Where's the Beef?

Many business leaders say that highly paid executives result in high performance. That’s a myth. My experience shows that the opposite is true. To prove that I’m not just running at the mouth, I found a study that analyzed the performance of Australian companies, which showed that the more they paid their CEOs, the worse the company performed. That means excessive executive pay is more than a moral issue; it’s an issue for shareholders and employees, too.

Politicians may label my comments as liberal or conservative, but that’s not where I’m coming from. Rather, as an American business leader—not a Democrat or a Republican—I worry that our new economy is being built using smoke and mirrors, and is not creating real value. We are merely churning money, and a select few in the money value chain are getting filthy rich without adding anything of value that will help build the global economy.

For all the money being spent on excessive compensation, what new products have been created? What breakthrough product ideas have been discovered? Have any real problems been solved? Nope, it’s just money changing hands—a reward for smarts and cleverness.

James J. Hill, John D. Rockefeller, and Andrew Carnegie built the rail, oil, and steel industries by creating tangible products and jobs. But there’s something different this time: Some say today’s super-wealthy people are the next generation of robber barons, using wealth to create more wealth, and leaving few products and jobs behind.

I have to ask: Where’s the beef? I wonder what Andrew Carnegie would say. When he retired, he had accumulated about $300 million by providing steel to America’s railroad system. By the time he died in 1919, he had given 90 percent of his wealth away through the establishment of foundations that are still active today in such areas as education and science, and by donating to libraries and churches. Carnegie also funded efforts to promote international peace. After World War I, the League of Nations was modeled after Carnegie’s peace efforts, which in turn led to the formation of the United Nations.

Since I can’t ask him directly what he’d think about this new generation of robber barons, I can only refer to some of his writings, which included these thoughts about stock market trading:

• “Speculation is a parasite of business, feeding upon values, creating none.”

• “Dollar making is not necessarily business.”

• “Nothing tells in the long run like good judgment, and no sound judgment can remain with the man whose mind is disturbed by the mercurial changes of the stock exchange . . . he cannot judge relative values or get the true perspective of things.”

That, my friends, is what is happening. We are losing the true perspective of things and are forgetting to add the beef to the bun. And if we don’t start putting some common sense back into this matter, we’re going to find ourselves offering empty buns to a global economy that’s finding beef somewhere else.