Photo scource: Pro Commerce
Everyone knows that the economy sucks right now. It seems we learn of more closures and layoffs every day. If fact, the latest number from the government show the highest number of people on unemployment this week since statistics were tracked. And that doesn’t count those on a special extension enacted last year. (In case you aren’t depressed enough already, Stateline.org has a state-by-state breakdown of unemployment.)
So I wasn’t surprised to learn this morning that Starbucks closing another 300 locations and reducing payroll by thousands. This action comes after Q1 profit fell by 69%.
I listened to Wendy Kaufman’s article (NPR.org) with growing numbness until something unusual caught my attention. Chief Executive Howard Schultz is showing incredible leadership and responsibility in his drive to turn the company around. Schultz has taken the remarkable step of asking the board of directors to reduce his base salary to $10,000 from more than $1M last year.
Contrast this determination with the actions of Merill Lynch CEO John Thain, who spent more than $1.2M (Wall Street Nation) redecorating his office while his company burned around him. (Hampton Roads has his complete shopping list.) While negotiating the sale of Merrill, Thain and the board also pushed through measures to speed their bonuses before Bank of America took over. These bonuses totaled several billion dollars while the company lost more than $15.3B in one quarter. In my humble opinion, that constitutes theft of the stockholders’ equity. Thankfully, I have never owned Merill stock.
So I want to nominate Howard Schultz for some kind of award. He is actually walking the walk instead of just expecting his employees to cover all the slack.
While most CEOs don’t come anywhere near Thain’s Nero-esque behavior, you also don’t hear of many of them offering to cut back their salaries.
6 February 2008 Update: The economy continues to real under the weight of the theivery of those who had the helm of some of the world’s largest financial companies. Even relatively conservative outlets like