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The Real Bottom Line: We Have a Serious Deficit of CorporateIntegrity May 7, 2012 By Joe Rothstein Editor, EINNEWS.com This is not an ad or puff piece for Starbucks. But it may seem thatway when I condense elements from the company s corporate missionstatement: Our mission: to inspire and nurture the human spirit oneperson, one cup and one neighborhood at a time We re passionate about ethically sourcing the finest coffeebeans, roasting them with great care, and improving the lives ofpeople who grow them. We care deeply about all of this; our work isnever done. We re called partners, because it s not just a job, it s ourpassion. Together, we embrace diversity to create a place whereeach of us can be ourselves. We always treat each other withrespect and dignity. And we hold each other to that standard. Every store is part of a community, and we take ourresponsibility to be good neighbors seriously. We want to beinvited in wherever we do business. We know that as we deliver in each of these areas, we enjoy thekind of success that rewards our shareholders. We are fullyaccountable to get each of these elements right so that Starbucks and everyone it touches can endure and thrive. Starbucks mission statement may sound quaint to our ears,conditioned as we are to the prevailing mantra of The job of thecorporate CEO is only to increase shareholder value. We reexpected to believe that corporate management has but one goal:immediate profit. Government, non-profits and others can concernthemselves with societal issues and constituencies other thanshareholders they aren t the business of business. Or are they? One of the nation s most successful CEOs has writtena book challenging the notion that corporate management has but oneconstituency, namely, its shareholders, and he has a long string ofcorporate successes to back him up. The author is Leo Hindery, Jr.,one of the nation s foremost leaders in the media andtelecommunications industries, and his book is entitled It Takesa CEO. Hindery provides a rare take on the integrity deficitthat s become all too evident at the highest levels of U.S.business. Enron. WorldCom. Countrywide and other mortgage lenders. Thego-for-broke Wall Street culture. Now Wal-Mart and the Mexicanbribe scandal. None of these or the other myriad examples ofbusiness failure can be tagged on rogue underlings. All signs pointto failure at the top. Leo Hindery began his business career as a close observer and, muchlater, employee of the General Electric Company, whose CEO in the 70s was the much esteemed Reginald Jones who believed, as Hinderydescribes it, that the corporation had equal and concurrentresponsibility to five constituencies: shareholders, employees,customers, communities and the nation. Jones, along with his close friend Edmund Littlefield, anotherprominent CEO who was Hindery s first boss, believed that the bestthing for virtually every company was a growing and prosperousmiddle class a belief with roots going back to early seeds ofthe consumer society, most notably to Henry Ford who knew that theonly way he could sell his cars was if people, especially includinghis employees, had the money to buy them. It s only recently, says Hindery, that the narrower goal ofprofit-only has defined corporate responsibility. The BusinessRoundtable, made up of the nation s major public company CEOs andone of corporate America s most influential lobbying arms,formally embraced the Littlefield and Jones view until 2002. Jones, in a notable twist of fate, was succeeded as GE s CEO byJack Welch in 1981, a leader with a completely different idea ofcorporate responsibility and thus management. Welch once said theideal manufacturing plant would be one you could put on a barge andfloat to whichever country has the lowest taxes, most subsidies andcheapest labor. In his book, Hindery laments much of what s happened to altermindsets in management suites and executive board rooms. High onthat list is the disparity between CEO pay and the average worker.The ratio of CEO-to-worker pay in the S&P 500 Index companies was380:1 in 2011, whereas back in 1980, the average large company CEOonly received just 42 times the average worker's pay. And for mostof the 20th century that ratio was a fairly consistent 15-20 to 1. When the CEO makes 400 times what the average worker makes, says Hindery, he s not part of a team. The average worker, hesays, hasn t had an increase in real wages since 1967, while CEOpay in 2010 and 2011, in the midst of this ongoing recession andlargely jobless recovery, increased an average of 20-25 percent. What can be done about all this? Hindery would like to see a changein the tax code that would limit a company s deductible expensesfor CEO pay no more than, say, 35 to 40 times average workerearnings. Other than that, given the current political climate, hethinks most change will have to come from shareholders, notgovernment. And we re beginning to see that. Citibank s shareholders voteddown a multi-million dollar pay package for the company s CEO. Thevote was advisory, but the Board of Directors acceded to thedemand. Many of Wal-Mart s largest shareholders have just nowpledged to vote against the reelection of Board members who seemedto be asleep at the switch during the Mexican corruption scandal. Wall Street s bulls and bears run in herds. It might nottake many examples of shareholder revolt to change corporateculture. Hindery s book should have some influence as well, giventhat it is a rare insider who turns the spotlight on the excessesof fellow CEOs. As for Starbucks and its scout-like mission statement, being a goodemployer and socially conscious citizen doesn t seem to belimiting the company s growth. Starbucks stock has doubled inthe past five years. (Joe Rothstein can be contacted at joe@einnews.com). I am an expert from chromepistonrod.com, while we provides the quality product, such as China Hollow Metal Rod , Precision Steel Shaft, Hydraulic Piston Rods,and more.
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