$25 Billion for These Guys?

"Leadership is not the same as reaction. Even a cat will jump off of a hot stove. Leadership involves prediction."
[loosely quoting] W. Edwards Deming

The big three auto companies are clarifying their request for $25 billion to bail them out.

GM"s CEO will drive to DC in a hybrid car.
Ford's CEO will work for $1 if the auto industry gets $25 billion. (Which, oddly enough, suggests that if his company has less money he'll ask for more pay.)

These two were sharply criticized for flying to DC on private jets, asking the American taxpayer for money. And Ford's CEO, Mulally, said that he thought his $21.7 million compensation package was okay, even when the company he was leading needed to be bailed out.

I guess this shows that these CEOs can be shamed into changing their behavior. But it also seems to affirm that they are merely lurching from one reactionary move to another. And in an industry where developing a new model car can take 3 to 8 years, leadership by reaction is far more of a liabilty than high gas prices or tight credit markets.

It seems doubtful that these CEOs have a bold vision of the future or have any real connection to the average consumer. Given that, it is not obvious how they'd be able to put $25 billion to good use. I say invest the money into mass transit instead.

"I think I'm okay where I am"

So it was hard to feel sorry for the executives when Rep. Peter Roskam (R-Ill.), late in the hearing, reminded them again that "the symbolism of the private jet is difficult," and mischievously asked the witnesses whether, in another symbolic gesture, they would be willing to work for $1 a year, as Nardelli has offered to do.

"I don't have a position on that today," demurred Wagoner (2007 total compensation: $15.7 million).

"I understand the intent, but I think where we are is okay," said [Ford's CEO] Mulally ($21.7 million).

"I'm asking about you," Roskam pressed.

"I think I'm okay where I am," Mulally said.

[full story here]

Today's CEOs are the last of the monarchs. Not only are they paid outrageous sums but they are the last of the major leaders to rule without challenge.

Bill Clinton was continually berated and criticized by Americans, as was George Bush. And so will Barack Obama. And the beauty of this system is that we can accuse our presidents of any kind of heinous crime and make our case in public and still not worry about losing citizenship or being deported.

If an employee at Ford were to make public statements about Mulally like those that many Americans have made about Clinton or Bush, this employee would be gone - fired. CEOs do not entertain critics.

One simple plan that I would propose for publicly traded firms is this: corporations allow a free press and even a two-party system within.

As I've mentioned earlier, corporations comprise between one third to two thirds of the 100 largest economies in the world. (The 100 largest economies list includes Japan and General Electric, France and Exxon.) We've learned in the West that no country can prosper with centrally-controlled economy or an society with government control of the press and the flow of information. Essential to success of a large system is the distribution of information and power. What if that applied to all economies - even those within a corporation?

Imagine that the stockholders and employees had free flow of information about projects and teams and management policies. And that - as with a parliamentary system - an election could be called and stockholders and employees were given a chance to vote on direction and even things like CEO salary. What if the CEOs had to please the stockholders and employees instead of dictate to them?

Progress in the West has followed from a diffusion of power. Religion got so much better when popes lost their monopoly control over it. Government, too, became less oppressive and more able when monarchs lost their grip on it. When legislation and the popularization of finance handcuffed the robber barons, financial markets prospered. Now it's time to do to CEOs what we've done to popes, kings, and robber barons - disperse their power.

Mulally thinks that he's okay where he is. Most of us don't. No dictator ever pointed out that the rest of us would be better off if he gave up some power. We can't wait for the CEOs to come to this realization.