Re: Think tank stuff and reality

["Joseph Doggett" <joseph.doggett@worldnet.att.net>]

A thought that I had was how something is implemented and administered.
Enron executives had the ability to liquidate their stock and take the
proceeds.  Did non-executive employees have the same rights?  I doubt that
they did.  Executives were able to maneuver with greater freedom.  They
could work to ensure that the price of the stock was high, and then they
could compensate themselves for their efforts.  When the facade faded or was
exposed, then the executives simply moved to another scheme.  However, the
employees, who trusted their financial stability to the stock, probably, in
a 401-K, were/are unable to "move on."  Rather, they have to leave with
nothing and begin anew.
    Perhaps a discussion about how an employee-ownership plan is
administered, what the rights of the shareholders are (all shareholders),
who can do what, and if someone can not perform some action that another
can, then the disparity between ability needs to be investigated.


----- Original Message -----
From: <Mbindnerdc@aol.com>
To: <orglabor@cog.kent.edu>
Sent: Monday, January 14, 2002 3:22 PM
Subject: Re: Think tank stuff and reality


> Enron is an interesting situation.  Yesterday morning ABC's This Week
featured it.  I fear that many in the policy community are drawing the wrong
lesson, however.
>
> Many are now calling for legislation to limit the exposure of employee
stock ownership in 401(k) plans.  They ignore the real reason for the Enrol
debacle.
>
> For decades many have been decrying the size of executive compensation,
which include large stock option awards and stock grants to executives.
Enron points to why these are not only unfair but a bad idea.  Such
excessive awards in effect reinforce the mindset of  executives that they
are set apart from the other employees of the firm.  By giving executives
more than their share firms reward them for cheating lesser employees out of
their fair share.  They provide executives a direct financial incentive to
look out for their own interests at the expense of the employees and even
the share holders.  There is not much moral distance from taking more than
you are entitled to cooking the books and making deals from self-interest
rather than the interest of the firm.
>
> In the case of Enron, does anyone doubt that the books would not have been
cooked had the executives been the servants of their fellow employees rather
than their masters?  Would the fraud at Enron have occurred absent the
overcapitalization of the executives?  Hardly.  There would have been no
incentive to cook the books or to hide liabilities.
>
> The answer then, is more employee-ownership, not less.  This is why I
favor equal stock grants (rather than stock options) to each employee,
regardless of salary, on a monthly basis (with the reinvestment of dividends
to reward longevity).  Broad based employee ownership with factional
representation on the board (professionals, unions, management, outside
investors each represented in proportion to their holdings) would prevent
the excess executive compensation now awarded in many firms - and without
specific government regulation of executive pay (which the conservatives
would never allow).
>
> Michael Bindner
> Virginia
>