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March 24, 2005



"Calculus of driving isn't lost on women"
Published Cape Cod Times Mar 26, 05'

Regarding the storm over Harvard President Summers' remarks:

In a recent yet unpublished study relating to proclivity and prowess in applied math and physics, researchers simulated being lost while driving. The husband drove and the wife rode.

Cortex electrodes revealed that the wife stimulated the intuitive zone while the man's mathematical nodes were active. Post-simulation, the wives claimed that knowing where they were going seemed the paramount issue while the men, on debriefing, said they were calculating how much faster they would have to drive to make up for lost time.

Case closed?

Not entirely. On switching positions at the wheel, men's math activity tended to decline, particularly among those who felt they wouldn't be lost if they were driving. Ninety-two percent of the wives asked for help, although it was outside the test parameters, but 8 percent of the women did have increased mathematical activity.

None would disclose what formulas they were devising.


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Our founding Fathers, privately men of God, chose Enlightenment Philosophers, Locke, Hobbes, Machiavelli, Rousseau and others as the source and inspiration for creating our founding documents. It is entirely reasonable to state that God's blessing was sought but the drafting of our Constitution and Bill of Rights was a endeavor to enumerate how fallible men might maintain a government acceptable to and accountable to the governed.

If being of a specific religion or needing to be religious or to appear to be religious is now a prerequisite for holding public office then we have retreated from Enlightenment. The law of our country is that a person of one religion may not be held to be ascendant over a person of another religion or a person of no religious beliefs.

"Of the People, by the People.." by the design of good pious men, by law, by their best thinking for creating a lasting and just government specifically excludes religion as a positive consideration for holding office

Today we hear a lot of God this and God that and Christianity this and that from Congress and the Oval office, including a certain specificity of religion when Jesus Christ is intoned. Ronald Reagan's son, also Ron, has been oft quoted as saying, "My Father was a very religious man, but he didn't wear his religion on his sleeve." President Reagan therefore upheld the spirit of our Founding Documents.

There exists a point that when public debate devolves from "Of the People, by the People" to "Of the religious, by the religious" that the spirit of our so heralded Constitution is blasphemed. Those who have taken an oath to uphold the Constitution need temper promotions, promulgations and practices that de facto or de jure undermine the laws and spirit of our great Nation.

An excerpt from Thomas Jefferson's Bill For Religious Freedom (1779) says much:

".........that the impious presumption of legislators and rulers, civil as well as ecclesiastical, who, being themselves but fallible and uninspired men, have assumed dominion over the faith of others, setting up their own opinions and modes of thinking as the only true and infallible, and as such endeavoring to impose them on others, hath established and maintained false religions over the greatest part of the world and through all time:"


March 21, 2005



The first three paragraphs below comprise my historical perspective, formed thirty years ago, on how and why executive compensation has spiraled out of reality. This is followed by the argument that executives and their minions have their pay "grossed up" to cover the prevailing tax burden which means the Republican roll back of billions of dollars in taxes for corporate titans was logically absurd.

The subject of CEO compensation, (and concomitant thereto executive ethics) has been a subject of interest to me for thirty plus years. When I was a young fast track officer with Bankers Trust Co., Manhattan and London, I concluded that the old way to the executive floor which was Yale or the like and prep school and 'society' background was dying out. Wickedly bright, hardworking and manipulative types that eschewed the old boundaries of business and social etiquette became ascendant. I have never been surprised that the new breed of top dogs and their accomplices, the "Board," basically steal from the shareholders. Something akin to 'noblesse oblige' or restraint of greed began to disappear lo so long ago.

A personal memory comes to mind. Circa 1985, B.F., a straight arrow school acquaintance, related to me his confusion. He had expected to toil as a bank officer for a lifetime and consider himself successful if he managed to put his three children through college and retire with a living pension. As I sat in front of him he said that due to burgeoning salaries and bonuses he then had the entire capital for three Ivy League educations, “liquid.”

Another contributing factor, in my opinion, is that the shareholders of record for the Fortune 500 or 1,000 used to contain a significant block of original founding shareholders or their heirs with 1% to 7% of the shares, who in no way would countenance a CEO and his gang taking two to fifty two million dollars off the top. Also, most shareholding back then was funneled through bank trust accounts, read trustees, who likewise with the founders' heirs would not tolerate 'theft.' Today, founder's stock is diminimus and the mutual fund advisors are either part of the gang, making millions for any level of performance, or do not have the moxie to exert influence. Recently it has been written that pension funds are seeking influence which is hopeful as well as a sign that the aforwritten is valid.

Gross pay. A mid level executive earns a perk, a car for example. For simplicity sake we'll say that the first fifty per cent of the car's value is not taxable by the receiving individual. The remaining fifty per cent is akin to a luxury and is taxable income. He is given the car and a raise to cover the taxable income and then the raise is 'grossed up' to cover his tax expense on the raise itself. A new hire even, an MBA or law grad, entering Manhattan will be paid above and beyond, dare I say it, a Red State wage to net sufficient income to cover all taxes and high cost living conditions, a grossing up.

Similarly, much of the membership in today's executive elite, given that there is no real deterrent to naming their own pay, in essence write their own compensation package. What they damn well expect after taxes can be the starting point of their pay if they so choose. This amount, with the help of some pretty pricey hired hands, can then be 'grossed up' to meet expectations..

One may conclude that there is ample evidence that controls on executive pay have simply been lost. There is no countervailing force and shareholders for the present have no option but to accept that the elite write their own ticket. Nicholas Kristoff quotes a study by Bebchuk/Harvard and Grinstein/Cornell that the pay devoted to the top five executives at public companies has risen from six per cent of their profits to ten per cent in the last ten years alone. Now that is gross.

But, when the richest among us, those who can increase their pay to cover prevailing taxes, have their six, seven and eight figure net incomes ratcheted upwards by an unnecessary tax cut, that is twice gross. Stinky really.

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