Tuesday, February 17, 2009

I am beginning to think that the criminal activity in the financial world is stemming from a warped sense of entitlement. The Bernie Madoffs, R Allen Stanfords and John Thains of the world believed they were entitled to huge salaries and bonuses, multiple houses, private jets and countless other perks regardless of the underlying performance of their businesses. Madoff (and now it looks like Stanford) resorted to stealing when business results couldn't sustain a lifestyle. Thain lost his job and reputation when his bonus demands (and outrageous office remodel) became public. These numb nuts thought they deserved the money regardless of where the cash came from. If it required stealing or pillaging from an insolvent institution, so be it. This entitlement thinking is much more prevalent in business than the few cases so far made public. I have seen first hand that when people reach a certain level in an organization, they feel entitled to certain salaries, bonuses and perks, regardless of performance.

This corporate welfare needs to stop. Boards of directors need to defend the companies they get paid to represent and protect. Money mangers whose income is based on the size of assets under management and performance, need to see their incomes drop when assets shrink and performance falls. If that means selling a house and getting rid of the car and driver, that's too bad. I used to have a high school coach who repeatedly said that you don't get credit for showing up, or more crudely, you don't win games by throwing your jock strap on the field. America needs to put its game face on and get to work, and corporations need to fire executives on the dole.

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