Friday, February 06, 2009

The five-hundred thousand a year men

During World War I and World War II, Woodrow Wilson and FDR used "dollar-a-year-men", captains of industry who worked for the government for the symbolic amount of $1 a year. Maybe these guys were still getting paid by their companies. Or maybe they were all wealthy enough that they could afford to work for free for the duration.

I've been thinking about the "dollar-a-year-men" because the name Lee Iacocca keeps coming up in the bailout stories. When Chrysler was bailed out in the grand-daddy of all bailouts (age-wise, although not magnitude-wise), Iacocca (their CEO) elected to take one dollar as his salary.

Do we really think that the Iacoccas had to start using powdered milk to make the whole milk last longer, or swapped out expensive solid white tuna for the cheaper shredded dark stuff? Do we think that Lee had to start buying his suits at Anderson-Little? Do we think that the family vacation was a day-trip to an amusement park? That his kids had to set their sights on community college? No, we don't.

He could clearly afford to live off his wealth (which I'm guessing was no where near the wealth, even adjusting for inflation, that today's corporate machers have).

But there is something heartening about a CEO who steps forth and does this - especially when you consider that Chrysler did not get f'ed up on Iacocca's watch: he was the turn-around guy.

Taking a buck a year speaks to leadership, accountability, and to the recognition that times are tough. It speaks to the power of symbolic acts to move us.

Have I been missing something, or have any of the bank or other bailout boyos offered us this gesture, or any sort of symbolic mea culpa?

Perhaps some of them have, and I missed it with the focus on $35,000 commodes on legs that was part of John Thain of Merrill Lynch's redecorating scheme, Citi's $42 million corporate jet upgrades, and Merrill's $4B bonus payouts.

Instead, we're hearing that it's unfair, unworkable, and unAmerican to expect senior bank executives - on whose watch THIS ALL HAPPENED - to work for a paltry $500K. We're hearing how draconian the provision is that bonuses be in restricted stock that can't be flipped until the government is repaid.

We're led to believe that these guys may just bail out rather than accept such insulting and measly salaries. ("I spit on this paycheck. Ptui.")

I actually am somewhat in the middle on whether restricting pay in this way is such an unalloyed good. And $500K - even though it's an order of magnitude higher than the average American's earnings - is not a lot of compensation for someone running a major financial institution, even one that has been so nearly run into the ground that it requires the personal, exceptional one-on-one, bespoke government assistance plan that the salary restrictions apply to.

Still, these guys have pretty much brought it on themselves by their bad decisions, wretchedly excess behavior, and lack of accountability. (Just how can a company that's lost $15B lay out bonuses worth $4B? Was there really $4B worth of bonus-worthy performance in Merrill Lynch last year? What do you think?)

You'd think that at least one of these fellows - and forgive me if I'm being sexist here, but I don't think that any of the institutions in question are headed up by women - would have had the good sense to come forth and announce that he couldn't justify a bonus this year for himself and his top executives. That he would be taking no salary for the duration of however long it was going to take to get his institution un-f'ed up.

For crying out loud, these guys have been raking it in for years.

And while they were at it, you'd think that one of them would have had the god sense to declare that there would be no spending on things that might cause the tax-payer public to raise an eyebrow.

I'm not talking about a nice, expensive dinner with clients here. I'm talking about those 'hey, let's jet off to Bora-Bora on the corporate jet for a weekend of drinking champagne out of the high-heeled slippers of dancing girls' - a mythical example (maybe) but pretty much, for most of us, in the same league as the $35K commode on legs.

(Like hard core pornography, wretched excess is hard to define, but I know it when I see it.)

It's a matter of the CEO's using their judgement. 

And if they don't have ay judgement to use, where are their advisors? Where are the investor relations, corporate communications, HR execs, or executive assistants to take their boss aside and say, "In the current environment, if you do this, you will appear indifferent, arrogant, callous, greedy, and clueless. And while I, of course, know that you are  supremely entitled to a $35K commode on legs, our shareholders, employees, and now - damnably and regrettably - the general, tax-paying public, will interpret this badly."

While I am back and forth on the wisdom (and level - although there are those stock set-asides), I am completely with Mr. Obama on this:

"This is America," the president declared at the White House. "We don't disparage wealth. We don't begrudge anybody for achieving success. And we believe success should be rewarded. But what gets people upset -- and rightfully so -- are executives being rewarded for failure, especially when those rewards are subsidized by U.S. taxpayers." (Source: Wall Street Journal Online - may require subscription to access.)

Okay, sometimes I have been guilty of disparaging wealth- but only when it's deployed frivolously, okay?

And I do not believe that the CEO should be compensated with a bank teller's wages.

Someone running a ka-billion financial institution is working and worrying long, hard hours. They have had to work long and hard to get where they are. They've put themselves out there. They've taken risks.

I'm delighted that there are people with enough wealth to generously support the arts, social service institutions, medical facilities and health programs, environmental causes, and education.  (This is one of the reasons why Bernie Madoff's admitted crimes are so heinous: he stole do-gooder money.)

But enough is enough.

While I may not necessarily agree with everything about the bailout pay restrictions, I can't say I'm sorry to see these guys hit in what is apparently the only place that where they have any sensitivity whatsoever.

1 comment:

katrog said...

Let them whine! Let them eat McDonald's! Let them go find other jobs! Do they seriously think there is a market for overpaid financial CEO's who have driven their institutions into the crapper, brought the financial system to the brink of collapse, and done a lot of social harm to boot? It reminds me of a line from an e.e.cummings poem--something to the effect that "there's a hell of a good universe next door--let's go!"