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Robert
A.G. Monks
January
23, 2003 Honorable Olympia B. Snowe
Re:
January 28 – Confirmation of John W. Snow Dear Olympia, I
fear that history will judge us very harshly for acquiescing to corporate greed.
It is time for a principled person to protest publicly. I ask that you consider
voting against the confirmation of John W. Snow for Secretary of the Treasury.
As someone who has for many years (My God, have twenty years passed?) been
interested in your success, I full well realize the immediate negative
consequences of such an act. I am thinking of the long term and the right thing. The
President certainly has the right to nominate those whom he feels will help
implement his policies and he has the right to the support of his party members
in the Senate in all but the most unusual situations. Tens of millions of
Americans have lost money – in the stock market and in their retirement
accounts – in some substantial measure because the people they were entitled
to trust in running their companies have proven unworthy of that trust. One of
the biggest problems facing the country today is the restoration of trust in
stocks. The confirmation of John Snow is the clearest message to the public that
this Administration relies on those who run corporations for their own benefit
rather than for the benefit of the pensioners and shareholders.
It
is not simply a matter of Snow having enriched himself hugely. His circumstances
are unique. During the decade of the nineties, the principal officers of
American corporations transferred to themselves approximately 10% in value of
all the stock traded on public exchanges (going from roughly 2% to 12%) –
about $1 trillion at the market peak. Largely this was effected through stock
options, which you must understand are stealth
compensation. In the early nineties, the Business Roundtable, comprised
entirely of big company CEOs, executed a strategy which resulted in the
Accounting Regulators being ‘rolled’ and the U.S. Senate voting 88-9 on May
3, 1994 (George Mitchell was one of the 9) to provide that granting stock
options was not an expense and did not have to be recorded on the balance sheet.
Therefore, nobody could find out how much senior officers were actually being
paid by looking at the public financial statements. Warren Buffet testified
against the resolution and virtually everyone has now come – eight years too
late - to realize that “stealth compensation” is just plain wrong.
This story has been told in the New
York Times, the Wall Street Journal
as well as in my own The Emperor’s
Nightingale. Senator Lieberman, the principal proponent of the bill,
described the Senate’s action as being in aid of small business. He was
deceived. The real money was made by the CEOs of the Business Roundtable.
John W. Snow was head of the Business Roundtable at the time of the Senate Vote.
I am enclosing a study of John Snow’s compensation arrangements as
described in Maine based The Corporate Library’s recent analysis (which was
featured in a Wall Street Journal article
on Monday January 20th). Judging from the New
York Times article on January 23, 2003, nobody seems to know within a
hundred million dollars how much John Snow has been paid. What is important in
The Corporate Library‘s analysis is that Snow was paid for not
performing. Snow got rich; the
shareholders did poorly in comparison to the shareholders of comparable
companies.
At the risk of seeming presumptuous, you have an opportunity to do
something critical for the country. Respectfully Yours, Robert A.G. Monks |