We’ll send you a myFT Daily Digest email rounding up the latest Merrill Lynch & Co Inc news every morning.
The UK parliament has been humiliated by an expenses scandal of Augean stench, prompting Martin Bell, an anti-sleaze campaigner, to suggest such abuses could never occur in the business world. “If our cabinet ministers worked for a private company or public corporation, half of them would be out of a job this morning,” he said. “They would have been shown the door. Their employers might then call in the police.” Sadly, he is wrong. Shareholders are taken for a far bigger ride by their C-suites than UK taxpayers are by their MPs.
Shareholders have little insight into the perquisites enjoyed by executives: the jets, country club memberships and season tickets are never disclosed in remuneration reports. Every so often, daylight reveals shocking shareholder-funded extravagance. Ex-Tyco boss Dennis Kozlowski, for example, supplied himself with a $15,000 umbrella stand, a $17,000 “travelling toilette box” and $2,200 wastebasket. More recently, opponents of John Thain leaked to the media that the one-time chief executive of Merrill Lynch had treated himself to a $1.2m office makeover, with $87,000 rugs, $25,000 pedestal table and $68,000 credenza. But for every case that makes headlines, thousands do not. Which accounts department queries the spa treatment in the boss’s hotel bill or questions helicopter trips to far-off golf courses?
C-suites around the world are, with few exceptions, hypocritical in the extreme, demanding austerity from workforces while living high on the hog themselves. There is a way this could perhaps change for the better. Organisations that want to crack down on such profligacy could institute a system of 360 degree internal transparency. Every quarter, listed companies could publish, for internal consumption, a department by department account of the expenses of the employees making the 10 largest claims. That would make a dent in the corporate AmEx bill.
The Lex column is now on Twitter. To receive our daily line-up and links to Lex notes via Twitter, click here
Lex is the FT’s agenda-setting column, giving an authoritative view on corporate and financial matters. It is also one of the few parts of FT.com available only to Premium subscribers. This article is provided for free as an example. A Premium subscription gives you unlimited access to all FT content, including all Lex articles and the FT mobile Newsreader.
If you have questions or comments, please e-mail firstname.lastname@example.org or call:
US and Canada: +1 800 628 8088
Asia: +852 2905 5555
UK, Europe and rest of the world: +44 (0)20 7775 6248