A CEO for a company that posted record losses for a quarter was recently asked why he gave himself a large bonus in an interview. His reply was: Because I deserve it. This statement was a real eye-opener. It should have all of us suddenly waking up to the utter scam that business schools are pulling on publicly-owned companies. A recession is a good time to examine this stuff and attempt to put a stop to it. Why did the young CEO of think he deserved a large bonus after his company was putting up the worst numbers in it’s history? It has nothing to do with how good of a job he is doing. It’s because he dropped $150,000 on a long education and now has issues of entitlement.
The scary thing is, you can’t really blame him! This is what they taught him in business school. Finish school, graduate, find a struggling publicly-owned company to get a top executive job at, and siphon off a million dollar salary for yourself. Man, they must be sitting around laughing in business school at this prospect. All you need is a Harvard MBA and you have a license to legally embezzle ridiculous amounts of money with no accountability. This makes skimming the Tangiers casino (in the movie Casino) look like child’s play.
Remember the late 1980’s movie Wall Street? Think back to Gordon Gekko’s speech to the Teldar Paper stockholder meeting. His main beef was that there was no accountability to upper management because they had no stake in the company. They are just there to rape and pillage motivated purely by self-interest. Don’t you find it interesting that the failing big three auto company CEO’s all flew private jets to go ask the federal government for taxpayer bailout money a few month’s ago?
Sadly, this is the way corporate America works. Business owners who start and grow the company, whose passion fuels it’s initial success, are pretty much long gone by the time a company is actively traded in the stock market. Venture capital firms take an early partnership in the company, help it grow, and then when the IPO happens everybody gets out rich. The new stockholders elect of board of directors who hire new officers for the company and that’s where these bright-eyed kids graduating from business school come in. They walk out of school into contracts that most professional athletes would drool over, with zero experience in business and no passion for this particular business (oftentimes without having any industry knowledge whatsoever).
The lesson to be learned here is two-fold. If you are a college kid reading this, go get a business graduate-school education from a top university. The recession will be over by the time you graduate and you can get in on this scam. Otherwise, start a new business that will capture the interest of venture capitalists. Work it for a couple years, build it up and get out rich when the IPO goes live. So there are two ways to take advantage of the American dream by exploiting loopholes in our system. Or perhaps exploiting loopholes in our system is the American dream.