The Four Legged Stool

[AllentownJake]

When I first began my career 8 years ago, I had the fortune to go to a forum with the old CEO of my company. The old CEO had run the company for 25 years and had an old fashion sense of business. He believed in something called the four legged stool in order for a corporation to be successful. The stool was the four stakeholders he believed in the corporation.

1) Management

2) Shareholders

3) Employees

4) Community which the corporation resides

The CEO did his best over his 25 years to balance those four interest, was widely respected by his former employees and the community which he resided. Don't get me wrong, he made a fortune, but people in the moderately size town appreciated him and didn't feel begrudged because they thought he was worth the money to all four groups. His belief was that if he balanced the four interest he'd have a long career and that he'd be widely respected in the community and by his employees. The latter being very important to him.

The new CEO, whom the old CEO had little respect for had a two legged stool.

1) Management

2) Shareholders

Generally speaking the employees weren't crazy about him nor was the communities that the company resided in. He would do the occasional charitable works projects but he was nowhere near to the extent that the former CEO had done. Community Relations were enough to keep the local government officials from hating the corporation. He lasted 6 years but probably made the same amount of money in 6 years that the old CEO had made in 25.

After I left he was replaced by a new CEO. From all reports this CEO believes in a one legged stool

1) Management

He's hated by his employees and the communities he has his business in hate him because he's constantly laying people off. He'll make as much as the first CEO and second CEO did in their careers in two years. Won't matter to him probably. I don't know this personally but I'm guessing he knows that when he leaves he will get a Golden Parachute and can retire early or take a consulting job and board appointments as an ex-CEO. When he became CEO he won the equivalent of the power ball and frankly speaking he doesn't have to work another day in his life after 2 years.


The three CEO's show an evolution of management and business culture in this country. It also shows some of the results of executive compensation. Whether or not these three men are of better character or not I don't know. The conditions for the first CEO were that in order to build a fortune he needed a long career at the top. The latter two needed less time to amass enough money to never have to worry about money again in their life. All three desired to have a fortune. The difference was what was necessary in the society they were living in to obtain it. I'm not sure how the second two CEOs would have turned out if they were paid less and required more years at the top to obtain the money that they achieved.

[YOY]

1. Well now, you have to ask. Just what genious shareholders, Boards of directors more specifically

would hire numbers 2 and 3 and justify their salaries?

[AllentownJake]

2. Simple answer

BOD are filled with number 2 and number 3 or retired number 2 and number 3 or former politicians who got donations from number 2 and number 3.

Why do they justify the obscene salaries for number 2 and number 3, because number 2 and number 3 will justify the same salaries for the Board members.

There might be the occasional academic who sits on the Board for show but doesn't speak up because he/she likes their $100,000 a year they get to sit on the Board.

[YOY]

3. The same answer evertime I look at it. a combination of nepotism and greed.

You know, some folks here truly think all MBAs are like these weasals. I'm happy to tell you it's not true. Just the rich bastards who all seem to know each other and all seem to shove golf clubs up each others' asses in their spare time.

[AllentownJake]

4. Most MBAs are in middle management

Struggling to feed their wife and kids and forced to do the dirty work of the E suite.

It takes a certain amount of Machiavellian machinations and out right ruthlessness to break out of middle management into the upper tier. Not saying that everyone has to do it, some (very few) get their on their own merit the old fashion way through hard work. None of those people break it into the CEO chair.

There is way too much fast tracking going on in this country. Generally speaking the biggest fuckers are the ones that were fast tracked.

The first CEO started off at the quasi-bottom as an actuary and got promoted because he was one of the best actuaries. The second CEO started off as a Vice President and was brought into the company from another company. The third CEO was brought in as part of an acquisition and after 2 years managed to stab the second CEO in the back with the board by promising to be more ruthless.

[AllentownJake]

5. Afternoon kick

Because I like this post more than anything I've posted in the past few days.