Many CEOs pursue the four Ps: pay, power, benefits, and prestige rather than
than the benefits for the company.
Recently, there are more and more CEOs falling from grace. In the United States, forced
Departures accounted for 39% of CEO departures in 2002 versus 25% in 2001, according to
Boaz Allen Hamilton. In 2002, Enron chairman Ken Lay, Tyco boss Dennis
Kozlowski, Qwest’s Joe Nacchio, Worldcom’s Bernie Ebbers. The year 2003 saw the
Departure of CEOs of Raytheon, Kmart, Spiegel, Scherling Plow, Motorola, Freddie
Macs, Boeings, Americans, etc.
Agence France-Presse (AFP) on April 13, 2004 reported that Professor David Yermack of
New York University’s Stern School of Business found that the average shareholder earns
underperforming market benchmarks in companies where the boss flies by fancy
corporate jets. In the study, “Flights of Fancy: Corporate Jets, CEO Perquisites and
Lower returns to shareholders,” said Professor Yermack: “The central result of this study
is that the CEO’s personal use of company aircraft is associated with serious and significant
poor performance of their employers’ stocks…. Company stock prices fall an average of 2
percent around the date of initial disclosure of the use of the corporate aircraft.
Some of the CEOs may not be justifiably fired as the economy worsens without
their faults, but they were held accountable. Yet the days of fat cats running
Corporations are gone.
Uncontrolled and unnecessary costs destroy companies. If your competitor has a limo and
you don’t, you’re already winning. She has a leaky bucket. There are six self-made.
billionaires. And all of them were models of simplicity and prudence in personal aggrandizement.
In 1991, Wal-Mart founder Sam Walton was driving an eight-year-old red Ford pickup. Hears
he was always looking for his own coffee. As president of EDS, Ross Perot paid himself $70,000 per
year. However, when Perot sold EDS to General Motors, the president of General
Motors, Perot’s new boss, was earning a $2.4 million salary plus bonuses. Finally, he paid Perot
$2.5 billion to disappear because GM execs were embarrassed by folksy Perot,
that didn’t demand a high salary, a flashy office, or specially tuned cars. david packard
he never had a closed office before leaving Hewlett-Packard to work for the government. invoice
Microsoft’s Gates often rode the coach on the planes, until eventually they got so big they ran their
own fleet of aircraft. Warren Buffet manages the billions and trillions of Berkshire Hathaway
with a staff of 24. When they have lunch together, it’s McDonald’s. Warren still stayed in the
same house he bought thirty years ago and at a salary of $100,000 per
year. Ingvar Kamprad, the founder of Ikea, takes the company bus to his stores.
In fact, examples of executive abuse dominated the news during 2002. Many Enron
employees were laid off while top executives used $200,000 to finance their luxury box at
the former called Enron Field. Thought founded on the innovative idea of the snapshot
photography, Polaroid management failed to save the company from the shift to digital technology
cameras. Polaroid reportedly canceled health care benefits for company retirees in
following his Chapter 11 filing. However, management reportedly requested the
bankruptcy court to obtain permission to dole out approximately $19 million in bonds to hold the key
executives leaving. Webvan is another example. could not compete against
traditional supermarkets with their online shopping and home delivery services. Before that
ceased operations, the company reportedly agreed to pay its resigning CEO, George
Shaheen, $375,000 per year for life, though Webvan stock price crashed 99
percent during his term.
Bankrupt Kmart authorized payments of $362,000 a month in retirement benefits
some 242 of its executives. Kmart’s creditors to whom Kmart owed $6 billion
protested before a Chicago bankruptcy judge.
LA Times writer John Balzar observed that creditors and stockholders aren’t the only ones
those infuriated by the seemingly arrogant attitudes of America’s corporate giants.
“Consumers are angry, and some are declaring a little war against the powerful corporation,
against shenanigans, double dealing, get-rich-quick schemes, fraud, self-interest
deals.” Those investors felt robbed when they saw their
retirement savings dwindled.
In the United States, CEO compensation increased 1,000% in three decades, reaching 500 times
the wage of the average worker. However, they are hungry for more. Martha Stuart of the
ImClone System ruled out the US$17,000 cost of a vacation for his company. dennis
Kozlowski spent US$15,000 on a “dog umbrella stand” and US$6,000 on a shower curtain.
John Rigas spent US$20,000 of Adelphia shareholder funds on a Christmas tree. Tea
the list of corporate excesses goes on and on.
CEOs who live “fat cat” lifestyles using corporate funds should be slaughtered and
flayed