Thursday, July 14, 2005

Cry Me a River

As one digs deeper into the national character of the Americans, one sees that they have sought the value of everything in this world only in the answer to this single question: how much money will it bring in?
Alexis de Tocqueville (1805–59), social philosopher

Bernard J. Ebbers, the founder and former chief executive of WorldCom, was sentenced to 25 years in prison today for his role in the record $11 billion accounting fraud that brought down the telecommunications company in 2002.

Ebbers' greed is just the tip of the proverbial iceberg.
I have no sympathy for this man or his wife. They never thought twice about employees or investors. This case is just the most egregious corporate thievery, but day in and day out executive management teams are frequently generously rewarded because they happened to be in the right place at the right time and know the right people.

I am not saying that many don’t work hard, but their efforts hardly warrant the types of bonuses, stock options, and salaries they receive. Company mergers are another bonanza for management. If you happen to be one of the lucky few all your bonuses, stock options and salary are multiplied by three years. If you are lucky enough at the time to be say, 52, you immediately qualify for all your retirement benefits, which could include lifetime health care, a very big deal today.

WellPoint earlier this week agreed to pay $198 million to settle two class-action lawsuits by more than 700,000 physicians who charged the company with systematically underpaying them. Big deal, look at what Wellpoint's CEO received in the merger. Wellpoint’s CEO Leonard Schaeffer, according to SEC filings, received $27.5 million in severance pay and a special executive pension with an added boost of $10.5 million. He could cash in stock shares and options estimated at about $250 million, with early vesting as soon as the merger closed.

His special executive retirement plan (SERP), valued at about $45 million, would be paid all at once soon after he left WellPoint. Schaeffer would also get country club memberships for 48 months and financial counseling, office space and secretarial support for five years. This does not even include the rest of the management team.

Something needs to be done about this legal stealing from the public. No, I have no sympathy for Ebbers, John Rigas, Dennis Kozlowski, Jeffrey K. Skilling, Ken Lay, and I was sorry to see Richard Scrushy from Health South go free.

2 comments:

Devo said...

I am glad to see Ebbers rot in prison. His kind infuriate me.

Besides, WorldCom drug my name through the credit-agency muck and really made my life a living hell for a good two years after I ceased cell phone coverage with them. They tried to tell me that I didn't pay my last bill, and I had to prove at least five times to them AND various collection agencies that I did. We hates them, precious.

The Misanthrope said...

Of course they needed the money. We can only guess at how many people paid the same bill a second time just to be done with it all.