Last August, the Times reprinted a story from the Washington Post. The headline was a grabber. “Top CEOs shift on corporate values.” Being a conservative who supports capitalism but who has long questioned corporate profit motives, I read on.
The article began, “A group representing the nation’s most powerful CEOs … abandoned the idea that companies must maximize profits for shareholders above all else, a long-held belief that advocates said boosted the returns of capitalism but detractors blamed for rising inequality and other social ills.” The CEOs agreed that “… business leaders should now commit to balancing the needs of shareholders with customers, employees, suppliers and local communities.”
Are you kidding me? Finally? Did the grossly overpaid captains of industry develop a conscience? Dare we hold our collective breaths for action instead of words? Hopefully the intervening silence that I’ve perceived (I may have missed further reports.) doesn’t portend the quiet death of a great idea.
Some of today’s corporate “values” are in drastic need of overhaul. Primary among them are the excessive, obscene amounts of money paid to high level corporate officers. Too many make far more than they need to live truly extravagant lifestyles. Sure, that’s relative — what’s extravagant to me may be considered poverty level to someone else. I get that, but how much is enough to live an extravagant life? Two million a year? Five? How many people do you know (or are aware of) who can’t live in reasonable comfort on $5 million a year?
Do they really need Ferraris and Maseratis? How about three homes on multiple continents or yachts with 40 foot “dinghies?” I have absolutely no problem with successful people living well, but there’s living well and there’s living to excess. I know, it’s all relative, but let’s be real.
Let’s examine today’s executives and what drives them, but first some background for perspective. My career was in retail banking. I was a regional branch administrator with responsibility for five offices before moving to back office operations. I might have let you into your safe deposit box, considered your loan request, analyzed your financials for a business loan, helped a teller settle, resolved customer complaints, helped a widow balance her checkbook, etc. I worked with all kinds of people — struggling young people just starting out and members of our board of directors. I also worked with the large egos of the bank’s fast-moving “new breed” of MBA’s.
My observations over the years have (I think) identified the major cause of income inequality. Some say greed, and that is not to be discounted, but I suspect it to be more of an ego issue. I call it “the mine’s bigger than yours syndrome.”
Too many corporate officers today compare and compete for the number of their personnel, the size of the budget they manage, their power over others, and let’s not forget take-home pay. A friend I’d known since Army days at “Fort Benning’s School for Boys” made a career of it and retired as a bird colonel at the Pentagon. At lunch one day, back in 1999, he mentioned the size of his budget and was curious about mine. That was the first time I’d noticed budgets used as an alleged “measure of success.” Since then I’ve found it to be commonplace.
Surely you get the picture. I don’t need to belabor the issue. I agree with the premise that corporate values need to change. The measure of a person’s value should be the contribution to the success of the company, budgets be damned. Too many executive salaries need to be chopped — not simply pared back. It sounds somewhat socialistic, but more of the corporate profits need to go to employees who are the backbone of the company. The disparity of incomes is unconscionable. Executive salaries have become so disproportionate that the application of the word obscene is appropriate.
And now a closing suggestion. Business should stop overcharging for their products/services. The drug industry has become the poster child for over-charging, but almost every business is involved. Banking is another example. Back in the day, a return check/overdraft fee was $5. (The process was manual.) Today, they take $25-30 or more. (The process is mostly automated.) As a former banker, I know that to be a rip-off. I fondly recall the early days at my first bank when a fair profit was considered good business.
Change is needed and we need to encourage those executives who agree. It will only start from the top. As for the corporate executives? We should be ready to cheer them should they proceed, and jeer them if it turns out that they were just blowin’ smoke. How about a 50% pay cut for starters?
Rick Blatchford writes from Mount Airy. Contact him at firstname.lastname@example.org