Photo: Yodel Anecdotal
It’s been a rough period for consumers, taxpayers and stockholders. Whether you are in the 99% or the 1%, you have to be scratching your head at the continued lack of leadership and oversight that seems to pervade business, government, and society.Yahoo! – Just another in a series of missteps that has hurt the company
Yahoo!’s CEO, Scott Thompson, lied on his resumé and blamed a headhunting firm. Apparently, he is not alone. A story in the Huffington Post cites 7 other famous cases of resume fraud. While Yahoo! will not have to pay him a “severance” package, he will be keeping a $1.5 million bonus he received upon joining the company along with restricted stock valued at $5.5 million and his compensation to date estimated at $333,000 for his four months with the company. Of course, Thompson follows Carol Bartz who was going to revive the company after Jerry Yang and the Yahoo! Board turned down a lucrative offer from Microsoft to acquire the company. Good going Yahoo! Board for your record of four CEOs in 5 years. It seems that you are competing with Hewlett-Packard for doing the worst job of oversight of any major big high-tech company board, with the possible exceptions of RIM and Nokia. What do you think this does for your corporate image?
JP Morgan – behaviour that invites regulation as its CEO lobbies against it
JP Morgan’s CEO, Jamie Dimon, who has been lobbying against government regulation of banking in the aftermath of the financial meltdown, was surprised that his bank lost $2 billion on a hedge trade involving a derivatives portfolio. Now the FBI is investigating JP Morgan Chase, and Dimon let two of his underlings take the fall. Isn’t he the Chairman and CEO? Even so, shareholders voted to allow him to keep his Chairman and CEO titles as well as his $23 million compensation package. This is probably because JP Morgan Chase did not perform nearly as poorly as its rivals in the lead up to the worst recession since the Great Depression. Nevertheless, this latest boo-boo has provided a severe hit to the Company’s image and stock price.
Best Buy – a company that some believe is slowly dying
Best Buy’s CEO, Brian Dunn, stepped down in April after it was disclosed that he had an inappropriate relationship with a subordinate. Many believe he should have devoted more of his attention to the company that some say is slowly dying. What did he get upon exiting the company? He was awarded a $6.64 million severance package by the Best Buy Board. Not bad for another record of poor performance.
SEE ALSO: Pink Slime and Beetle Juice
This less than exemplary behaviour on the part of the aforementioned CEOs comes on the heals of disclosures of the widespread use of pink slime to pad ground beef and beetle juice to colour drinks and other food items. It seems that the public is only good for giving companies money – first as customers buying products, then as stockholders buying company stock, and last as taxpayers that foot the bill so that these CEOs can walk away with lucrative severance packages and golden parachutes. And who is there to protect the customers, stockholders, and taxpayers? There seems to be no will or money for that. It is all going to the people that are not properly doing their jobs and the boards and agencies that are failing to oversee them.
Government regulation versus self-regulation
Too many continue to press for no regulation. Their argument is that government cannot be trusted to do anything efficiently or correctly. That is an excellent point, and government detractors have done a good job of branding that point in the brains of the public with an assist from various agencies and boards. Perhaps a more valid point, however, is that the foxes have proven again and again that they are certainly not qualified to guard the hen houses. It seems that regulation is the only way that their inappropriate actions will be curtailed.
Nasty side effects of bad behaviour
If businesses want less regulation, they need to stop doing bad, dishonest, and negligent things that have caused stockholders, taxpayers, and consumers a lot of nasty side effects such as lost wealth, health, and sanity. Too many boards and CEOs can no longer be trusted to do the right thing. When they cannot be trusted, how can they lead an organisation, set the right example, and direct employees and customers to do what is right? They cannot.
Not a big deal???
Some have said that what Scott Thompson did is not a big deal. That is almost as disturbing as the resume fraud itself. Yes, there are estimates that 40% of job applicants embellish their resumes. Even if they do, the stockholders of a public company should feel comfortable that someone on the Board or in the company will discover the error – especially when the person is being vetted as the CEO of the company, and especially after the company has had a rocky track record with four CEO’s in five years.
Jamie Dimon has also said that JP Morgan Chase losing $2 billion is not a big deal. I guess his memory is short about how the financial meltdown started with the trading of derivatives. Perhaps he forgot the $17 trillion it is estimated that US households lost because of derivative trading and related financial mishandling. Maybe he forgot because his household was not affected. In any case, should we even care what his thoughts are at this point? We need to do a better job to insure that this does not happen again.
The lesser of evils
While government regulations may not be the preferred answer. It is a better answer than organisations policing themselves. Unfortunately, too many public companies have proven time and again that they are not able to objectively self-regulate. An independent third party needs to be involved to protect the public from bad things such as financial catastrophes, tainted food, and bad behaviour that causes stockholders, taxpayers, and consumers to lose their health and wealth.
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