Chief Executive Officers and other senior business leaders are essential to the success of big businesses. They make the big and important decisions that affect the whole business. And they receive big rewards for making those big decisions.
Really. Big. Rewards!
Now, capitalists tell us that entrepreneurs deserve to receive big rewards for launching and running successful businesses because of the great risks that they take, the hard work they put in and the many jobs they create for others. I don’t know how you feel, but that doesn’t seem unreasonable to me. Entrepreneurs can be a key driver of innovation and jobs.
But why should CEOs and other senior managers be able to reap huge financial rewards just because they have gained control of businesses that were built by others? Do their rewards really reflect the value they provide?
Just consider Boeing as an example. The airplane maker is literally part of a duopoly, along with Airbus. If an airline wants to buy passenger jets, they have to choose one of those companies, and the long waiting lists alone can be enough to force a decision about which one to buy from. The two companies have an order backlog of more than 16,000 planes between them, which will take some dozen years to clear.
I could train a monkey to run Boeing. It would have a simple, windowless office, perhaps in the basement, and a desk with three buttons.
Monkey press green button, Boeing workers build plane and monkey get banana.
Monkey press blue button, Boeing workers sell plane and monkey get banana.
Monkey not press red button, Boeing planes not fall from sky and monkey get banana.
It’s not difficult. At least that’s what the monkey tells me. Dennis Muilenburg was CEO of Boeing from mid-2015 to the end of 2019. During which time, two fatal crashes of new jets led to an extended grounding that sent the stock price tumbling from a peak of $440.62 in March 2019 to under $100 in March 2020. And when he started as CEO, Boeing bonds had stable A grade ratings, but they also tumbled downwards too, leveling out at just above junk status, where they remain today.
Despite failing to achieve the high standards of the monkey, Dennis Muilenberg is believed to have pocketed about $96 million from his 4.5 years as Boeing CEO. About 160 times more than the average Boeing employee made during that time and enough to buy a whole lot of bananas.
That huge amount of money was significantly boosted by Boeing stock buy backs, which capitalists say are an important way to maximize shareholder value, but also help senior managers gain huge financial windfalls and boost their already high salaries. In fact, Muilenberg apparently spent more than twice as much on buy backs than on research and development. Perhaps if he’d switched his priorities, 346 passengers wouldn’t have been killed when two Boeing jets literally flew themselves into the ground.
But this relentless prioritizing of profit at all costs is at the heart of the system that’s helped the wealthiest 10% of Americans hoard 68.3% of all US wealth, while the poorest 50% share just 2.5%.
Of course, Muilenberg, like every other CEO who reaps huge rewards just from taking charge of successful businesses created by real entrepreneurs, did nothing illegal.
Still, don’t you think CEO could stand for Crooks Executing Offenses?
What you just read? ☝ Shouldn't more people read it?
Share it now, before you forget
