Super-rich set sights on a really gross profit

June 05, 2006|By DAN RODRICKS

Most Americans know what a jump-the-shark moment is - the point at which television viewers recognize that a widely liked show has reached its peak and is about to die. It's the beginning of the end. The phrase comes from an episode of Happy Days in which Arthur Fonzarelli (Henry Winkler's Fonzie) went water-skiing and jumped a shark. It was clear Happy Days had seen better days.

I have my own expression: Jump the shower curtain.

It has two meanings. It refers to the moment, experienced by average, working-class Americans, when they become so disgusted and jaded about corporate greed and the self-indulgences of the super-rich that they can no longer mount outrage about it. And it refers to the moment when an already rich person decides to gross everyone out by crossing into the grotesque. The reference is to the $6,000 shower curtain former Tyco International Ltd. CEO Dennis Kozlowski famously purchased for his bathroom. Kozlowski had a mansion in Florida and a huge apartment in New York, and he spent millions on artwork and other luxury furnishings. The $6,000 shower curtain had a gold-and-burgundy floral pattern.

Kozlowski and another Tyco executive were convicted of stealing millions of dollars from the company, and they went to prison last year.

And that's nice. If a guy has the gall to pay $6,000 for a shower curtain, he should be made to clean prison toilets for a year, or 10.

But you know what? There's a lot of other executive compensation out there, apparently perfectly legal, and all casually justified by the compensation experts and financial analysts and a wide array of apologists for the country's out-of-control rich-get-richer culture. No one goes to jail for this stuff. Buy companies, merge companies, flip companies, reduce staffing, curtail employee pensions and other benefits - it's the American story of the last 20 years.

Some of you probably jumped the shower curtain long ago.

If it were not happening in the midst of a raging, politically charged controversy over electricity rates in Maryland, the executive compensation package in the proposed Constellation Energy Group-FPL Group merger would not really be shocking anyone - and Constellation CEO Mayo Shattuck probably wouldn't be trying to blunt criticism by pledging millions of his payout to charity.

According to Constellation, Shattuck and a dozen other company executives would get $72.9 million in cash if the merger goes through.

I liked this quote from Steven Hall, the New York compensation consultant, in The Sun the other day: "I hate to say this, but $73 million for 13 people doesn't strike me as `Oh my god' money.'"

He means it's not jump-the-shower-curtain stuff.

We live in a country where a $73 million windfall for 13 people has no wow factor. It's like office workers sharing a winning Lottery ticket. Take away the political lightning from the looming BGE increases, and you have a story that otherwise would have been a business-page brief.

Exxon Mobil's former CEO Lee Raymond got a $357 million retirement package that included a payment of $98.4 million and stock and stock options. This comes for Raymond after several years of making more than $20 million, according to Forbes, and at a time of record profits for the company and record-high gasoline prices for consumers.

Do you think the people at Exxon Mobil Corp. are at all concerned about how this looks to the average schlemiel citizen?

Nah.

As The Sun reported last week, the shareholders at the company's annual meeting in Texas overwhelmingly rejected resolutions to rein in compensation. (They also rejected two environmental initiatives and a proposal to add sexual orientation to the employee anti-discrimination policy.)

Hey, it's all part of American grotesque.

On some level, it still bothers me. But I don't get excited about it anymore because, other than a few prosecutions here and there, not much seems to be done about it. We've been pounded by decades of company downsizing for the sake of wider and wider profit margins, with corporations and the executives who control them more interested in the quick hit than long-term investment, with a political class that appears co-opted by the corporate class, and an utter disregard by both for public perceptions.

It was wholly remarkable to learn from a recent story by Sun reporter Laura Smitherman that Mercantile Bankshares Corp. chief Edward J. "Ned" Kelly III had turned down a $9 million windfall should the Baltimore bank be sold. He felt he'd been compensated enough already and would hardly be left empty-handed.

"People are frankly irritated at the big payouts people are getting," Kelly said. "I know this may sound silly coming from a corporate CEO, but I thought it was the right thing to do." Admirable.

But, in this crazy culture of ours, almost alien.

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