In the current economic and stock market environment, where questions have been
raised around business ethics, salaries and layoffs, and tarnished images of
once revered American brands like Citigroup, AIG, Ford, GM, Countrywide, Lehmann
Brothers, Bank of America, WaMu, Bear Stearns and many more flash across our
eyes in one negative context after another, it is good to know that a few good
men still remain standing tall, with their integrity intact.
Indeed,
American brands like Southwest, FedEx, Aflac and Nucor claim not to have laid
off a single person from their staff in over 3 decades? Of course the definition
of a lay-off may vary from one company to another, but if this is true, then I
truly wonder what these guys are doing right in terms of long-term planning,
retention and headcount that they can sustain the right productivity and avoid
handing their employees the pink-slip in tough economic conditions. Why can't
more of Corporate America be like them? Nucor has had some serious ups and downs
with economic climate shifts over the last 30 years but has yet to let that
impact their workforce. How is it that Southwest is able to remain the only
decent airline, with consistently lower fares, good customer service, and keep
their workforce while their competitors like United and Delta keep changing
their tune?
Part of this is greed. The other is mis-management.
Citigroup will have laid off 72,000 people from 2008 through 2009, yet their CEO
and top brass will probably make more than their fair share. So let me briefly
focus on one way Corporate America can win back some of the public trust that
they seem to have lost. How about putting a ceiling on executive salaries? How
about tying their bonuses to long-term stock performance. Now I am a big
supporter of capitalism and I believe negotiated salaries should be paid out as
per the contract, however, people who agree to paying such salaries (such as the
Board of Directors) need to be held accountable. They should not be allowed to
gift this money away. Money that belongs to the stakeholders like the investors,
the employees and other business partners that get dragged down in the throws of
this greed. Warren Buffett himself has talked about this issue of excessive CEO
compensation in his various annual newsletters to Berkshire
shareholders:
"At only one company was I assigned to comp
committee duty, and then I was promptly outvoted on the most crucial decision
that we faced. My ostracism has been peculiar, considering that I certainly
haven't lacked experience in setting CEO pay.
