ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Wednesday, March 20, 1996 TAG: 9603200009
SECTION: EDITORIAL PAGE: A-13 EDITION: METRO
SOURCE: MICHAEL J. LONERGAN
IT NEVER ceases to amaze me how the high-level executives of American industry bloat themselves with preposterous self-importance.
Their salaries, bonuses, stock options and perks would lead one to believe that they are the only people actually working in their companies. How else can we explain the CEO who rakes in a cool $10 million while a normal employee takes home a barely liveable $30,000?
Is it possible that the CEO is worth that much more? Is it conceivable that any human's work effort is worth $3,000 for one hour, while co-workers are worth only $10 per hour? I suppose you could believe this ridiculous distribution of income if you recently fell off the end of a turnip truck.
I have met and worked with a number of CEOs from some of the largest corporations in the United States. I remember one very bright man who built his corporation from the ground up. Most were very average men who almost always had to have the detailed workings of the corporation explained to them. I knew a long list of vice presidents pulling down the big bucks, and the kindest thing I can say about them is that, in some area of the business, they were adequate, and they usually behaved politely. By and large, they were decent but very average people.
I was a vice president of three Fortune 500 companies and had dealings with a variety of executives from my own and other large corporations. I know how I got there (a modicum of talent, some lucky breaks and the benefit of good timing) and I know how they got there. Without reservation, I say there is simply no executive whose work effort, in comparison to the rest of the employees, justifies the current obscene distribution of income. None of them could possibly have ''earned" that much. Actually, money is "earned" by the combined effort of all employees.
There certainly is validity to reasonable variation in income according to responsibility. What is happening today, however, adds up to nothing more than the feudalization of American industry. America's corporations no longer have personnel departments; they have human resource departments. The corporation does not see people but rather resources (serfs) to be used to make more profit so the lords can enjoy ever larger incomes.
We are talking about public corporations; they are actually owned by thousands of American citizens. They are being treated as though they are the private hunting preserves of the senior executives. Our system of boards of directors acting on behalf of the public has fallen into chaos.
The scenario will play out as follows: Rising stock prices are key because the senior executives enjoy huge incomes from the capital gains on stock options, and rising stock prices keep the stockholders happy. So everything is great, right?
Wrong! The work force is reduced to skeleton size, then worked to death. Since the men who make the decisions to cut are rarely familiar with the detailed workings of the company, they almost always cut into the muscle, starting a long-term downward trend in efficiency. Capital improvements are put off, sucking the blood out of old, fully capitalized plants. Research and product design are reduced or eliminated because they do not add to the year's profits.
These are just a few of the tricks of showing quick profits at the expense of a future healthy company. When all the tricks run out, and they will run out, the company goes into a tailspin. When this begins to happen to America's corporations, we will experience a financial crash of proportions not yet experienced by any society anywhere.
Congress must enact laws restricting the rape of America's public corporations, and it must do it soon.
Michael J. Lonergan of Lexington is retired. He formerly was a professor of information sciences at Pace University, and a vice president of American Motors Corp.
LENGTH: Medium: 73 linesby CNB