Guest Editorial

Monday, August 26, 2002

Boardroom dregs on parade

For pure symbolic value, the arrests of Adelphia founder John Rigas and his two sons were priceless. The feds led the three men away in handcuffs, charging them with nine counts of conspiracy to commit securities, bank and wire fraud and accusing them of using Adelphia, a publicly held company, as their own "personal piggy bank."

But the reasons for the arrests two weeks ago aren't as significant as their fabulous showiness.

The press had been alerted. So television stations captured and aired the scene repeatedly, like ESPN showing the catch of the week.

I couldn't see enough. I flipped through channels looking for it. The men in tailored suits with their hands behind their backs, escorted by federal marshals on New York's Upper East Side at dawn. For me, Pa Rigas and the boys were taking the perp walk for all the grand CEOs who are, finally, getting their come-uppance.

Every day, it seems, another CEO plummets from his perch at the right hand of God. Tyco's Dennis Kozlowski gets nailed for tax evasion. ImClone's Sam Waksal is arraigned on insider-trading and securities fraud charges. WorldCom's Bernard Ebbers faces indictment in connection with his company's faulty accounting.

Joseph Nacchio was forced to resign from Qwest last month amid an SEC investigation into the company's accounting practices. This week, Thomas Middelhoff, chairman and chief executive of media conglomerate Bertelsmann, joined Jean-Marie Messier of Vivendi Universal and Robert Pittman of AOL Time Warner in a string of ousters among once untouchable media moguls.

A year ago, such a bloodbath was unthinkable. If 1980s Wall Street produced Masters of the Universe, 1990s Wall Street gave us Messiahs of the Universe.

CEOs became the super-models of the business world, showing off their winter-tan faces on the covers of Fortune and the New York Times Magazine, writing books about their particular strain of genius and sailing to Bermuda in boats named "Himself." A late-'90s CEO would happily land in the news for buying a 64-room home in Bel Air with $65 million in cash, as Global Crossing's Gary Winnick did. A CEO wouldn't blush while cashing in $72 million in compensation for a single year, as Disney's Michael Eisner did, or demanding a $10 million bonus in a year that saw 6,000 employees laid off, as WorldCom's Ebbers did.

Fueled by the notion that a single human being could make or break a multibillion-dollar organization, CEOs saw their average pay increase by 442 percent in the last decade to $13.1 million - 571 times the average hourly worker's pay.

But as they sipped watermelon martinis in the Hamptons with Diane Sawyer and Jerry Seinfeld, their companies fell apart, struck down by a fatal combination of neglect and narcissism. "The stock bubble - in which paper wealth created auras of power and invincibility - seems to have bred an environment in which the narcissist who may lurk within many of us was able to emerge in feverish full bloom," columnist Tim Race wrote recently in the New York Times.

Now that the economy is tanking, a once tolerant public is heading with pitchforks and torches to the golden boys' gated estates. CEOs are the new personification of greed and knavery, the new punchline to late-night TV jokes.

In a column a few months ago, I predicted that workers would one day storm corporate headquarters in outrage over the obscene pay and stock options among CEOs - especially those CEOs who were pocketing millions while laying off employees. As it turned out, we didn't have to lift a finger in bringing down these brilliant, savvy, invincible leaders. They did it to themselves. May the perp parade continue.