A Growing Trail of Question Marks
Shouldn’t we wonder, isn’t there a towering figure somewhere in American business who doesn’t leave a trail of question marks behind him?
There are two ways to view the nomination of John W. Snow as Treasury secretary: One, everybody does it. Or two, President Bush and Vice President Dick Cheney want us to think everybody does.
As chief executive of the railroad company CSX Corp., Snow sold a big chunk of his holdings ahead of the firm’s announcement about its weakening financial condition -- news that drove down stock prices. Bush and Cheney have faced similarly uncomfortable questions.
Maybe everybody in the corner suite does it. Maybe the administration wants us to think so.
There is no evidence, we’re told, that Snow anticipated the downturn in his company’s fortunes when he sold 120,000 shares last August. The same is said about Bush, who sold 212,140 shares of Harken oil company stock just weeks before the company announced a restructuring that sent its value tumbling. Bush was then a director at Harken. And Cheney, as CEO of Halliburton, unloaded 100,000 shares of stock in advance of a 76% drop in the company’s value.
Maybe that’s the way business works, or maybe we’re supposed to think so.
Snow, of course, was paid stupendously to run his railroad -- $36.5 million in the last four years, plus a platinum parachute reportedly worth $40 million or so. Once upon a time, we were told that payouts like this were justified by red-hot performance. But under Snow, CSX’s return to shareholders lagged the S&P; 500, the New York Stock Exchange listing of all transportation companies and even a 10-year Treasury bill.
Maybe everyone did it.
I am not, as I frequently remind myself, an expert in matters of running large and demanding corporations. And I’m also aware that delivering potshots from this distant vantage is all too easy. As Eric Hoffer once said, “In a trader-dominated society, the scribe is usually kept out of the management of affairs, but is given more or less free hand in the cultural field. By frustrating the scribe’s craving for commanding action, the trader draws upon himself the scribe’s wrath and scorn.”
But still.
As a “performance incentive” in 1996, Snow took a $24-million loan from CSX to buy company stock. But the stock didn’t perform. It lost value. And when the outstanding loan couldn’t be covered by the value of his shares, Snow didn’t get pinched like other investors. The company forgave him the debt, never mind incentive. Oh well, maybe everybody did it.
After all, under Snow’s reign, CSX managed to turn a profit and still not pay taxes for at least two of the last four years. Instead, the company received federal millions in “rebates,” which sound to me a lot like taxpayer subsidies. All legal, of course, so far as we know.
As Treasury secretary, Snow would be responsible for the IRS, which relies heavily on moral persuasion to see that everyone and every corporation contributes a fair share to support the nation. What kind of moral symbolism is it to hand the agency over to a man who found ways to make money and not pay taxes?
From Washington we hear testimonials of those who know Snow and have worked with him over the years. They say he is a man in whom we can believe. His deeds have shown him to be a person willing to serve his country and the cause of industry, not just himself.
I guess that’s the problem.
Snow held government positions before; he understands how the system works and how it’s supposed to work. He realizes how leaders are supposed to conduct themselves. Yet he maintained a membership in the symbolically charged men’s-only Augusta National Golf Club until he was called to service. Only then did he resign. What that says, loud and clear, is that his personal principles are distinct from what the nation expects, and he knows it.
Haven’t we learned by now that just because something is legal, it’s not always right?
Rewards that reflect achievement, a willingness to share risk, integrity in our personal choices, life by example -- we used to call these “core values.”
John Snow’s nomination tells us that this is all sucker talk for salary workers, not the way of corporate aristocrats.
Because they all do it, right?
