Corporate Bureaucrats Cloak Themselves in Entrepreneurial Banner

The Financial Times released results of a new FT/Harris poll:

Thus continues the corporate class’ continued propoganda campaign, with the complicity of mainstream financial media, to promote themselves as the engine that makes the world turn. Notice how often these corporate managers drape themselves in the mantle of entrepreneurship to defend their egregious compensation.

Here is the first Wiktionary definition of “entrepreneur”:

1. A person who organizes and operates a business venture and assumes much of the associated risk.

The key phrase is that the entrepreneur “assumes much of the associated risk.” Of course, much of this associated risk stems from the seed capital and sweat equity contributed by the entrepreneur. True entrepreneurship is still much admired by Americans — look at how both Obama and McCain tried to play up to small businesses during the recent election.


In stark contrast, these corporate bureaucrats, managing large mega-corporations, have little “associated risk”, other than losing their job. The large corporation has already developed enough critical mass that the organization itself is bigger than any one person within it. After all, will Apple tumble into obscurity once Steve Jobs moves on? Unlikely.

This makes the executive suite little more important than a common employee and yet, these corporate managers seem to think they’re entitled to extravagant bonuses, stock options, corporate perks and other wasteful compensation. Yet if these bureaucrats fail in their job, it is the shareholders who bear the brunt of that failure. Some corporations require that the top corporate officers build a meaningful equity position with, at most, a loan from the company.

I do not object to corporate bosses owning large exposure to the businesses they manage but they should come by this ownership in a similar manner that the entrepreneur does — they should earn it and pay for it themselves.

No less a personage than Warren Buffett shows the way but as he so often reminds us, Buffett’s views on executive compensation are deeply unpopular in the corporate world. Why should other CEOs listen to the greatest investor of all time, a man who transformed a dying textile manufacturer into one of the world’s most respected financial and operating holding companies? Buffett may be immensely wealthy but it is because he has ever been the owner/entrepreneur, rejecting extravagant salaries or bonuses. Even when he ran a hedge fund, Buffett made sure to include an element of risk on his end, refusing any compensation unless his investors made money.

Today’s corporate class earn ridiculously high compensation while laying off all the risk onto shareholders, taxpayers, creditors, anyone but themselves. They stack their boards with little more than rubber-stamp cronies and resist most efforts by the owners of the company, shareholders, to assert their views.

As the corporate bureaucrats continue to delude themselves into thinking they are more important than the rest of us and enlist their lackeys in the media to pump this viewpoint, disparate interests ranging from the unions to Carl Icahn have vowed to put these sycophants in their rightful place.

Even the longstanding link between small business and corporate America have strained as stories like this one from today’s WSJ demonstrate. ¬†As government bailouts benefit corporate America, often at their expense, America’s true entrepreneurs and small businesses are beginning to realize that they’ve been had.

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