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Some people are fond of saying that government should be run like a business. You almost never hear anyone say that a business should be run like the government.
But maybe that’s the problem, at least when it comes to transparency and accountability at publicly traded companies.
All of the recent corporate scandals have centered on the management’s irresponsible selfishness and its willingness to mislead shareholders. In the Enron, WorldCom and other infamous cases, CEOs and their lieutenants took more than their fair share of the company profits and rewarded their friends through inside deals, often with the support of cronies on the boards of directors. When business wasn’t going well, they cooked the books to create the impression of success, and this also was enabled by corporate boards too cozy with the managers to be interested in genuine oversight.
Now a proxy fight for control of Little Rock-based Acxiom Corporation is raising similar concerns close to home. Last Saturday, the New York Times detailed questionable management decisions by the company’s leader, Charles Morgan, including “us[ing] shareholder money in recent years to sponsor Nascar and other racing teams in which Mr. Morgan and his son participate, to lease a Falcon jet from a Morgan-controlled company that has flown to Cabo San Lucas 32 times since late 2001, to contribute to institutions whose trustees are Acxiom directors, and to pay companies owned by Morgan family members for consulting and other services.”
I can sympathize with Morgan’s desire to run the company without interference. After all, he has led Acxiom for more than 30 years, growing it into one of the world’s top information technology firms. He probably feels that his success should allow him some autonomy in the way he manages a business that has been his life’s work.
But that success also was made possible by the shareholder investments Acxiom has received since Morgan took the company public in 1983, when it was known as CCX Network, Inc. There’s a simple compromise involved in selling stock in a business: in exchange for access to increased capital, the owners have to relinquish control and play by rules that guarantee openness and responsible administration.
Instead, corporate leaders like Morgan are acting less like dependable stewards of a public trust and more like capricious beneficiaries of a trust fund. Another recent article in the New York Times was headlined “Executives take company planes as if their own.” Enough said.
That article noted that a private plane addiction is epidemic among both corporate and political executives. Of course, that’s not news to anyone in Arkansas, where Gov. Mike Huckabee uses the State Police airplane with impunity for his personal and official travel.
As with Morgan, Huckabee’s action is not illegal, but it raises doubts about his commitment to the trust he swore to uphold. There may be perfectly good arguments for spending public money to fly him around, including concerns for security or time management.
But Huckabee never bothered to ask for approval. He just went ahead and did it, spending taxpayer money for his own convenience.
For an example of how a continued lack of respect for the public interest can become criminal, look to President George W. Bush’s secret and illegal domestic spying. When the program was revealed, Bush defended it as necessary for national security. However, before that he ignored the rules and implemented it without seeking the consent of Congress. He violated everyone’s trust by not trusting everyone with information they are entitled to know and decisions they are entitled to make.
The common thread among Morgan, Huckabee and Bush is the hubris of the chauffeur who forgets that he doesn’t own the car he is driving. Their authority erodes in direct proportion to their self-serving actions.
Huckabee is a lame duck who will leave office in January, but Bush still has almost two years left to govern and Morgan faces a proxy fight at Acxiom’s annual meeting this summer. Even if Bush and Morgan win their respective battles, their strength has been significantly reduced in the eyes of anyone who would consider investing in their leadership.
In that respect, public companies and government are exactly alike. For both, trust is the primary currency: It is measurable, has real value and, once lost, can never be fully replaced.