I have been accused, from time to time, by otherwise Grateful Readers of these pages of focusing overmuch on the description, analysis, and criticism of many of the troublesome practices and behaviors in the financial industry which vex our peaceful commonwealth and which have led us down a ruinous path to our current sorry state. "Why," these plaintive supplicants beg, "does someone with your blinding grasp of the obvious not do your fellow citizens the signal service of providing a
solution to the pesky problems you so trenchantly describe, rather than just ranting on and on about their vileness and injustice?"
This, I must admit, is a just critique.
Fortunately, a recent browser in my archives has reminded me of a piece I penned quite early in my career as a gimlet-eyed commenter on current events. While it is not entirely up to date, it could easily be refashioned to do service in today's less carefree environment. I wrote the post in question early in 2007, when I was yet a starry-eyed naïf on the serried field of financial bloggism, and when nary a cloud bedimmed the bright blue horizon of a world where everyone looked forward to an endless future of easy credit, excess liquidity, and consistently above-market returns.
The mere memory of those times makes me sigh.
Anyway, as I said, the post could do with some editing for fact and content, since some of its key premises—for example, the contention that private equity firms still have money to spend—are clearly artifacts of a time long since past. (Now, for instance, one might contend that the natural buyer is the US government, financed without apparent limit by complaisant taxpayers and clueless sovereign wealth funds. Stay tuned for further revisions.)
Nevertheless, I believe the problem I identified then continues to afflict us now, and the solution I proposed remains sound. Perhaps it could be extended to a broader class of commodities—for example, investment bankers, secured debt lenders in distressed companies, and reckless insurance company executives—but I will leave that as an exercise for the reader. When purveyors of pitchforks and torches struggle to meet demand from the general populace for their wares, I am certain that a well-thought-out, rationally designed solution along the lines of my proposal will meet with substantial public acclaim.
* * *So, without further ado, I (re)present herewith
A MODEST PROPOSAL
FOR PREVENTING THE CHIEF EXECUTIVE OFFICERS OF PUBLIC CORPORATIONS FROM BEING A BURDEN TO THEIR SHAREHOLDERS OR COUNTRY, AND FOR MAKING THEM BENEFICIAL TO THE PUBLIC 1IT IS a melancholy object to those who walk through this great town or travel in the country, when they see the streets, the roads, and expensive restaurants, crowded with former Chief Executive Officers of public companies, followed by three, four, or six hangers-on, consisting of PR flacks, personal trainers and bodyguards, and second or third wives, all in furs and importuning passersby for the location of Charlie Rose's studio. These ex-CEOs, instead of being able to work for their honest livelihood, are forced to employ all their time in playing the 100 Best Golf Courses in the World, yachting in the New Hebrides, and giving interviews on "Larry King Live." Worse, they are routinely compelled by their straitened circumstances to author self-exculpatory autobiographies and tendentious management screeds (with the assistance of ghostwriters or third wives) and to promote same on nationwide speaking tours.
I think it is agreed by all parties that this prodigious number of former CEOs is in the present deplorable state of the nation a very great additional grievance; and, therefore, whoever could find out a fair, cheap, and easy method of making these individuals sound, useful members of the commonwealth, would deserve so well of the public as to have his statue set up for a preserver of the nation.
But my intention is very far from being confined to provide only for former CEOs; it is of much greater extent, and shall take in the whole number of current and former Chief Executive Officers of publicly traded corporations in this country and, by extension, the world.
The number of public company CEOs in this nation being usually reckoned five thousand, of these I calculate that there may be about fifteen hundred of consequence. The latest research by eminent scholars of executive pay indicates that these CEOs were paid an average of $4.9 million a-piece per annum in wages, benefits, and emoluments, thereby imposing upon the nation and upon the common shareholders of their employer companies an aggregate burden of $7.4 billion per annum. And yet this is not the worst of the imposition upon the population, since it is common for such CEOs to take with them substantial multiples of their current pay and benefits upon their retirement, voluntary or otherwise, from the post. A respected gentleman of my acquaintance, who himself is of the most unimpeachable character and honesty, even asserts that there have been some knaves and scoundrels among the ranks of former CEOs who have managed to depart their employers with amounts in excess of $200 million, although I can scarce credit such outlandish reports.
I shall now therefore humbly propose my own thoughts, which I hope will not be liable to the least objection.
I have been assured by a very knowing Frenchman of my acquaintance in New York, that a vigorous healthy CEO well compensated is at three years old a most delicious, nourishing, and wholesome food, whether stewed, roasted, baked, or boiled; and I make no doubt that it will equally serve in a fricassee or a ragout.
I do therefore humbly offer it to public consideration that of the fifteen hundred current CEOs already computed, those five hundred CEOs in their first year and those five hundred in their second year of service may be reserved for ongoing management, and five hundred CEO designates be identified for promotion to the post. The remaining five hundred currently in office may, upon the third anniversary of their employment as CEO, be offered in sale to the persons of quality and fortune though the nation; always advising the shareholders to let them suck plentifully at the corporate teat in the last fiscal quarter, so as to render them plump and fat for a good table. A CEO will make at least six dishes at a lavish entertainment for friends; and when the family dines alone, the fore or hind quarter will make a reasonable dish, and seasoned with a little pepper or salt will be very good boiled on the fourth day, especially in winter. I have reckoned upon a medium that a CEO newly appointed will weigh 190 pounds, and in three solar years, if tolerably remunerated with salary, options, restricted stock, and perquisites, increaseth to 260 pounds.
I grant this food will be somewhat dear, and therefore very proper for private equity partners, who, as they have already devoured most of the public corporations, seem to have the best title to the CEOs.
...
* * *There is more, Dear Readers, much more. Please, read it at your leisure and discuss it amongst yourselves.
I pass these valuable thoughts on to you, my fellow citizens, as a general salve for these troubled times with no thought of personal reward, other than the cheers and praise of a grateful nation.
(Of course, donations to The Epicurean Dealmaker Memorial Library are always welcome. Please send all contributions to the address found on this website in the form of small, unmarked bills or credit vouchers to nationally recognized strip clubs. Thank you.)
1 As before, this author proffers fulsome apologies to Jonathan Swift.
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