moneypolitics & government

You cannot trust these CEO’s

No Gravatar

This is just another example of how the corporate fat cats are killing this country.

A few years ago, during the 2008 financial crises there was a well-known multi-national corporate giant on the verge of collapse. The long time CEO at the time, worked with management, government officials, and investors to salvage the company. And though there were several extenuating circumstances that lead to the company’s demise, the CEO graciously took the brunt of the criticism and was terminated by the board of directors.

At the time of the firing, the company had foreign and domestic branding issues. There were scandals and dysfunction. Most importantly, this multi-national was in the red. It was so highly leveraged that solvency was at risk, investor confidence was low, and stock prices were lower.

Then in the 1st quarter of 2009, the board appointed a new CEO – a young energized dynamo with great experience in organizing investors. He promised to change the company’s image, revive worker morale, invest in research and development, and improve the bottom line. This guy was the shot in the arm the company needed.

The first thing he did was reinvest in all the departments of the company that were failing. To do this he raised capital in the foreign markets, thus leveraging the company even further. The next thing he did was introduce an attractive new dividend for investors to keep them happy.

In time however, it was obvious that the renewed investment in the failing departments was not improving productivity or performance. And the new dividends were doing little to satisfy investors, because the value of the investments themselves had diminished so much. Both the reinvestment and new payouts leveraged the company more than ever, without helping the bottom line at all. At this point the risk for corporate collapse was greater than before. Eventually members of the board started to take notice of these shortcomings.

More recently, this unnamed CEO has been rallying investors. He is telling them that it’s not the value of their shares that’s important, but that it’s the dividends and stock options that are. He believes he can force the company’s talented employees, who produce all of its value, to give up their share in the corporation to pay out investors. He tells investors he has done great things, like close down high risk operations in central Asia and the Middle East, even though those things were well underway before he was hired. And he blames diminished product quality and company service on the company’s previous management.

At the end of the year this CEO is up for review in front of the board. He will likely tell the board the same thing he tells the investors. Let us hope the board cracks down on this corporate maleficence. They didn’t hire him to make excuses. They hired him to turn things around. He knew what the conditions were when he took the job and he knew it would be his responsibility. He should be fired.

Would you fire this reckless CEO? If you would, then make sure you vote for Mitt Romney in November. Because the company is the United States of America, the investors are the American people, the board members are the American voters, the employees are “the rich,” and the CEO is our good friend Obama.

 

Print This Post Print This Post

Discussion Area - Leave a Comment