An Exemplary Failure?

Today's New York Times web opinion page ran an interesting piece by D. Michael Lindsay, the current president of Gordon College who was an academic sociologist at Rice University until this year. Lindsay also wrote Faith in the Halls of Power: How Evangelicals Joined the American Elite, a book based on several hundred interviews with evangelical Christians who have "made it" by getting into top positions at mainstream institutions in American society.

But there is another side to the story of "making it." And it's one that I've been thinking about for several years. When Christians enter the Big Time of corporate leadership, will they be corrupted by power? If necessary, will they be willing to sacrifice their positions in order to stay true to their faith?

Lindsay tells us that Gerard Arpey, the CEO of American Airlines, did the latter. As Lindsay puts it, Arpey

resigned and stepped away with no severance package and nearly worthless stock holdings. He split with his employer of 30 years out of a belief that bankruptcy was morally wrong, and that he could not, in good conscience, lead an organization that followed this familiar path.

I'm grateful to hear about this. If Lindsay's account is accurate (and I have no reason to doubt it, since he's interviewed Arpey), then this is a great example of the kind of leadership that Christians could exert in corporate America: real leadership that embraces noble failure rather than compromised success.

Or to be more accurate, the kind of leadership that takes seriously the call and example of Jesus to be a sacrificial servant of others rather than exalt oneself. As Jesus said, "If anyone wants to be first, he must be the very last, and the servant of all" (Mark 9:35). In case the readers of Mark missed the point, this is repeated:

whoever wants to become great among you must be your servant, and whoever wants to be first must be slave of all. For even the Son of Man did not come to be served, but to serve, and to give his life as a ransom for many. (Mark 10:43-45)

A little context helps appreciate how radical Arpey's move is. First, as I've blogged about before, executive pay has gone crazy in this country, and Arpey is bucking a major trend. Second, all airlines have struggled to be profitable and contemplated bankruptcy in order to shed union contracts with pilots, flight attendants, and maintenance workers. And some of their CEOs had no such scruples. By leading their companies through bankruptcy, they slashed their workers' pay and trimmed their retirement pensions, taking money away from ordinary workers. But Northwest Airlines' CEO came out of bankruptcy in 2007 with a compensation package worth $26.6 million. After United Airlines CEO Glenn Tilton put his company and his workers through bankruptcy, he walked away with a cool $39.7 million.

So Gerard Arpey does deserve our praise! Well-done, good and faithful servant.

Epilogue to this story
Of course, the day that Arpey resigned, American Airlines declared bankruptcy, which means that the end of the American Airlines story isn't good news. But the good news of the Christian story is that those servants who sacrifice and end up last will someday, in the Kingdom's economy, be first.

If we were in Arpey's shoes, I hope we'd choose the right thing--to be more motivated by truly loving God and our neighbor in the long run (and in the long run, as Keynes said, we are all dead, so we'll have to face our Maker) than by enriching ourselves. I hope we'd decide to work toward that day when we might hear those words: "Well-done, good and faithful servant! You were faithful with a few things; I will put you in charge of many things. Come and share your Master's happiness" (Matt 25:23).

Executive Pay and Globalization

 In the Lexus and the Olive Tree, Tom Friedman has a catchy chapter on the dangers of a winner-take-all, free-market society--the kind of society rewarded by processes of globalization. He uses a professional basketball analogy to make his main point. A few top competitors--those like Michael Jordan or LeBron James--reap massive rewards, while the average competitors in the market--the lesser-known teammates of the superstars--get much less. Friedman's concern is a real one: How sustainable is a team that includes both mega-rich and not-so-rich players? We have cause to worry about the erosion of social solidarity between the affluent and the ordinary.

U.S. income data since the 1970s suggest that this concern is valid. "The rich are getting richer, while the poor are getting poorer" is one of those thoughtless cliches that turns out to have some truth in it. The undisputed fact here is that the top 1% of income earners now account for at least a quarter of the nation's total income.

But who are these people and how do they get their money? Are they executives, doctors, lawyers, or financiers? According to a recent study of tax returns by three researchers reported in today's Washington Post, "executives, managers, supervisors, and financial professionals" accounted for around 60 percent of this group by 2005. Executives, managers, and supervisors alone were 40 percent of the group. 

The study itself is pretty dry material for the average reader, but the Post story by Peter Whoriskey frames their findings with a comparison of the top executives at Dean Foods, a Fortune 500 national dairy company. 

His lead paragraphs capture the reality of today's executive compensation problem:

It was the 1970s, and the chief executive of a leading U.S. dairy company, Kenneth J. Douglas, lived the good life. He earned the equivalent of about $1 million today. He and his family moved from a three-bedroom home to a four-bedroom home, about a half-mile away, in River Forest, Ill., an upscale Chicago suburb. He joined a country club. The company gave him a Cadillac. The money was good enough, in fact, that he sometimes turned down raises. He said making too much was bad for morale.

Forty years later, the trappings at the top of Dean Foods, as at most U.S. big companies, are more lavish. The current chief executive, Gregg L. Engles, averages 10 times as much in compensation as Douglas did, or about $10 million in a typical year. He owns a $6 million home in an elite suburb of Dallas and 64 acres near Vail, Colo., an area he frequently visits. He belongs to as many as four golf clubs at a time — two in Texas and two in Colorado. While Douglas’s office sat on the second floor of a milk distribution center, Engles’s stylish new headquarters occupies the top nine floors of a 41-story Dallas office tower. When Engles leaves town, he takes the company’s $10 million Challenger 604 jet, which is largely dedicated to his needs, both business and personal.

Meanwhile, as Whoriskey reports, 

while pay for Dean Foods chief executives was rising 10 times over, wages for the unionized workers actually declined slightly. The hourly wage rate for the people who process, pasteurize and package the milk at the company’s dairies declined by 9 percent in real terms, according to union contract records. It is now about $23 an hour.

The concern here is about relative gains. The ordinary workers, probably because of union power, are not destitute; $23 an hour is a decent wage. But their share of the overall wealth generated by the company is declining, just as ordinary workers' shares of national wealth are declining. And whose shares are gaining? The bosses'.

CNN reported in 2007 that the average American CEO was making 364 times more than the average American worker. With stock options and salaries and all the rest, the top bosses were doing quite well, even while they were downsizing and outsourcing and union-busting. As a result, CEOs became the single largest group within the top 1 percent of American income earners.

Back in the day people like Kenneth Douglas were willing to turn down raises out of a sense of solidarity. But people like Gregg Engles--and other winner-take-all executives--are jeopardizing the stability of our society. They might blame globalization, but they we all know that greed is the real problem.