Ben Stein On Executives Gone Wild

There has been lots of press coverage about Delphi in the last few months; some pundits are siding with management against the union, and some are siding with the union against management. I even added my two cents worth of outrage against the executive compensation package Steve Miller submitted to the bankruptcy court. (To refresh your memory, Miller wants hourly workers to take cuts in their pay from $25 an hour to $9-12 an hour, while rewarding the top 600 or so executives and managers with a share of about $510 million.) Companies like Delphi have been getting away with downsizings and reorganizations for years now without too much criticism, so I was pretty surprised to come across an article in the NY Times by Ben Stein that actually questioned Miller’s sense of decency.

What? A bankrupt company enriching its executives even as it destroys its stockholders' equity and demands that its workers revert to spartan living standards? (To be sure, the compensation is concentrated at the high end of the corporate ladder - of course - and much of it is in stock, which is difficult to value. In these recapitalization situations, though, the stock tends to be a fabulous bonanza for those who got it free or for very little.

Stein goes on to say that he owns Delphi stock and he points out that Miller has a fiduciary duty to the stockholders, not Miller’s colleagues, and that any extra money sitting around belongs to them first and foremost. His next statement then puts it to Miller pretty succinctly:

However, despite my losses on Delphi, I still have a solidly comfortable life - at least for today. I don't desperately need my infinitesimal share of that $510 million (or whatever nine-figure sum it may be). But the workers on the assembly line and in the restocking room who make an hourly wage - they do need it. They need it badly. How on earth did the idea come into the head of someone as smart as Mr. Miller that he could get away with enriching those who already have high pay (or higher pay) and simultaneously demand that his workers accept poverty or lose their jobs?

Stein wasn’t just critical of Miller in his article. He talks about Edward Lampert and the K-Mart/Sears marriage that cost worker’s jobs while enriching him, and Carl Icahn’s insistence that Time Warner eliminate jobs so stock prices can go up and make him richer. Stein owns Time Warner too, but he said, “I KNOW some of these people from my many visits to CNN. They work hard. They are not paid a lot. Is it really necessary for Mr. Icahn to demand that they be fired, just before Christmas or at any other time, so he can make more on top of the billions he already has?”

This article makes me hopeful that the pendulum will start to swing back in the other direction. For too long, workers have been asked to give up pay and benefits for the sake of the company while top executives prospered and never shared in the sacrifice. There comes a time when people need to question the decency and morality behind the decisions being made and how these decisions look to the rest of the world, and for Stein, the time is now:

This is a country at war. For men who are already billionaires to look for more billions by firing hard-working middle-class employees or demanding they take a pay cut is not the kind of thing that unites a nation. I'm a devout capitalist, but this is just plain ugly.