Editor's note: A former version of this article listed Starbucks as a negative example of executive compensation. At his request, Starbucks reduced CEO Howard Schultz's compensation earlier this year. The Fool regrets the error.
Coward: One who shows ignoble fear in the face of danger or pain.
Today's subject: For all the pain that high-ranking members of corporate America have caused others over the past year or so, they seem surprisingly afraid of suffering any of it themselves. While rank-and-file workers throughout the economy face slashed salaries or arbitrary layoffs, these executive big shots seem to cringe at the thought of losing any of the padding in their cushy paychecks, or any of the nonsensical perks to which they've grown accustomed. And heaven forbid they should ever be held accountable for their own performance! I have no sympathy for such cowardly behavior.
Why you should be indignant: The Washington Post recently rounded up a list of compensation outrages, straight from companies that have relied on the government's largesse to survive:
- Bank of America's (NYSE: BAC ) Ken Lewis and CIT Group's (NYSE: CIT ) Jeffrey Peek each got personal use of corporate jets last year, perks valued at $100,000.
- Comerica (NYSE: CMA ) CEO Ralph W. Babb Jr. received compensation for a new country club membership worth $200,000.
- GMAC Financial Services CEO Alvaro de Molina received $2.5 million from company coffers to help pay his personal tax bill.
Accepting such outlandish perks, especially when your company's dependent on public money, seems downright craven to me. (The Obama administration's "pay czar" recently moved to limit executive compensation in firms that received large amounts of government money. Gee, I wonder why?)
I wish the examples above were the only shameful lowlights from our current crisis. Unfortunately, they're just the beginning:
- Abercrombie & Fitch's (NYSE: ANF ) CEO Mike Jeffries already draws huge compensation, despite his company's lousy performance. Now the company's paid him an equally large "retention bonus" just for sticking around. Somebody really thinks that guy's going anywhere?
- Talbots' (NYSE: TLB ) CEO Trudy Sullivan took a big payout to offset reductions in her retirement benefits. But the retailer she runs has been struggling operationally for a very long time now, while laying off workers and reducing their benefits.
What now? I recently complained about the confederacy of wusses in our midst, as more and more people vocally demand bailouts or government aid in the face of economic woes.
Then again, I'm not surprised that this whining has reached such a fever pitch. When nothing's fair; when bailed-out corporate entities pay their leaders handsomely; when merit no longer seems relevant to compensation; when a privileged few protect their well-being at the expense of their workers; and when such myopic cowardice actually seems lucrative ... well, what can you expect of everybody else?
Real heroes choose to do the right thing in the face of adversity, even when they're tempted to succumb to fear. Real heroes pull themselves up by their bootstraps and get to work creating things, not figuring out how to score a handout. Real heroes bravely jump in, embrace entrepreneurship, succeed on their merits, and take responsibility for their actions if things go wrong. If we don't celebrate executives who demonstrate such integrity -- if we instead continue to reward failure and greed -- we risk destroying our best investment opportunities, if not our economy as a whole.
I don't believe in coercion. As many philosophers have argued, a forced decision isn't actually a moral choice at all. I do believe that all the executives cited above should be free to choose their paths. However, that also means the rest of us are free to interpret what these people's choices seem to convey about them. Me? I think they're great big cowards.