Corporate Confidential

Gag Me With a Proxy Statement

In the news this morning AIG is preparing to pay millions more in “bonuses” to several dozen top executives – after a round of payments a mere four months ago set off a furor.  They’re asking the government for permission in an attempt to shield themselves from additional public outrage.

AIG doesn’t actually need permission but since their current bailout tab stands at around $180 billion they feel that asking, “Mother, may I?” will give them some kind of credible cover.

An AIG official, speaking anonymously – it seems that these days no one is willing to go on record or accept accountability – said, “We want to feel comfortable with what we are doing.”

That is news.  When did these guys ever care about feeling comfortable, let alone being able to look at themselves in the mirror?

And why do these bonuses need to be paid?  Well, for one thing, they were promised a long time ago.

I see.  AIG doesn’t care about breaking promises to their shareholders or to the taxpaying public but oh, no, we can’t break a promise to our executives.  That would be wrong.

AIG explains this further in proxy statements filed last month, which I spent some time reading this morning.  It was hard to keep food down while I read.  They realize that “we need to confront the fact that many of our employees, perhaps the majority, knew that their long-term future with us was limited.”  Well, those with brains, anyway.  As a result they acknowledge the fear that “our key producers could perhaps be lured away.”

Aw darn.  That means they could lose the very people who caused their financial mess.

The proxy statement, which can be found here if you have the stomach for it, further states that: “Allowing departures to erode the strength of our businesses would have damaged our ability to repay taxpayers for their assistance.”

Um AIG?  I’m afraid I have bad news.  You have no strength.  Your strength has already “eroded.”

But AIG’s rationalizations for staying at the public feeding trough don’t acknowledge this.  In fact, attempting to follow their twisted logic is like following Alice down the rabbit hole:

Our only hope of repaying the taxpayers is by spending more of their money to retain the same “top talent” that got us into this mess in the first place so that we can have continuity and they can continue to do more of the same work and lose more money so that we can repay…no, wait, that can’t be right.  Let me try again.

We need to retain these people because it’s the only hope we have of ever repaying the taxpayers.  We’re sure they won’t make the same mistakes again and are, in fact, capable of changing their ways and doing things differently this time around.  Hiring new people, with new ideas, who would be cheaper than retaining the old guys just isn’t a good idea because – because why AIG?

No matter how I rephrase the AIG “logic” it just doesn’t make any sense or stink any less.

At Least He Said He Was Sorry

So they’ve sentenced Bernie to 150 years.  Although in actuality I doubt he has more than five or ten left in him, at least in jail.  Someone has broken it to him by now that they don’t serve Château Pétrus with the spam, right?  It seems like it would be a more fitting punishment to make him keep “working” and see that every cent he earned went towards paying back the people he robbed.  Not realistic, I know.

It’s just that at this point in his life he’s had his fun.  He’s had the trips, the houses, the parties, the fancy clothes and the fabulous wines.  He’s 71.  He’s lived the good life and what time is left for him to serve will be paid for with the public dime.  Why not make him do some honest work from now on and try to pay some of his debt back?

Maybe we could at least make him pay his way in prison?

So much has been said about Madoff that I don’t really have anything to add.  I just wonder how many more like him are out there, quietly scamming us out of our money.  We’d be deluding ourselves to believe Bernie is the only one.  His fraud empire was stellar, to be sure and maybe that’s one of the reasons he got caught.  He grew too big and got too bold.

Madoff’s lawyer stood up and said that the government seeking a sentence of 150 years was absurd. What’s absurd is Madoff saying he’s sorry and expecting anyone to believe him.  You’re sorry when you knock over a vase.  You’re sorry when you’re late for an appointment.  When you perpetrate massive, systematic, purposeful fraud for twenty years sorry just doesn’t cut it.

The judge countered by pointing out that no one – absolutely no one – had written anything supporting Madoff or attesting to his character.  Not even his wife who said in a statement that: “The man who committed this horrible fraud is not the man whom I have known for all these years.”

There was an article in the New York Times a couple of weeks ago bemoaning the fate of Ruth (“The Loneliest Woman in New York”) who apparently can’t even go for highlights at her regular salon anymore.  I tried but I had a very, very hard time feeling sorry for her.  OK, I didn’t try very hard.  Besides, how good does your hair have to look for visiting day?

A Raise is a Raise...Except When It's Not

A raise by any other name really does not smell as sweet.

 

Citigroup Inc. is increasing the base salaries of many employees -- reportedly by as much as 50 percent for some workers -- as it restructures their compensation amid government restrictions on bonuses, reports the Associated Press.

 

Adjusting the balance between “fixed and variable compensation” is the alleged goal of Citigroup’s new round of salary increases.  Corporate greed has gotten even more creative.

 

It seems only fair, since bonuses haven’t really been bonuses at all but more of a guaranteed payout completely unrelated to performance.

 

So let’s just give the badly performing execs hefty raises and call a spade a spade.

 

But wait, they’re not actually raises because bonuses are being lowered.  Huh?  According to an “anonymous person familiar with the matter” the changes would not affect the total amount of an employee’s compensation.  So it’s not a raise, per se.  But they would allow Citi to pay as well as they did in 2008 – and what a year that was! – while appearing to adhere to the government’s new bonus caps.

 

As one economist put it, this is merely a “change in the composition of total compensation.”

 

Let me see if I can follow this logic:  Base salaries should be at least equal to total 2008 compensation because they could never do any worse than that so we should never pay them any less.

 

Citi and the other banks say they need to do this if they want to hold on to their talented employees.  Yes, those same talented employees who caused the financial sector to implode taking down the rest of our economy with them.  I can certainly see why they want to retain that talent pool.

 

Citigroup has received $45 billion from the government. A portion of those funds will soon be converted to common stock, giving the government a 34 percent stake in the bank – and the right to scrutinize compensation.  So don’t call them bonuses call them a reformulated balance of compensation components.  Whatever you call it, it still stinks.

 

AIG: Absolutely Insane Gluttony

That must be what it stands for.

As usual, this morning my inbox held “Today’s Papers” from Slate Magazine and my driveway the New York Times, both leading with the story about AIG bonuses being paid out to the very executives responsible for trashing the economy.

 

I know this is going to sound terribly naïve, but shouldn’t bonuses be tied to performance? 

 

It seems AIG is “contractually obligated” to pay out $165 million in bonuses to 400 employees in its Financial Products division although AIG’s government-appointed chairman, Edward M. Liddy, expressed his disgust: “I do not like these arrangements and find it distasteful and difficult to recommend to you that we must proceed with them.”

 

No word from the previous chairman, who put the compensation program in place.

 

Ironically, there are AIG employees suffering, but they are those not working for Financial Products.  AIG is slashing bonuses -- but for people in other parts of the company who had no direct involvement with the derivatives.

 

A commenter on the NYT's website sums it up well: "This is so outrageous it is almost humorous."

Yeah, that’s one way to put it.

 

On the “bright” side, the top 25 executives at the Financial Products division have agreed to work for $1 for the rest of 2009.  Big of them.  If you gave me $165 million I would work for free for the rest of the year too!

 

I want either a true government takeover of AIG, or force them into bankruptcy proceedings. That way they can get out of their "contractual obligations" and we'll know where our money goes. Problem solved.

 

Historically a “bonus” was defined as:

 

• An additional payment (or other remuneration) to employees as a means of increasing output.
• A payment in addition to normal pay. Often related to performance and typically paid as a one-off lump sum.

New words enter the dictionary each year as they become commonly used.  I propose a new definition for the word bonus:

 

“A reward in direct proportion to the amount of damage, financial and otherwise, an employee inflicts both on his or her own employer as well as the world at large.”

 

Resources:

 

Gretchen Morgenson, who is one of my heroes, has written a great piece in the Times on this, entitled “At AIG, Good Luck Following the Money.”  One concern she highlights is the fact that there has been a lot of secrecy around the $50 billion funneled to AIG’s counterparties so far.  The government has resisted revealing these companies’ identities even though they are getting our money.  This is so Orwellian I don’t even know what to say.  Click here to read her article.

 

Sign a petition demanding transparency in the government bailout here.

It was the worst of times...

Things are the worst they've ever been. I'm out and about and checked the market (why?) on my iPhone. Down again. Still. Always.

I'm wondering - can it go into negative numbers? "The Dow hit -3,258 today on more negative news about the nonconomy."

I talked to the owner of a consulting company here in Salt Lake I'm teaming with and the news was all bad. "Companies are trying to reduce the numbers of contractors they have on staff," she told me.

Potential clients are cancelling projects, cancelling implementations and delaying upgrades - indefinitely. I get the feeling they'd cancel life itself if they could.

Sigh.

Corporate America, I miss you!

Just to show my support for the masses I decided to quit my cushy contract job.  No, that’s not really why I did it.  It’s far more complicated and rash than that.

 

But the bottom line is I am voluntarily unemployed at possibly the worst time to be unemployed since 1933.  I have a house that’s been on the market since April 1, 2008 that I’m not even living in because I’ve rented another place to live in with JT.   (Hint: One of the reasons I quit my contract gig.)  How smart am I?!

 

Unfortunately, my nature seems to be that when the going gets tough I hide under a rock.  Or, in my case, a pillow.  Although I did drag myself to a networking event last night, God help me. 

 

It turned out to be really cool, which was a pleasant surprise.  I met some interesting people and it jazzed me up for awhile.  Through talking to people I found myself looking at things from a different angle and coming up with ideas.  Probably why they have social networking events.  Who knew.  I will probably go back again next month assuming I’m not living in a Maytag appliance box under an overpass somewhere.  At least it will be spring soon.

 

I met this man last night who told me when he was unemployed in 1982 – which was as  bad as now, according to him – he still got up, showered and dressed by 8 as if he was going to work.  I thought those stories were urban myths!  Good for him, I guess, but I don’t do that.

 

I wonder if I have the wherewithal to make something happen.  To make cold calls and ask for informational interviews and set the alarm clock to dress for an imaginary job.

 

Pride goeth before a fall they say, or they used to say a really long time ago when people used words like “goeth.”  I’ve been kind of high and mighty snarking at the masses and at corporate America and now it looks like I’m in for some tasty crow.  Which will be good on a cold night in the big appliance box!

 

Unemployment Creating Jobs

This can be subtitled, “Only in New Mexico.”  Here is a headline from this morning’s Santa Fe New Mexican:

 

“Deluge of unemployment calls has state hiring to keep up.”

 

Except it’s not only in New Mexico.  A Google search for articles shows that Michigan, Minnesota, Rhode Island, Tennessee, California, South Carolina – virtually every state in the country – is experiencing a similar phenomenon.

 

“Many state unemployment offices are backlogged processing claims, with some states reporting a two or three week delay. However, new staff is being added and the delay should ease up in the near future,” said one job search website.

 

In North Carolina the state’s Employment Security Commission web site is having technical issues and has crashed at least twice under a rush of claims as that state set one-day records for both the amount of benefits paid and the number of transactions.

 

State unemployment phone lines are buckling under unprecedented call volume, with thousands of calls going unanswered daily and hold times stretching to hours rather than minutes.  Colorado is moving to hire additional workers because currently their unemployment office is able to only handle about half of the estimated 5,000 calls it's getting daily.  In Maine the governor approved the hiring of dozens of new people to handle the deluge of unemployed workers despite having a hiring freeze in place.

 

The New Mexican article states that, “The department has 43 customer-service representatives, but Gov. Bill Richardson has directed the department to move ahead with 20 "emergency hires" and find about 30 state employees in other departments with similar skills who can temporarily help answer calls, starting as soon as next week.” 

 

If they’re adding 50 new workers to the existing staff of 43 that means New Mexico is more than doubling the department work force.  So in a weird kind of circular way unemployment is actually creating jobs.

 

Obama to Auto Executives: Take the Money and Run.

Please.

 

Top Democratic lawmakers have “blasted” auto industry leaders.  President-elect Barack Obama accused car company executives of having a “head in the sand” management approach.  We’ll give you the money if you’ll just go away.  Here’s your check now don’t let the car door hit you in the behind on your way out.

 

Auto industry leaders are not getting hit in their pocketbooks but in a place that might hurt almost as much:  Their gigantic egos.

 

Am I too optimistic in believing that while failing is rewarded financially it might hurt just a little being shown the door at the same time?  Or is money everything to these guys?  Will they laugh all the way to the bank in their private jets?

 

I don’t know.  I think there will be a small voice in the back of their heads saying, “You blew it, jackass.”  Maybe it will be their father’s voice, or their mentor’s or just their wounded pride but these kinds of men love power and prestige just about as much as they love money.  They don’t like being wrong, especially in public.

 

In his comments on NBC’s Meet The Press Obama did not single out any individual executive.  He indicted the American auto industry as a whole saying, “What we haven’t seen is a sense of urgency and the willingness to make tough decisions.  And what we still see are executive compensation packages for the auto industry that are out of line compared to their competitors, their Japanese competitors, who are doing a lot better.”

 

But what kind of world would we live in if we tied executive compensation to performance?  We can’t hold these executives accountable for their companies’ financial outcomes.  Obama’s comments imply that rewarding failure with outlandish compensation is wrong.  That’s crazy talk!

 

Out of the Muck...Briefly

I wrote about something slimy last time – or should I say someone?  At any rate, I thought I would blog about something more uplifting this time.  It’s Sunday, so I was catching up on my reading.  This is from last Sunday’s New York Times:  It may be a good job, but is it ‘Good Work’?

Howard Gardner, a psychologist at Harvard, is cited in the article for his “influential theory of multiple intelligence.”  That is, there are abilities beyond math and verbal skills which really lead to success in life. “Good work” is defined as a calling which combines:

·         Excellent performance

·         Expressing ethics

·         Engagement

If you don’t have all three you have a job or profession but it’s not good work.

This really hit home with me in light of my current experience at work with the psycho slut beast.  Especially the questions to ask yourself about a job:

“Is this the kind of place where I can see myself in others?”  God, I hope not.

“Are my colleagues people I’d admire or people I’d prefer to avoid?”

‘nuf said.

A good job is one which fits your values as well as one which enables you to be competent and effective.  The article says to ask yourself if your work brings you joy.

In light of all of my rants against corporate greed I like articles like this which lay out different criteria for success.  It’s really not about status or fortune.  I make good money at my current gig but I feel impeded from achieving excellence and I certainly don’t admire some of my colleagues.  As a result I have no desire to engage.  And joy?  At this point I’m not sure if I’d recognize joy if it hit me over the head with a two by four.

As I move on in my career – and I will move on – I hope to find this elusive good work, work that combines excellence, ethics and engagement.  It makes me sad that I don’t have it now.  I hope to in the future.

One Way to Do It

How to get a new computer in corporate America:

1.       Spend time researching what you need and preparing purchase requisition

2.       Get your request turned down by the finance department

3.       Find an existing unused computer as requested

4.       Junk up the old computer

5.       Shame management into letting you have a new one

 

This actually happened to my boyfriend.  He was starting a new job.  When told he could not have a new laptop he went and found one that was no longer in use.  It was already pretty junky, with makeup stains and some scratches.  He further “distressed” it and then went in proudly to show the comptroller that he’d found a computer.

 

“That’s disgusting, I can’t let you go around and visit customers with a laptop that looks like that!” she exclaimed.

 

Voila.  His request for a new computer was approved.

 

How much time went into researching the purchase?  How much time went into his exchange with the comptroller?  How much is their time worth?  Corporate culture in most places does not, unfortunately, put much of a premium on their human capital.  But if you want to buy something you better watch out.  Strange.