November 30, 2006
The Growing Greed Breed
Ongoing legal maneuvering still reminds us of how Dick Grasso, chairman of the New York Stock Exchange (NYSE) was forced to resign over the $139.5 million bonanza in accrued benefits the NYSE paid him. The total pay package, according to Associated Press reports, was $187.5 million.
The nearly $200 million qualifies Grasso as a member of the Greed Breed. What words can describe such a deal? The exact words are hard to come by, but “greedy,” “ugly,” and “arrogant” will do for starters. This breed knows how to squeeze the last egg out of the golden goose, with the help of friendly compensation committees and lax boards of directors.
Members of the Greed Breed Club not only squeeze the golden goose for all they can get, but in more flagrant cases, they run it down, kill it and eat it, guts feathers and all.
Some of the packages are even bigger, with stronger smells. Michael Milken, the “Junk Bond King,” pulled in more than $500 million in a single year in the late 1980s. Milken’s tainted riches got him a 10-year prison sentence, and were connected with the demise of his company, Drexel, Burnham & Lambert.
Another figure in the Drexel scandals was Ivan Boesky, who pleaded guilty in November 1986 to illegal insider trading. Some months earlier, the corruptible Boesky, who had not attended college, was invited to speak at a commencement at the University of California, Berkeley.
Boesky, departing from his prepared text, told the seniors, “Greed is all right, by the way. I want you to know that. I think that greed is healthy. You can be greedy and still feel good about yourself.” The seniors reportedly applauded loudly.
He could have added that Jesse James felt good about his end of the banking business, too.
The number of business scandals has rapidly increased in recent years, more like an infectious disease than spreading slow rot. Enron, WorldCom, Adelphia and Global Crossings were not the only cases of greed or outright criminal actions. Most were claimed to be legal at the time, but however the Greed Breed justifies its actions, the lack of restraint and the inability to gauge when “compensation” ceases to be excessive and becomes obscene, reflect the moral decay that infects our nation.
The behavior of greedy executives, as barometers of corporate rot, has its counterparts in the excessive jury awards that reveal greed as a malignancy metastasizing in our national soul, and in members of Congress selling their influence.
The result is that, with the combined efforts of tort lawyers and foolish juries, venal executives, and opportunists looking for a windfall, we seem to be producing more and more of the Greed Breed.
We’ve always had people who cut corners, in politics and in business. Still, the “legal” corporate greed harms more than the average stock investor, who may get the erroneous idea that the whole financial world is corrupt. The corruption undermines the whole enterprise system. For if honest businesses can’t raise needed capital, we all suffer, from fewer jobs, opportunities, and a weaker national economy.
A disturbing aspect of Dick Grasso’s lucrative deal with the NYSE was that it was legal excessive and ugly, but legal. When an illegal windfall is discovered, we charge it off to larcenous hearts and criminal behavior. But when an institution like the NYSE is a party to a legal, but vulgarly excessive, payoff to an executive, the public begins to wonder about the corruptibility of the entire business and financial worlds.
It can make Joe and Jane Citizen forget that ethically challenged CEOs are not the norm. Most executives are focused on doing the best job possible for their companies, from which shareholder-owners and employees also benefit.
These men and women don’t steal or cook the books. They are almost universally motivated to give something back to their communities, state and country.
While career politicians are often said to be too lazy to work and too nervous to steal, most business executives, on the other hand, thrive on hard work.
And any nervousness that inhibits stealing can be cured by going into politics, or by getting a compensation committee to do the stealing for them.