Enron story is particularly illustrative of the decay of corporate
morality which has developed along with soaring top executive
compensation. Enron executives, not only Lay and Skilling, were
living it up at the top of the world, traveling in business jets and
limousines, and cashing in multi-million bonuses, based on profits
which were a mere mirage of creative accounting practices.
the roof fell in over Enron, the top managers, Lay, Skilling, but
also Rebecca Mark, the deal-making diva and water queen, Ken Rice,
the broadband macho, Lou Pai, the stripper-loving trader, and scores
of others cashed their holdings, selling $1.2 billion worth of
stock, while regular employees had their 401k accounts blocked by
Enron bankruptcy was just the first of a number of corporate
casualties in the race of ever higher top executive compensations,
lower morality and a general disdain for the lower classes of law
abiding people. At that level, white collar crime was finally
sanctioned, with the most infamous villains (Jeff Skilling, Dennis
Kozlowski, etc) sentenced to long terms in prison. Corporate
governance has been improved, notably thanks to the Sarbanes-Oxley
act of 2002.
CEO compensation spiral has not so far been flattened and excesses
go on in the C-Suites of our largest corporations. New villains have
been identified in the wake of the sub-prime mortgage crisis which
is deeply affecting our lives, every day. People like Angelo Mozillo,
James Cayne, Robert Fuld, or an unidentified composite of careless
traders were held responsible for the financial meltdown following
the Lehman bankruptcy.
were they not themselves misled by their compensation schemes, which
rewarded risk takers more than the cautious, and which pushed the
morally least solid to commit increasingly serious offenses to law?
Is excessive CEO compensation just the tip of an iceberg of
unimaginable proportions? And then, why are CEOs overpaid and what
can we do against it ?
Hail to the CEOs