Barack, Paul Newman and me

Magazines love lists. FORTUNE has its 500 biggest companies, Forbes has its 400 richest people, Cosmopolitan has 75 Crazy-Hot Sex Moves and Ethisphere has the 100 Most Influential People in Business Ethics in 2008. President Obama (No. 14), the late Paul Newman (No. 91) and I (No. 39) all made the Ethisphere list because we were judged by the magazine to have “greatly influenced the business ethics realm over the past year.”

Others on the list included CEOs Lee Scott of Wal-Mart (6), Dave Steiner of Waste Management (11), Jeff Immelt of GE (16), Anne Mulcahy of Xerox (22), Neville Isdell (40) who’s just stepped down at Coca-Cola, Eric Schmidt of Google (41) and Howard Schultz of Starbucks (63). Tom Friedman (20) and Paul Krugman (31) of The Times made the list, as did social-investment leaders Peter Kinder of KLD Research (67), Joe Keefe of Pax World (69), Barbara Krumsiek of Calvert (92) and Amy Domini of the Domini Social Invements (93). Of course I’m flattered to be in such good company.

The name to watch on the list is, of course, Obama. He will have more influence on business than anyone in the year ahead, and he seems likely to use it. He has been in office for less a week and has already made two decisions that will have significant impact.

On his first day in office, Obama issued a presidential memorandum on transparency that directs federal agencies to be more open and to invite participation from citizens. It says, among other things:

Information maintained by the Federal Government is a national asset. My Administration will take appropriate action, consistent with law and policy, to disclose information rapidly in forms that the public can readily find and use. Executive departments and agencies should harness new technologies to put information about their operations and decisions online and readily available to the public.

This won’t affect business directly, but it sets an example that big companies will feel pressure to follow. Right now, I’m working on a story about lobbying by a big Washington trade association and finding that companies won’t tell their own shareholders what they spend on the association and its lobbying. That’s not right, and it probably won’t last.

Second, Obama is going to direct federal regulators today to let California and 13 other states set stricter fuel economy and emissions standards for cars, according to The Times. This is a big deal, and it comes over the opposition of the auto industry. I’m not persuaded that higher CAFÉ standards are the best way to raise the fuel efficiency of the U.S automobile fleet—I’d prefer a revenue-neutral gasoline tax, with the monies raised used to lower payroll taxes—but Obama’s decision is a strong and swift signal to business that companies had better get ready for tougher environmental rules.

The most important thing Obama and the new SEC can do to improve business ethics is to force reforms in corporate governance, giving shareholders the right to nominate directors for boards and giving them more influence over executive pay.

As Carl Icahn wrote last week in The Wall Street Journal:

Faltering companies are now soaking up hundreds of billions of tax dollars, and they are not substantially changing their management structures as a price for taking this money.

How does it serve the economy when we subsidize managements that got their companies into trouble? Where is the accountability? More importantly, where are the results?

The CEOs on Ethisphere’s list, or at least the ones I know, run their businesses for the benefit of shareholders, as well as for the good of the broader society. But many other do not, and right now there is no way shareholders can get rid of overpaid, self-aggrandizing CEOs.

I’m thinking in particular of Merill Lynche’s former CEO, John Thain, who even as he was preparing to lay off thousands of people, spent $1.22 million of company money to refurbish his office. As CNBC’s Charles Gasparino reported:

Big ticket items Thain purchased include: $87,000 for an area rug in Thain’s conference room and another area rug for $44,000; a “mahogany pedestal table” for $25,000; a “19th Century Credenza” in Thain’s office for $68,000; a sofa for $15,000; four pairs of curtains for $28,000; a pair of guest chairs for $87,000; a “George IV Desk” for $18,000; six wall sconces for $2,700; six chairs in his private dining room for $37,000; a mirror in his private dining room for $5,000; a chandelier in the private dining room for $13,000; fabric for a “Roman Shade” for $11,000; a “custom coffee table” for $16,000; something called a “commode on legs” for $35,000; a “Regency Chairs” for $24,000; “40 yards of fabric for wall panels,” for $5,000 and a “parchment waste can” for $1,400.

I would have put Thain on the Ethisphere list. If we’re lucky, his behavior will influence business ethics—for the better—in 2009.

Comments

  1. Darren Toth says:

    As always, great stuff, and Kudos on the recognition from Ethisphere. However, I-not so much ‘take issue’-but at first glance I have a problem when you said,
    “I’m not persuaded that higher CAFÉ standards are the best way to raise the fuel efficiency of the U.S automobile fleet—I’d prefer a revenue-neutral gasoline tax, with the monies raised used to lower payroll taxes…”
    Now, far be it from me to argue with someone as elbows deep into the sustainability issue as you, but, a gasoline tax? Really?
    I mean, I understand that the CAFE standards require automobiles to be technologically feasible as well as economically practical, and right now, alternative fuels can’t compete with gasoline, but a tax? Making it more expensive would curb some people’s excess driving, but the ramifications to our industry, and the price of goods to everybody, would suffer.
    I really see the solution coming from many sides; the slowest, but most powerful, would be a matter of subtle persuasion. What we need to stop doing is pampering the drivers in this country. We need, as a culture, to really make it a social issue when someone who has a Hummer or a Suburban and really has no need for that much vehicle, can be looked at like one looks at cigarette smokers are in today’s culture. Sure, there’s no law against smoking, but the social taboo that has grown over the years with limits on where and when you can smoke have effectively reduced the number of smokers in this country. I am a smoker, and I live in Los Angeles, but furthermore, I am a 36 year old man who has NEVER owned a car. I am often commented at for smoking–people look at me with disdain for polluting their lungs, as they drive down the crowded street in their SUVs.No argument that cigarettes are bad, but having a large vehicle made for off-road, mountainous terrain or heavy industrial use pumping out petroleum exhaust for your trip across a town where it never snows…
    But it is a matter of perception that I, the evil smoker, am the cause of all the cancer and heart attacks of the world. Certainly, there are steps we can take, not to eliminate cars, but to enhance the alternatives. Creating safe bike lanes, increased security and better care of our public transit systems, tax deductible incentives to those who carpool or use bus-pass programs for their employees, modernizing our rail systems, or even pushing companies to allow employees more telecommuting options.

    We struggle so hard to find new ways to make our cars cleaner, but there is little initiative to make people think outside of their cars. We are a culture that drives everywhere, and simultaneously wonder why our collective waistbands are stretching to the point of epidemic. I know that commerce cannot survive without transit, so therefore shouldn’t we be doing everything we can to keep the remaining gas we DO have on our farms and shipping routes, and cut the waste we as citizens burn up simply because we don’t feel like walking or taking a train?
    It isn’t easy, and although we can look at the example of Cuba and their transformation from a gasoline society, this is America-a MUCH bigger place. I’m not suggesting we stop driving, I’m only thinking that we need to figure out ways to not drive so much, and get the concept of automobile dependency out of people’s heads. People look at me like I am from Mars when I tell them I’ve never owned a car, but mostly because they cannot conceive of a life without one. I do just fine, and I get a lot more reading done, and save a hell of a lot more money than you folks stuck out there on the highways.
    Sorry–got a little verbose there. Congrats on making the list. Yer doing a great job.

  2. Paul Newman was great at everything, that’s what Elizabeth Taylor said on him: “He was purity of heart. Working with him was such a joy. Knowing him, being his friend, was as golden as the sunset and a privilege I’ll never forget.”

    Here I’ve tried to collect all notable tributes paid to Paul Newman by his famous peers:

    http://www.tributespaid.com/category/p/paul-newman

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