Tuesday, January 01, 2008

Just compensation?

Though a new year is beginning, I find that I cannot leave the old behind without venting briefly about two 2007 stories that I found particularly repugnant. My concern is the compensation packages recently awarded to “retiring” (read fired) Citibank Chief Executive Charles Price and Merrill Lynch Chief Executive Stanley O’Neil.

Stripping the verbiage from numerous stories in the business press, we learn that both men played key roles in implementing practices that have contributed to the current sub-prime mortgage debacle. This debacle is threatening the health of America’s economy and, perhaps even the global economy. Thousands of homeowners, by no means all of whom hold sub-prime mortgages have been stricken by spill-over consequences of actions by these financial leaders and others like them.

At least the firms they lead, too, are paying a price for entrusting positions of leadership to Price and O’Neil. Citibank, it is reported, will be writing down losses of $8 to $11 billion from subprime lending. Merrill Lynch losses are reported at $7.9 billion. Stockholders of the two companies are suffering additional losses.

But what about personal responsibility? It is reported that Price will receive compensation of about $27 million, plus $100 million in additional benefits from stock options. O'Neil's total package is reported to be $160 million.

I simply don’t get it. How can these men look themselves in the mirror each morning? How do they explain the morality of these circumstances to their children and grandchildren? Questions like this do not only originate with me. They also come from the students with whom I live at American University;.

It seems to me that the least Mr. Price and Mr. O’Neill could do is offer a heartfelt public apology to their former employees, stockholders and the American people. They could adopt a modest lifestyle, perhaps that of a police officer, military officer, social worker or junior high school teacher of a comparable age. They could donate the remainder of their ill gotten gains to some worthy cause.

That would be just compensation, it seems to me.

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