Back in the 1980s, the CEO of a major Seattle-based corporation took time to explain to me the difference, as he said, "between wealth, and unstoppable wealth." Some people are rich, but others are in a category where they just get richer despite themselves. That latter category is being tested in this Great Recession, but that hasn't stopped some big shots from going down grabbing all they can.
Reports indicate that former Merrill Lynch executive John Thain has been fired by Bank of America for doling out billions of dollars in bonuses to Merrill Lynch executives even as the failing company was about to be taken over by B of A and was reporting 4th quarter losses in 2008 of $15.45 billion dollars. At the same time the investment bank was going belly up, Thain decided to redecorate his office to the tune of $1.22 million which included a $35,000 toilet.
And here's an interesting tidbit to put in the Marie Antoinette file: Thain paid his personal driver $230,000 for one year's work. Notes CNBC, this is double the amount executive drivers usually get. Meaning even corporate chauffeurs have been hauling in $115K per year. That would buy five corporate toilets with enough money left over to wipe yourself with.
Also, we learn from the Associated Press that while struggling Starbucks was shedding jobs and closing stores last year, Howard Schultz had to tighten his belt. In 2007 Schultz received more than a $1 million per month in pay ($12.6 million total). In 2008, the company cut back his compensation to a mere $9.7 million, which included perks, insurance, stock options, etc. Of course, he still has use of the brand new $45 million corporate jet. I'm sure that's a comfort to investors and customers alike.
So that's how you get dinged in a down year. Starbucks stock is currently worth less than half what it was last January and Schultz's expensive foo-foo drinks are being challenged by back-to-basics and recession-sensible lattes from McDonald's. And this just in: big Starbucks job cuts are expected in the next couple of weeks. As Seattle suffers through its first Sonics-less season in decades, Schultz can at least salve his pains with the knowledge that he's still in the unstoppable wealth category, if just barely. Unfortunately, your 401-k's and IRA's are not.
