Time For The Next Generation of Executives
I am writing to offer my name into consideration for the executive positions within your company–specifically, the Chief Executive Officer–and hope you will agree I am the perfect fit. I am well educated, resourceful, analytical, ethical, and decisive. However, this mix of qualities can be found in a myriad of candidates. What I would bring to your executive suite is much more valuable in these troubled times.
Before I elaborate, let me deal with an issue that I’m sure is at the forefront of your mind–my expectations for compensation. I am quite aware that there is an eminent move by the Obama administration to limit executive pay, and this is one reason I am currently writing to you. I realize that the common perception is, in the words of James F. Reda, “[that] $500,000 is not a lot of money, particularly if there is no bonus.” I wholeheartedly support others, who also seek this position, declining to be considered because of the meager pay. As a matter of fact, I will take the position for $400,000, if offered. Further, I encourage you to pay me three-quarters of that amount in equity. The reason I would suggest this is closely linked to my qualifications for the job, beyond the aforementioned.
First, I promise to be accountable. In these troubled times transparency is of the utmost importance. Companies’ leaders have to answer to their shareholders, their directors, their employees, and even, in some instances, the government. Uncertainty and the loss of confidence has caused the collapse of many firms. Too many executives have skated through the crisis by blaming problems on their predecessors (using codewords like “legacy assets”) a year or more later. Trumpeting a business model or a plan for months, or even years, to investors and the public alike, and then changing course abruptly shows a lack of leadership and ensures the market will assume the worst. In short, I will take responsibility for what happens on my watch, ensure my decisions are transparent, and will be ready to accept the consequences of my decisions and performance rather than deflect criticism.
Second, I will be a steward of our firm’s reputation and brand. Too many firms have consistently done the exact wrong thing. I will institute rules that ensure our sterling reputation emerges from this crisis intact. Further, I will hold employees accountable for actions that harm our image and will be harsh and swift to send the message that our firm doesn’t tolerate actions that cut against our values. Simultaneously, I will be a strong advocate for defensible decisions and use my position to ensure all relevant stakeholders understand our reasoning–I refuse to let the media scare me into making decisions that aren’t in the best interest of our firm. I will also ensure that tough decisions, like deferring or drastically reducing employee compensation, are made and explained. I promise not to tarnish our firm by repeating half truths and party-line nonsense in defense of the status quo.
Third, I promise to not be ruled by quarterly results and short-term gains. How many assets could have been sold and moved off of firm’s balance sheets, but for executives’ reluctance to miss out on any “upside” of these assets? How many buybacks and ill-conceived mergers were executed because they were the flavor of the day? How much more leverage was taken on because interest rates were low and competitors were doing the same? I will not bow to these “fads” and optical enhancements to earnings, at the expense of logic and long-term strength.
Fourth, I promise to get involved with every aspect of our business. I will make it my job to ensure I am very familiar with all of our products. Further, I promise to dive deeply enough into our business that I will be able to make intelligent decisions where others will not. If no one is asking the difficult questions, I will. If there is a poor incentive structure that leads to poor controls, risk management, or business practices, I promise to find out about it myself, not be told about the problem(s) when it starts adversely affect our firm.
Fifth, and lastly, I promise to eschew the trappings associated with being an executive–I will lead by example. I will set the example for our employees. I will maintain a modest office, fly commercial whenever possible (and that does not translate to “whenever I want to”), and ensure the company never incurs expenses for my comfort or convenience. In an era where travel and expenses are highly restricted for legitimate business purposes, for me to use my position for my own convenience would be inappropriate.
It is clear to me that I will bring exactly the sort of fundamental, common sense changes to your executive office that your firm needs. The past few weeks have shown us all that the current generation of executives, seemingly uniformly, completely fail to meet the obvious standards needed to lead our companies. Recent events have left companies’ equity values depressed, morale crushed, and, in some instances, partial or total financial collapse because of executives’ poor decisions, poor management of their brand and perception, refusal to take personal responsibility, and inability to think objectively and dispassionately about their business. And, when these executives have been forced out, they have been paid handsomely for doing an atrocious job by any objective measure. Simply put, I offer something different–any reward I will reap will come from the same reward you, as an investor, expect: an increase in the value of the firm’s equity.
I hope you agree with me that I am a great fit for an executive position–specifically, Chief Executive Officer–at your firm. Should you have any further questions, please feel free to contact me at DearJohnThain@gmail.com. I look forward to hearing back from you.
Dear John Thain