $1200 per night. The government should demand repayment of every penny spent at the St. Regis on this pig-in-a-poke. Can you imagine what Limbaugh and the rest would say if they found a “welfare queen” enjoying this kind of high life at government expense? Well, when corporate executives are the ones getting welfare, the standards should be similar.

You want to run up big bills to reward your high performers? Fine–but don’t ask us to pay for it.