Keeping Up Appearances
It's "Business as Usual" for the Corporate Elite
For the corporate elite, it seems to be "business as usual" until they get fired or their business goes under. So let's examine each of these alleged excesses.
1) Office remodeling: When recently fired CEO John Thain of Merrill Lynch was pressed about what was wrong with the office of his predecessor, Stanley O'Neal? (Thain had it undergo a $1 million remodeling.), he replied:
"Well - his office was very different - than - the - the general d�cor of - Merrill's offices. It really would have been - very difficult - for - me to use it in the form that it was in."
Well, Thain has a point. His office is akin to the "throne room". Styrofoam just won't do
2) Billions of dollar in bonuses: We should not lose sight of the fact that not everyone at the troubled Wall Street businesses contributed to their downfall. I believe that the investment bankers at Lehman Brothers were able to find other jobs. Certainly those who overdid it with derivatives and credit-default swaps don't deserve a bonus, and should probably be fired.
3) Use of corporate jets: Sometimes this can be very cost-efficient. as I believe is the case for the CEO's of the Automotive "Big Three" They have no time to waste, so speed and convenience in getting places is crucial for them.
4) Lavish retreats: Well, everyone needs a vacation once in a while, but maybe not a lavish one.
My take on all this: I find the large payouts to CEOs, even in bad times for a firm, to be excessive and repulsive. The emphasis on keeping the stock price up has thwarted long-term planning and research.
Silicon Valley seems to have a better model. Google, more than anyone, acknowledges the role of academic research in the growth and success, and now excess, of the Internet.
Which big firms finance basic research in mathematics, physics and theoretical computer science anymore? Not many, or at least not to a great extent. Government should not have to be the only source of funds. Firms that "cash in" on the results of basic research should help keep it going. But I digress.
As for what's happening now, with all the bailouts and loans. This isn't socialism, it's taxpayer subsidized capitalism. So party on, you captains of finance and industry!
Published by mathpol
retired math professor. longtime political junkie. campaigned for Henry Wallace for President at age of seven. View profile
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2 Comments
Post a CommentThank you. I doubt that the CEO rides alone. Also, no one knows who the CEO of IKEA is or what he looks like.
As for #3, given the HUGE cost of maintaining private planes, this might not be necessary. IKEA's CEO rides coach - - maybe some can learn from his example and see what it's like to be one of the "little people". Good article.