January 8, 2007--Corporate Types
I have quite a few friends who have labored for years in the business world. Most in middle management. I've worked mainly for universities and philanthropies--in the not-for-profit world.
Though I've arranged at times to get into trouble and have twice been told it might be good to seek employment elsewhere, almost everyone I know in the for-profit world has been buffeted and battered by reorganizations, mergers, "downsizings" (meaning they get fired), and frequent reassignment to different work groups and bosses who invariably make their work lives miserable and as a consequence make the rest of their lives tense, frustrating, and even unhealthy--they are thus sometimes literally working and worrying themselves to death.
So as someone who cares about them I have often asked, "Have you considered switching over to the non-profit sector? It's a great place to work. It's less pressured; often satisfying because you might even be lucky enough to do some good; and, like me, you might surprise yourself by discovering how much you can earn. Plus the benefits and long-term savings opportunities are more predictable and less vulnerable to executive whim and thievery than you have experienced in the business world.
They look at me as if I am from another planet and invariably say, "Well, that's probably good enough for you, but we're corporate types."
By that I take them to mean, one, that they are entrepreneurial (implying that I'm not; am only interested in low-risk, secure situations; and might even be lazy); two, that they are interested in rolling the dice to see if they can make the really big bucks; and, three, “Leave me alone--what do you know about the real world anyway.”
So in an attempt to learn about that real world I occasionally read the Wall Street Journal and, of course, the Business section of the NY Times.
Both recently have been full of stories about the forcing out of Bob Nardelli, CEO of Home Depot, and how outraged many HD shareholders feel about his $210 million dollar Golden Parachute.
Since that $210 mil sounds like Big Bucks to me I thought--maybe my corporate-type friends are on to something. So I read more and discovered that his deal was not performance-based. Quite the contrary. During Nardelli's tenure as CEO, HD has done worse and worse, letting their main competitor, Lowe, pretty much overtake them; and the decline in the value of HD stock reflects this--it is way down even in this rising market. (See linked NY Times story for the details.)
So how did Nardelli wind up doing so well personally? I thought in the real world corporate types make out when their businesses do well and they fare poorly when their companies lose money. Isn't that what capitalism is all about?
As a not-for-profit type, I was very confused until I read further. I had known about the Golden Parachute that retiring executives get as a reward for years of successful effort (of course those in the middle, my friends, if they manage to not get downsized or hang in there for 30 years, get the proverbial gold-plated watch), but I learned that CEOs now also get a Golden Handshake. This means that even before they come on board they get a guarantee as to what they'll receive both up front and at the end of their service, regardless of how well they and the company perform under their leadership--thus the $210 million to Nardelli.
So, I came to understand, that's how it now works in 21st century capitalist America. Big shots put nothing at risk and are rewarded regardless of what happens during their tenure.
Doesn't this contradict the major justification for true capitalism where you put money at risk and thus are entitled to the bulk of the profits, but if you fail you lose your shirt?
What then does this sound like to you? To me it sounds as if corporate types, if they are lucky in regard to Golden Handshakes and Parachutes, are more like civil servants or tenured faculty members than Adam Smith laissez-faire capitalists and are, in truth, more like security-seeking folks such as me in the unreal world.
I have a naive suggestion that might make things fairer--require Fortune-500 CEO types to put up, say, $10 million of their own money, money that would be placed at risk so that at the end of their time running the shop, depending on how they perform, it either would be returned with a proportionate bonus; or, if things didn't go well, they would lose it--just like in the good old days.
In the meantime, my TIAA statements are looking pretty good to me.
Though I've arranged at times to get into trouble and have twice been told it might be good to seek employment elsewhere, almost everyone I know in the for-profit world has been buffeted and battered by reorganizations, mergers, "downsizings" (meaning they get fired), and frequent reassignment to different work groups and bosses who invariably make their work lives miserable and as a consequence make the rest of their lives tense, frustrating, and even unhealthy--they are thus sometimes literally working and worrying themselves to death.
So as someone who cares about them I have often asked, "Have you considered switching over to the non-profit sector? It's a great place to work. It's less pressured; often satisfying because you might even be lucky enough to do some good; and, like me, you might surprise yourself by discovering how much you can earn. Plus the benefits and long-term savings opportunities are more predictable and less vulnerable to executive whim and thievery than you have experienced in the business world.
They look at me as if I am from another planet and invariably say, "Well, that's probably good enough for you, but we're corporate types."
By that I take them to mean, one, that they are entrepreneurial (implying that I'm not; am only interested in low-risk, secure situations; and might even be lazy); two, that they are interested in rolling the dice to see if they can make the really big bucks; and, three, “Leave me alone--what do you know about the real world anyway.”
So in an attempt to learn about that real world I occasionally read the Wall Street Journal and, of course, the Business section of the NY Times.
Both recently have been full of stories about the forcing out of Bob Nardelli, CEO of Home Depot, and how outraged many HD shareholders feel about his $210 million dollar Golden Parachute.
Since that $210 mil sounds like Big Bucks to me I thought--maybe my corporate-type friends are on to something. So I read more and discovered that his deal was not performance-based. Quite the contrary. During Nardelli's tenure as CEO, HD has done worse and worse, letting their main competitor, Lowe, pretty much overtake them; and the decline in the value of HD stock reflects this--it is way down even in this rising market. (See linked NY Times story for the details.)
So how did Nardelli wind up doing so well personally? I thought in the real world corporate types make out when their businesses do well and they fare poorly when their companies lose money. Isn't that what capitalism is all about?
As a not-for-profit type, I was very confused until I read further. I had known about the Golden Parachute that retiring executives get as a reward for years of successful effort (of course those in the middle, my friends, if they manage to not get downsized or hang in there for 30 years, get the proverbial gold-plated watch), but I learned that CEOs now also get a Golden Handshake. This means that even before they come on board they get a guarantee as to what they'll receive both up front and at the end of their service, regardless of how well they and the company perform under their leadership--thus the $210 million to Nardelli.
So, I came to understand, that's how it now works in 21st century capitalist America. Big shots put nothing at risk and are rewarded regardless of what happens during their tenure.
Doesn't this contradict the major justification for true capitalism where you put money at risk and thus are entitled to the bulk of the profits, but if you fail you lose your shirt?
What then does this sound like to you? To me it sounds as if corporate types, if they are lucky in regard to Golden Handshakes and Parachutes, are more like civil servants or tenured faculty members than Adam Smith laissez-faire capitalists and are, in truth, more like security-seeking folks such as me in the unreal world.
I have a naive suggestion that might make things fairer--require Fortune-500 CEO types to put up, say, $10 million of their own money, money that would be placed at risk so that at the end of their time running the shop, depending on how they perform, it either would be returned with a proportionate bonus; or, if things didn't go well, they would lose it--just like in the good old days.
In the meantime, my TIAA statements are looking pretty good to me.
posted by Steven Zwerling at
11:55 AM
0 Comments:
Post a Comment
Subscribe to Post Comments [Atom]
<< Home