Yesterday a few bits of information fell unbidden into my left ear (the good one) and began sloshing about in my unconscious brain. The unsavory mix began to foment and fester, so much so that I found myself awake for most of last night, stewing and steaming and, in short, really pissing me off. What confluence of knowledge and insomnia could possibly bring a mild-mannered woman such as myself to the point of becoming a raving maniac? Follow me below the fold and I'll attempt to tell you in a calm and rational voice (but no guarantees)...
This little saga began yesterday morning when I was trying to wake for the day. I was half reclined on the couch in a semi-comatose state when into my unconscious ear I heard Matt Lauer say something about Viacom's former CEO receiving $85 million dollars in a severance package. That snapped me right awake. Surely, I said to myself, he didn't just say $85 million dollars.....
$85 million dollars?
So I got up and staggered to the computer to see what I could find out about this abomination. I googled "Viacom CEO Golden Parachute" and the first thing that popped up was an article from Mediaweek.com. It gives the breakdown as follows: Ex Viacom CEO Tom Freston gets $85 million in severance-$58.9 million in salary and bonuses, $7.4 million in deferred compensation, and the balance of his $5.7million 401k plan. 90,141 shares of Viacom stock worth $10 million, plus another $3 million over the course of the next 3 years for his services as a "special consultant". On March 22, 2007 he will receive ½ of this compensation. He'll also receive $8 million in life insurance over the next three years while the other ½ of this compensation is doled out to him. All this, and after only 6 months at the job.
Stunned by this, I found myself wondering what his salary had been before he was fired. I didn't find Mr. Freston's former rate of pay, but I did find an article at Economist.com that begins with this little nugget:
NOTHING in business excites so much interest in the wider world as the pay of top executives. And this is never more true than when, as now, a few prominent cases prompt indignant headlines and rouse normally somnolent shareholders to action. The phenomenon is global. Last month Richard Grasso, chairman of the New York Stock Exchange, quickly went from folk hero, for the way he got the exchange running again after the terrorist attacks of September 11th, to the incarnation of corporate greed when it was revealed that he would be awarded $140m in accumulated benefits this year. Mr. Grasso tried to stem the tide of outrage by agreeing to forgo another $48m due to him, but that appeased no one, and he was forced into an ignominious resignation.
While salaries for most CEO's tend to be less dramatic (in 2002 the average CEO of an S&P 500 company took home $925,000) they find many creative ways to swell their coffers. One dandy way mentioned in the article is the following:
Share options give rise to a phenomenon known as "pump and dump", whereby top executives do everything they can to pump up their company's share price in the short term (including, in notorious cases such as WorldCom, fiddling the company's accounts) so that they can dump their options and maximize their personal gain.
And then there's this:
It has become almost fashionable these days for bosses to forgo their basic pay. Eli Lilly's boss Sidney Taurel took a salary of only $1 in 2002. John Chambers of Cisco Systems did likewise, and Larry Ellison, boss of Oracle, took a dollar less. Nevertheless, in 2001 Mr. Ellison had been the highest paid executive in America thanks to $706m garnered from stock options he exercised that year.
And this:
Then the bosses of American Airlines, struggling from set-backs in the air-travel business following September 11th, were revealed to have placed $41m in a pension fund for themselves that was fully protected should the company go into Chapter-11 bankruptcy. This self-appointed perk remained hidden until after negotiations with the airline's unions aimed at securing wage concessions of up to $2 billion had ended a few months later.
The list goes on and on. But when it comes to severance packages, things get even better. While the Economist article lists the average severance package to be worth $16.5 million, Mr. Freston's fantastic $85 million payoff is by no means off the charts. And, as Mr. Freston's compensation package shows, departing CEO's are just as creative in the money they take as they are with the money they make. Here's an illustration:
Loans granted and then forgiven are another popular way of enriching CEOs. Charles Conaway, the chief executive of Kmart, an American discount retailer, left the company in March 2002 after just 21 months in the job and two months after the company had filed for Chapter-11 bankruptcy. A company loan of $5m, granted as part of Mr. Conaway's pay package, was "forgiven" upon his departure.
Robert Nardelli, one of two candidates who failed to win the top job at General Electric on Mr. Welch's retirement, left to head Home Depot, a retailer with revenues less than half those of GE. Mr. Nardelli's compensation in 2002 (of around $20m) included $2.5m for the forgiveness (to be spread over four years) of a $10m loan granted to him on his appointment. His contract also forgives him any interest on the loan and any tax due, and it includes a golden parachute of at least $20m. Not bad for an also-ran.
I found the strength to bring up one more article, found in Slate which describes the strange phenomenon of companies dumping their CEO's to get their stock prices to rise. In discussing the decapitations at companies like Viacom, Ford, Hewlett Packard, and Bristol Meyers Squib, it points out that axing a CEO whose performance is less than stellar can result in a rise in stock prices from 15% to 25%. In asking if such stock rises make sense it offers the following:
In the short term, why not? Clearly, Bristol-Myers stock--a real stinker in the past five years--was hurt by Dolan's multiple missteps on everything from accounting issues to fumbling negotiations with firms that made a generic version of its blockbuster drug Plavix. The FBI raided his office, for God's sake.
This was really all I had the stomach for. I spent the rest of the day stumbling around, grumbling to myself about wretched excess and corporate greed. It all might have ended for me there if I hadn't watched Bill Maher last night. Now, there are often things on Bill Maher that rile me up, but not like this. Somehow the stars aligned, or some such thing, that made everything fall into place like a pornographic jigsaw puzzle.
It was Bill Richardson that set it off initially. He was talking about meeting with GWB when that unctious idiot came to New Mexico, and Richardson asked him why he doesn't meet with Iran or North Korea or Syria, and Bush replied, "I don't want to reward bad behavior." My right eye began twitching at this.
I don't remember much of what else was said between the two Bills, but my attention was whipped back to the show when Bill Maher announced his panel, and the token Repub hit man was none other than Steve Moore, one of the masterminds behind that bastion of morality the Club for Growth, and now with the Wall Street Journal. Just the sight of someone like him can make my blood pressure rise, and last night was no exception. I watched, head twitching and throbbing as this affable monster trotted out all the Repub favorites while Bill and Barney Frank shredded him. I was half listening with my left (good) ear, but my mind was spinning and dropping those pornographic puzzle pieces into place.
I mean, what irony, what hypocrisy for Bush to say he won't speak to someone who might possibly be able to blow us all to kingdom come someday because he doesn't want to reward "bad behavior". Having to talk to that abominable fool can not be viewed as anything but punishment. Every breath that man takes, every thought, every action, everything he stands for is about rewarding bad behavior. And the perfect example is laid out for all to see in the rampant greed of CEO's and the corporations they steal from (and who steal from us) every day. How to explain the inflated salaries, the golden parachutes, the profit taking, the outright stealing. Corporations robbing the pensions of their workers, raping the land, polluting the very air we breathe. And this is who Bush rewards with massive tax cuts. Unbelievable!!! It is all about money, money, money, power, power, power. They have ruined a country, killed or made the killing possible of hundreds of thousands of innocent people, sacrificed our sons, daughters, husbands, wives for money, for power. We've been standing by watching the Republicans demonize us, our ideals, our hopes and dreams while they cover up scandal after scandal, all so that they can hold onto their power and steal our money.
I can't believe my ears when I hear these inept, greedy bastards bring up ancient history as a reason for us to overlook their scandalous behavior. If I have to hear one more time about Saddam Hussein killing his own people (which occurred over 15 years ago), or the "monstrous" Democrat House Banking scandal and the infamous Postage scandal (over 12 years ago), or Clinton's ill-advised fling with Monica (over 8 years ago), I think I may just spontaneously combust. We are not talking about the past, we are talking about NOW. The POTUS and Congress are not governing for the 1990's; they're supposed to be governing now, and for our future. They have exposed our young adults to sexual harassment (at the very least), robbed us blind, gotten us into a war that is unnecessary and unjust while totally ignoring what needs to be done to keep us safe, spied on us, lied to us, taken away half our rights while telling us its for our own good, scared the living shit out of us whenever it looks like we're catching on to them, ruined the country's standing throughout the world, and on and on, etc., etc., etc. AND NOW THEY WANT US TO REWARD THEM FOR IT BY LETTING THEM KEEP THEIR POWER AND OUR MONEY??? ARE THEY INSANE????
The corporate greed and debauchery I recited above and the greed and depravity of our government that I've just ranted about are one and the same. It is time we stand up, raise our voices, take to the streets and take back our country. We must save ourselves before they destroy us. We must band together, put our heads together, get out there and get out the vote. We are better than this, we as a people do not deserve the shame and despair that our government has cast upon us. It is time to take our country back. Now. We have the power in our hands to mete out justice to those who have wronged us, and I, for one, do not want to REWARD THEIR BAD BEHAVIOR!!
Now, if you'll excuse me for a moment, I must find an aspirin......