When I was a kid in a dinky little town in northern Minnesota, a local doctor who was a friend of the family managed to get out of Dodge and climb the corporate ladder in the pharmaceutical industry. He became fabulously wealthy, and I always remember something he once told my father. "Corporations are run for the benefit of the top management."
Even a skeptical Fool like me isn't cynical enough to put unqualified faith in that statement, but I'm also sure that the good doctor was only reflecting on what he'd seen in his trip through the boardrooms of several of the nation's top drug makers.
I remember that line every time I see a headline about executive excess, and there have been plenty of screamers from the New York trial of former Tyco International (NYSE:TYC) CEO Dennis Kozlowski.
It has already been demonstrated that Kozlowski is guilty of abominably bad taste. Anyone who would defile beautiful, historic Sardinia with a $2 million Gladiator-themed party featuring vodka-urinating ice sculptures and worse -- Jimmy Buffett -- proves himself to be an overpaid rube of mythical proportions. For this offense alone, I'd like to see Kozlowski locked in a room with a couple dozen defrauded lady pensioners carrying purses full of doorknobs.
But is it possible that Kozlowski's not actually guilty of filching anything? Unfortunately, that seems not only possible but also likely. Turns out the well-reported flap among jurors centers on the notion of intent. As reported by TheNew York Times, Justice Michael J. Obus of the State Supreme Court in Manhattan told the jury this week, "A defendant is not guilty of larceny if he actually believed that he had authority to take the property."
In other words, if you are a corporate executive, think you deserve it, and have the board's blessing, there's no crime in sticking your mitts into the company cookie jar. That's right, a crooked culture of management entitlement may provide both the incentive and a valid legal excuse for looting company coffers.
If that's the state of things, shareholders have a lot to fear.
Because business owners are a lot less likely to squander a company's millions on their wives' birthday parties, Tom Gardner looks for a culture of management ownership in his Motley Fool Hidden Gems .
Fool contributor Seth Jayson thinks Dennis Kozlowski should be forced to wander Sardinia with $100 and a backpack to atone for his sins. He has no stake in any company mentioned above. View his Fool profile here.
