A King's Ransom

This story in the LA Times seems like the perfect backdrop to the start of the Enron trials of Kenny Boy Lay and Jeff Skilling. The basic premise is that as many companies eliminate traditional pension plans to cut costs, the folks occupying the executive suite get expanded defined benefit plans that will provide seven figure annual incomes for life.

Of course, the deals don't appear tied to performance, and the PR flaks are quick to offer the typical canard that the deals are necessary to attract and retain top talent. But the guys getting the deals seem to mostly be short term players who hop from executive suite to executive suite collecting huge salaries, options, perks and pensions. Frequently, they hop away from a particular post just ahead of the wholesale restructuring, the shipment of jobs and tax revenue overseas, or accounting fraud.

Beyond the obvious problem of rank hypocrisy, there seems to be no discussion of the need to retain top talent in places other than in the CEO slot. Leadership matters, no doubt, but many of the guys getting these perks couldn't lead a parade, let alone a multi-national in the age of globalization. And you can have the greatest leader in the world, but without an educated, motivated, appropriately compensated workforce, success is unlikely.

So lower level employees are motivated by fear. Fear of losing jobs and health benefits, fear of jobs moving overseas, fear of shrinking real income, fear that their children will never make it through college. And, for awhile, that works. But eventually, that fear will turn to anger as another announcement of layoffs or increased benefit costs is made simultaneously with the announcement of record executive compensation.

Then all bets are off.