Business, Ethics, and Society
Prof. Douglas Lamont
WEEK FOUR: LECTURE/DISCUSSION
Theme for the week: Cracking down on the world’s biggest welfare
moochers, CEOs, and the new world of Christian social ethics.
1. Avarice versus Integrity, virtue ethics, moral acts, and moral actors
. Porky Pig Mike was dragged out of the chairman’s seat at the
Walt Disney Company. This moocher has not cultivated profits or his successor
for the firm. Therefore, he still is the firm’s CEO. Was he incompetent or simply
shrewd? In 1993, when Disney earnings fell 63%, he earned $263 million—the
highest pay of any executive of a public company.
Egoism breeds a lack of
. Athletes and movie stars earn ridiculous sums as well, but at least they
earn them in arm’s length negotiations.
Boards of directors
. Why did the Disney board pay Eisner $1 billion since 1996
to run the company into the ground? Couldn’t the board find a CEO for less
money? Why do corporate boards routinely overpay for mediocrity? CEOs shave
costs by laying off people, closing plants, and outsourcing, but CEOs don’t shave
costs by cutting their own salaries and benefits. The result is as follows: the top
executive suites are the world’s last enclaves of socialism.
from utilitarianism permit boards and CEOs to hide behind Rawl’s veil of
ignorance, and both underscore a lack of virtue ethics
. Tweedy, Browne, which owned 18% of Hollinger,
squawked at the unauthorized payments to
, former CEO. Mutual
funds, pension funds, and other public shareholders must pay attention to what
the dominant CEO does or does not do, and the CEO’s impact on shareholder
value. The Disney board split the job of chairman and CEO into two jobs. 43% of
Disney shareholders think this is a cosmetic change and want Eisner to go.
Eisner’s job is to increase earnings 30% in 2004, and produce double-digit
earnings annually to 2007, or his contract won’t be renewed in 2006.
neglect of shareholders and other stakeholders is an immoral act and
undermines Kant’s categorical imperative
Great CEO pay heist
. The free market is not at work here. The average CEO of
a major corporation now gets $10.8 million a year, almost 20 times as much as in
1981. “The salary of the [CEO] of the large corporation is not a market award for
achievement,” says John Kenneth Galbraith. “It is frequently in the nature of a
warm personal gesture by the individual to himself.” Pay is decided by a few
board members, often the CEO’s friends, who are CEOs themselves, and
sympathetic to the argument that $200 million is about right for such hard work.