CEO greed at its worse…a disgusting examination of who we really work for

January 23, 2009 · Posted in Featured, Finance, Financial Crisis, Government, People in the news, Personal Blogs, Politics, Rant, Social Change, Society, Things to think about, Thoughts on the economy 

The news is ghastly and literally makes you sick to your stomach.   Once again, a large corporate CEO has been exposed and details are coming forward concerning John Thain.  Thain is the recently ousted chief exec at Merrill Lynch after news of his extravagant spending has come to light.   We need people to lead and companies need quality CEOs to guide the culture and direction of its employees, but this is grounds for a free range turkey shoot.

I don’t know how to react to this but I’m almost forced to pull at heart strings because I don’t know how our system will change.  If you analyze what this man did and what potential repercussions it has on other people, it is completely and utterly criminal.  I mean in the same category as a masked gunman robbing a bank, robbing an elderly couple on the street, or simply robbing hard working human beings of their dignity.

He’s not the only one who has plundered corporate finances on meaningless and material objects.   Dennis Kozlowski, former CEO of Tyco, was jailed for his elaborate spending.  He once arranged a birthday party for his wife in a tropical location, hired Jimmy Buffet to perform, had a fountain with flowing vodka, waiters dressed in togas, and had a life size cake of his wife made with exploding candy breasts, no kidding.  He used company money.  At times, the stories are humorous but only so if the economy is good and people have jobs.

Considering the economic struggles of Americans right now – this hits home with me.  It hits home with me because my family has been impacted by the economy and we’ve been impacted by health issues.  This is not a sob story or an attempt to make someone feel sorry for another person, but rather a look at how this man’s actions actually have a trickle down effect to others – as if he actually pulled out the financial rug himself.

Here is a lay out of what he did and theoretically how it impacts the rest of us paupers:

Hires White House decorator guru Michael  Smith to decorate his corporate office at $800,000, which is about the same as sixteen Merrill Lynch analysts making $50,000 who were laid off when ML announced a 10% workforce reduction in 2008.

Area rugs valued at $131,000, which is roughly the value of a first time home for a young family which are now left with a mortgage payment and no income.

Guests chairs valued at $87,000, which equates to the salary of a highly skilled network administrator losing his IT job.

Wall sconces at $2700, which equates to about six months of the average COBRA payments for a laid off worker who has no other health coverage.

A credenza valued at $68,000 – another salaried employee – gone.

A $1400 trash can – again another mortgage payment- gone.

Do not forgot the $4 billion in executive bonuses which he paid out as Merrill Lynch was being purchased by Bank of America.    This was billions (billions!) of dollars handed out to individuals who didn’t even have the leadership capability to keep ML afloat.   BofA has just recently received $25 billion in bailout funds just prior to the take over of Merrill Lynch.  Thank god our government stepped in and helped with the financial burden caused by that huge ass $13,000 chandelier hanging in Thain’s office !

This rant could go on and on.  The damage has been done and it is most likely Thain will get a nice pension payout from BofA execs under the table unless it becomes public news – which if he does – it will.   If he does- it may be time for me to run naked down the street because apparently you can get away with anything in this country.  Hopefully, it does not happen and the man slithers back into his life outside of his corporate crime spree.   It’s nothing more than a crime spree considering Merrill Lynch was a sinking ship and pink slips were being handed out.

A CEO is hired based on his or her credentials and seemingly a perfect fit for the organization –  so they are compensated nicely.   The problem is that the methodology of “salary” is relative to all employees within the company.  The assembly line worker making $40,000 still wants to be paid if the company does not do well.  The same goes for the CEO as they don’t want their value depreciated by a falling stock price just as much as the worker in the office.   Hell, if you had $40 or $50 billion in stock value – you’d probably not even wink at someone walking in with a chair valued at more than a car.  Board of Directors are creating invincible, highly compensated money churning robots with no regard for those people who hold very fragile roles within the framework of a corporation.   It’s a reality, we work in an At Will employment environment which is dictated by the behavior of the market.  Good market= jobs, bad market= layoffs.   But, can the spending be justified when employees are being escorted out the door, salaries are lost, and families forced to suffer a little bit until something better comes along?  Many people never get that second chance to recover, but this slimy pig will.

This irresponsible corporate spending is virtually untouched by any current laws governing corporate responsibility.    How does this type of criminal “free” spending not fall under any Sarbanes Oxley guidelines?  There is no accounting oversight even though , based on the books, this spending looks certified.    The legislation apparently only concerns itself with whether or not the spending is reported as “complete” and “accurate”.     I do not understand how the SEC can’t hold the power to freeze the payment for outlandish office decor – is this not considered a “large” or “unusual” payment?

A road warrior consultant can’t spend over $30 on an out of town dinner, but John Thain can do this.

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Comments

One Response to “CEO greed at its worse…a disgusting examination of who we really work for”

  1. She on January 23rd, 2009 10:01 pm

    Well at least the BofA CEO has the right idea:

    NEW YORK (Reuters) — Kenneth Lewis, chief executive at Bank of America, has recommended that his board of directors not pay him a bonus for 2008, a difficult year for the largest bank in the United States.

    Lewis sent the eight employees directly underneath him an e-mail that said the decision was difficult, but that “we are a pay for performance company,” the Charlotte Observer reported.

    A Bank of America spokesman confirmed the contents of the e-mail.

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