- The Washington Times - Sunday, February 1, 2009



From the Roman slave rebellions, on to the English civil wars, the American and French Revolutions, and on to the Russian Revolution and anti-colonial rebellions, people who have had enough of excesses, greed, and oppression took action into their own hands. We can only hope that American shareholders and Congress do the same - with effective but less violent results - in rising up against the excesses and greed (and even a bit of oppression) exhibited by far too many results-challenged corporate executives with their own salaries, bonuses, and golden parachutes. Some corporate bigwigs who have incurred barrels of red ink on their books, and in some cases pleaded for taxpayer bailouts, are hauling off many millions of dollars in bonuses or severances.

Take Wall Street (please). Despite managing to rack up more than $35 billion in losses at their brokerage units alone, helping to throw the economy into crisis, managers at Wall Street financial companies collected an estimated $18.4 billion in bonuses for 2008, the sixth-largest haul on record, according to the New York State comptroller. The figure excludes stock-option awards that could make the figure even higher. Why should failing financial firms that have accepted government bailout money pay any bonus at all? The lame excuse that bonuses help retain “good” employees is fatuous. Tens of thousands of presumably innocent, hardworking financial employees were thrown out of work on these “good” managers’ watch; the reward for “good” managers of distressed companies should be keeping their jobs. They’re unlikely to be snatched away to another job in this shrinking job market.

Many corporate executives outside the financial industry also enjoyed fat bonuses in 2008, even as the U.S. economy shed 2.6 million jobs. Equilar, the compensation research firm, found that the average performance-based bonuses for top executives, other than CEOs, at 132 companies with revenues above $1 billion increased by 14 percent, to $265,594, last fiscal year.

President Obama was totally justified late last week in branding this conduct “the height of irresponsibility. It’s shameful.” He correctly noted that “there will be a time for them to make profits, and there will be a time for them to get bonuses. Now’s not that time.” This isn’t populist political palaver; it’s terse truthful talk.

The executive compensation system is clearly broken in some cases. Boards of directors have been far too chummy with executives, dissident stockholders are marginalized in their complaints, and some CEOs have acted either in their personal demeanor or corporate suzerainty like Roman emperors (think Tyco’s Dennis Kozlowski), French kings (think WorldCom’s Bernie Ebbers), and Russian czars (think Enron’s Ken Lay). The CEOs of the Big 3 automakers who flew to Washington in private jets to testify on bailout money, or troubled Citicorp’s plans to buy a private jet were just irritating actions of minor consequence in themselves; the collective actions of so many poor-performing business titans and public corporations are an arrogance that ultimately can cause loss of faith in the free enterprise system.

Few editorial pages are as pro-business as we are. That pro-business tendency is predicated upon the premise that what’s good for the country are strong, ethical business practices, not - to paraphrase what General Motors CEO Charles Wilson was famously, and erroneously, described as saying at his 1953 confirmation hearing to be secretary of defense - that what’s good for business is good for the country. Besides, there’s nothing good for business, or capitalism, or the nation, when practices involve greed and excesses.

With the economy tanking and millions of Americans out of work, it is revolting for poorly performing companies and their poorly performing executives to put Marie Antoinette to shame with their in-your-face “let them eat cake” approach to executive compensation. Revolting is just what should happen in Congress, at administrative and regulatory agencies, with shareholders, and among the public at large in view of this sordidness (the revolters must guard against the “cure” becoming worse than the disease). Shame on those bad-apple rapacious business heads who spoil the whole business barrel. Off with these heads (figuratively). America and American business deserve far better.

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