Why Can't Our CEOs Be Like Tony Dungy?This article is too good not to post in its entirety.
Boaz Weinstein, who lost more than $1 billion during the financial crisis (as a trader for Deutsche Bank) will be departing to launch his own hedge fund later this spring.
—Wall St. Journal, Jan. 15
Are you kidding me?
Who’s going to fork over millions for him to invest – guys who were frustrated because they weren’t able to get into Bernie Madoff’s fund?
What I want to know is, why isn’t the business world more like the world of sports?
Rob Marinelli went 0-16 as coach of the Detroit Lions and – gee, what a surprise – got fired. The shock would be if another team hired him as their head coach.
Yet CEO after CEO has seen the value of their company plummet – sometimes into bankruptcy – but seldom seem to pay the price themselves, except to act magnanimous for not taking a bonus.
Business executives like to cite “extenuating circumstances” for their financial failures. Well, Marinelli was given bad players, thanks to the poor personnel decisions of erstwhile Detroit GM — and now “expert” television commentator — Matt Millen. And many of what few good players Marinelli had got hurt.
Well, too bad for him. Nobody cut him any slack. Nobody gave him any sympathy. Instead, the Lions gave him his walking papers.
Yet, here’s this guy Weinstein, whose misguided trades cost Deutsche Bank a cool billion, and he expects investors to flock to him?
He wouldn’t be the first.
John Meriwether was the genius behind Long Term Capital Management, the now-infamous, heavily-leveraged hedge fund whose implosion in 1998 triggered a global financial crisis that resulted in a Wall Street-led bailout that was required to prevent panic in the markets.
Yet, last March, the Wall Street Journal chronicled how another hedge fund started by Meriwether – only a year after the LTCM disaster – had suffered significant losses on mortgage-related securities.
Now, I suppose you could point to football coaches like Rich Kotite, Marion Campbell and Ray Rhodes, who were hired again after failing the first time around, and the fact that the NHL recycles coaches in a way that would make an environmentalist smile.
But, for the most part, the wonderful thing about sports is that the guys who call the shots are rewarded for success and pay the price for failure. Win, and you’re revered. Lose, and you get fired.
That’s true for most players, as well. If they put up big numbers, they get big numbers on their contracts. If they don’t, they could be out of a job – especially in the NFL, where most contracts have limited, if any, guarantees. Professional golfers only get paid if they make the cut. If they don’t, they’re out the money they spent to play in the tournament.
Compare that to Ken Lewis, the CEO of Bank of America, whose stock hit an 18-year low last week and is down more than 80 percent from two years ago.
In a recent memo to bank employees, Lewis explained why he decided to forego his bonus for 2008: “This was a difficult decision because we have worked hard and made progress on many projects that will create value for our company in future years.”
A “difficult” decision? Did he really, truly, feel he deserved a bonus? And would it be paid out of the billions in bailout funds his bank has received from you and me, the American taxpayers?
I have no doubt that Romeo Crennel worked hard in Cleveland. The Browns made significant progress in 2007, when they went 10-6, following an injury-plagued, 4-12 season in 2006. But they fell back to 4-12 in 2008 and Crennel got the ax.
Mike Shanahan won two Super Bowls in Denver, where he had just two losing seasons in 14 years. He was fired after the Broncos blew the AFC West title by losing their last three games. Hired to replace him was 32-year-old Josh McDaniels, the offensive coordinator of the Patriots, who’s never been a head coach.
Jon Gruden won a Super Bowl with Tampa Bay in 2002, two years after getting the Raiders to the AFC championship game. He has had just one losing season in his last four years coaching the Bucs. He went 9-7 this year. But the Bucs lost their last four games and missed the playoffs, and so Gruden was fired Friday and replaced by 32-year-old Raheem Morris, who, like McDaniels, never has been a head coach.
In the NBA, teams are even quicker to pull the trigger. Six coaches were fired before Christmas – ho, ho, ho.
But, in the business world, the corporate fat cats, coddled by their obsequious boards of directors, continue to collect big bucks while their companies lose large amounts of money.
Look at the likes of Angelo Mozilo of Countrywide Financial, whose unbridled lending excesses helped trigger the mortgage meltdown; former Merrill Lynch CEO Stanley O’Neal, and Charles Prince, the former CEO who paved the way for Citigroup’s precipitous tumble.
Those three corporate titans testified before Congress last year, attempting to justify their outrageously oversized compensation packages. Although their companies lost billions in the housing markets, Mozilo received $75 million when his firm, with all its bad loans, was bought by Bank of America; Prince pocketed $68 million; and O’Neal received more than $160 million.
“The obvious question,” Senator Henry Waxman of California asked, “is how can a few execs do so well when their companies are doing so poorly?”
Good question, Senator.
You might want to pose it to your esteemed Democratic colleague in the Senate, Christopher Dodd of Connecticut, who, despite being chairman of the Banking Committee, accepted loans at special rates from Countrywide as a “friend of Angelo.”
In sports, you can win and still get fired. In business, you can lose, and lose, and lose, and not only keep your job, but often get a bonus.
It would be a better world if the world of finance was more like the world of sports.
My thoughts exactly.
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