For CEOs, thirst for perks may be in their DNA
Why do CEOs need extravagant perks even when they are firing staff and pleading for taxpayer bailouts? It may just be in their makeup, experts say.
It takes arrogance and narcissism to become leader of a Fortune 500 company. Those same traits, however, have become their undoing during the deepest recession in decades.
U.S. President Barack Obama has noticed, telling reporters on Thursday he was outraged by a New York State report that $18.4 billion in Wall Street bonuses were paid in 2008 as taxpayers rescued the crumbling financial system.
“That is the height of irresponsibility. It is shameful,” Obama said.
New York State Attorney General Andrew Cuomo, who is investigating Wall Street bonuses, welcomed Obama’s comments.
“While Wall Street melted down, top executives believed that, unlike the rest of the country, they still deserved huge bonuses,” Cuomo said.
For Bob Monks, a former executive who has written nine books on corporate governance, the reason is that the rich and powerful simply love their toys.
“It’s a boy thing. Sort of, ‘Mine’s bigger than yours.’ It’s really childish,” said Monks, a shareholder rights activist and the subject of a book called “A Traitor to His Class.”
Monks related a story about flying on someone’s corporate jet. The host was devastated when, upon landing, he saw that while he planned for a limo to be waiting at the airport another captain of industry had a helicopter take him to town payday loan online.
“I thought my guy was going to die. … It’s entirely about people’s self-image.”
THE JETS OF WRATH
Longtime advocates of shareholder rights were handed a gift in November when Detroit auto executives flew to Washington on corporate jets to ask for billions of dollars in taxpayer money, sparking a public outrage.
More recently, it became known that former Merrill Lynch CEO John Thain spent $1.2 million remodeling his office last year, including $1,405 for a trash can. Merrill Lynch is owned by Bank of America, which consumed $45 billion of taxpayer money through bailouts.
Then on Tuesday, Citigroup canceled plans to buy a $50 million executive jet after a White House rebuke.
“People don’t become head of Merrill Lynch without having a certain sense of self-importance. Once they arrive at that position, they have all kinds of toadies tell them what geniuses they are, then of course they begin to feel their lifelong feelings of self-importance have been confirmed,” said Charles Goodstein, a psychoanalyst and professor at New York University School of Medicine.
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