According to a recent analysis of nearly 300 Fortune 500 companies by the Citizens for Tax Justice, the average company was paying just 18.3 percent in taxes.
280 profitable Fortune 500 companies collectively paid an effective federal income tax rate of 18.5 percent, about half of the statutory 35 percent corporate tax rate, while receiving $223 billion in tax subsidies. These corporations include most of the Fortune 500 companies that were consistently profitable from 2008 through 2010. Collectively they paid $250.8 billion in federal income taxes on a total of $1,352.8 billion in U.S. profits. If they had paid the statutory 35 percent tax on their profits, they would have paid an extra $223 billion.
Stashing cash overseas is a legal ploy that as a shareholder you might be inclined to applaud, but is this form of tax avoidance really better for shareholders and the company, let alone the economy?
Business is vocal about the dangers of the deficit—as long as dealing with it doesn’t impinge on them.
But you have to admit, $223 billion a year would go a long way to paying it off.
It’s grown 25 percent a year for seven consecutive years to more than 250 employees in 2010 and named one of the best US firms to work for by Accounting Magazine.
…the firm is poised to go national but the guy who founded and ran the firm for eight years is no longer leading the charge. Was that his choice? It turns out it was not. David Deeter, the founder, got bounced down the organization chart.
While that may be the kind of growth investors salivate over, it often requires a “bet the company” mentality and matching action that’s not always appreciated by others.
Employees get scared, but you, the entrepreneur, keep their heads in the clouds and you keep thinking, boy, isn’t this great? Why? Because you are having the time of your life.
And therein lies the greatest danger for entrepreneurs who wants to stay at the helm.
Entrepreneurs start with a vision and do a pretty good job communicating it to the original team or they wouldn’t have bought in.
As time goes by and the organization grows founders get “busy” and start counting on those under them to communicate their vision to the new hires.
Sometimes the vision changes and the changes aren’t communicated, so the vision shared is no longer the current vision or, worst of all, the driving force mutates into one of growing just because you can.
The article author says,
Show them you can be both an entrepreneur and a chief executive. How? Let the employees see that you put the company’s interests ahead of your ego and your own personal interests. Otherwise, the real talent will leave — or boot you out…
but you have only to look at the corporate merger and acquisition debacles of the last few decades to know that too many corporations, both public and private, are driven by CEO ego and personal interest.
The best advice is to not only stay close to your people, but also to your mirror and remember you are not a god.
Every place I turn is commentary of some kind focusing on new changes for the New Year, but looking around it’s hard to believe in them.
In a recent Rules post I shared something I sincerely believe, it’s about progress, not perfection, but I haven’t seen a lot of progress lately anywhere in the world.
99% of politicians of all flavors rant on spouting their preferred ideology, with no real concern for the citizens of whatever country they represent.
As we learned, too many financial CEOs were made of ego and greed and the skill to mislead, but it seemsthat attitude is spreading to companies of all sizes, as well as individuals, in a trickle-down effect.
More and more people are willing to bend the rules and/or lie to achieve their ends.
While I accept that progress often involves several steps backwards to those taken forward, what’s happening is ridiculous.
Progress should mean a net positive after doing the math.
Dewey & LeBoeuf is a law firm; it was born in 1909 and is dying in 2012.
Its death is the result of a culture in which money replaced values—
“Because the partnership lacks any shared cultural values or history, money becomes the core value holding the firm together,” said William Henderson, a law professor at Indiana University who studies law firms. “Money is weak glue.”
and a toxic star system.
Even as Dewey’s performance flagged, the firm doled out lavish multiyear, multimillion-dollar guarantees to its top partners and star recruits. The guarantees — there were about 100, with several over $5 million a year — created compensation obligations that the firm could not meet.
Of course, they aren’t the only law firm or other type of business to founder and sink on the rocks of unfettered growth, mergers, aggressive hiring, outsize pay packages and compensation disparity that creates an internal us vs. them mentality.
In short, 103 years down the drain.
The Dewey & LeBoeuf failure provides glaring proof of the importance of a strong shared-values culture and testimony to the mantra I evangelize—people who join for money (or perks or stock) will leave for more money (or perks or stock).
After wasting more than an hour looking for good Saint Patrick’s jokes I decided I already used the best ones a few years ago.
What I did find was a 1949 Noveltoon called Leprechaun’s Gold that, to my mind, has both political and business parables applicable today. What about you?
Irish or not, I wish you sunshine, shamrocks, and rainbows.
When I went looking for quotes from P. J. O’Rourke I expected a bonanza considering he is a political satirist, journalist, writer and author. I only found three worth sharing, but those three are excellent.
You certainly don’t have to be a Boomer to relate to the sentiment in this comment.
“I like to think of my behavior in the sixties as a ”learning experience.” Then again, I like to think of anything stupid I’ve done as a ”learning experience.” It makes me feel less stupid.”
All you can say about O’Rourke’s view of blame and responsibility is ‘ain’t it the truth’.
“One of the annoying things about believing in free will and individual responsibility is the difficulty of finding somebody to blame your problems on. And when you do find somebody, it’s remarkable how often his picture turns up on your driver’s license.”
Finally, O’Rourke does a spectacular job of identifying the real source of human travails throughout history.
“No drug, not even alcohol, causes the fundamental ills of society. If we’re looking for the source of our troubles, we shouldn’t test people for drugs, we should test them for stupidity, ignorance, greed and love of power.”
Today’s offering includes three fascinating examples of lousy leadership at work, two explanations of the worst traits of lousy leadership and a review of a remedial book for lousy leaders.
The first example of lousy leadership is personally embarrassing, not because it’s about me, but because in January 2008 and again in April I lauded this lousy leader for creating a great culture. Little did I know. The lousy leader is Sam Zell and his hand-picked executive Randy Michaels, now CEO, created a culture that rivals or exceeds anything you’ve heard about on Wall Street.
Randy Michaels, a new top executive, ran into several other senior colleagues at the InterContinental Hotel… After Mr. Michaels arrived, according to two people at the bar that night, he sat down and said, “watch this,” and offered the waitress $100 to show him her breasts.
And it went downhill from there.
Next we have a pair of lousy leader brothers, Sam and Charles Wyly, who have avoided paying taxes on hundreds of millions of dollars by using trusts and tax haven-based shell corporations. And these two Texas swashbucklers are sure that the upcoming election will see an end to their problems.
“I think it’s good politics to beat up on big companies and rich people,” said Sam Wyly. Soon, he said, “the election will be over, and this will be forgotten about, or lost, be shut down, be gone, will be nothing.”
The third is Goldman Sachs, a company stuffed with lots of lousy leaders. Not another article, but a recommendation to watch CNBC’s Goldman Sachs: Power and Perilwhen it repeats October 26 at 8pm ET in case you missed it last Sunday.
Greed is a constant hallmark of lousy leaders. According to Andrew Lo, an MIT professor who researches the relationship between neuroscience and economics, greed actually has a chemical basis.
“When a person acquires resources, chemicals are released in the brain that cause the sensation of pleasure. Greed is simply the addiction to that release.”
Organizations have more power to direct employee ethical behavior of than we previously knew.
That’s the bottom line of new research from the University of Washington Foster School of Business that demonstrates, for the first time, the relationship between moral intuition—a reflexive perception of what is right and wrong—and moral behavior.
Finally, the perfect gift for lousy leaders—a copy of Marshall Goldsmith’s new book, Mojo: How to Get It, How to Keep It, and How to Get It Back If You Lose It
Reading a review of David Sarna’s History of Greed got me to thinking, especially the end when you learn that Sarna himself was greedy.
History of Greed‘s book jacket neglects to mention that he pleaded guilty in 2006 to conspiring to commit securities fraud and served nine months in jail. Had the author interviewed himself, he might have gained valuable insight into what sparks already wealthy people to take risks—even illegal ones—to enhance their coffers. When I asked Sarna why he omitted such a significant biographical detail, he confessed that his wife asked him to.
There’s been a lot written, especially over the last two decades, about greed, mostly centered on money and wealth, but that only tells a small part of the greed story.
Greed is defined as “excessive or rapacious desire, esp. for wealth or possessions,” but another source mentions food.
Greed can apply to anything—take it far enough and it becomes addiction.
Greed applies not just to tangibles, but to intangibles—think power.
But there are more subtle and surprising things than money and power that can lead people down the path to bad behavior.
Promotion; religion; empathy; leading; hobbies; sports (real and fantasy); working out; TV; books; friends, fans and followers; music; love; respect; the list is endless.
First we want, then desire, then crave; craving grows and we become greedy for more—always more. No matter how much we have it’s never enough.
Greed will eat us alive and if we do nothing it can destroy what we care about.
What do you crave that could lead to greed? What do you do about it?
Enron is back in the news because Jeff Skilling’s appeal is currently in front of the Supreme Court (his sentence may be reduced or overturned on a technicality).
Arthur I. Cyr, Clausen Distinguished Professor at Carthage College, offers an interesting commentary on Skilling, the Enron debacle and Arthur Andersen.
Leadership personality is telling in any organization. Skilling from early days as a McKinsey consultant was notorious for an exceptionally aggressive, grasping style. Business author and former colleague Tom Peters described him as apparently able to “out-argue God.”
The damage that attitude causes knows no bounds and holds true wherever it is found.
Enron, stock option backdating and finally the derivatives of the financial meltdown are all from the same seeds.
In hindsight, Enron’s death was symptomatic of growing global problems. In an age of great prosperity and exceptionally cheap credit, people fairly easily could put greed before good judgment.
Greed before good judgment says a lot, but not quite all.
Even when greed isn’t the driving force there is ideology—an inflexible force that proponents claim eliminates the need for any judgment at all.
Good management, however, requires flexible, insightful human strengths. Regulation and law enforcement only provide context.
Cyr’s final comment sums up the true solution as well as the why rules and even laws don’t work.
Speaking of taxes…
To many in the startup world speed is a holy grail—speed to market, speed to hiring and firing, speed to pivoting and speed to growth.
Every place I turn is commentary of some kind focusing on new changes for the New Year, but looking around it’s hard to believe in them.
Today’s offering includes three fascinating examples of lousy leadership at work, two explanations of the worst traits of lousy leadership and a review of a remedial book for lousy leaders.
Enron is back in the news because Jeff Skilling’s appeal is currently in front of the Supreme Court (his sentence may be reduced or overturned on a technicality).
