Never mind the US$140 million paid to Richard Grasso for his work as a casino greeter. Never mind the hypocrisy of the New York Stock Exchange directors' giving Grasso his money and then booting him for taking it. The big shocker in the Grasso imbroglio may be that two years after Enron, almost a year and a half after WorldCom and long after corporate America told us that we were through the scandals and back on ethical ground, anyone who turns over a corporate rock can still find the earth crawling with maggots.
Of course, corporate leaders want investors to think that the worst is over and that new corporate governance rules have "wounded all heels." The rising stock market also helps lull investors.
But human nature is slow to change. Too many executives are up to the same old tricks of managing earnings, promoting stock prices with well-timed announcements about how business is rebounding and paying themselves a king's ransom. And too many boards are permitting this behavior because they are inept or inert, or both. As long as these practices go unchecked, scandals will continue to erupt.
This is not to say that there has been no progress in bringing a higher moral tone to corporate America. Last week, investors won three small but notable victories, which went largely unnoticed amid the firestorm at the Big Board.
First, the Northrop Grumman Corp, the military contractor, announced that it was finally dumping a poison-pill provision that it has had on its books for years. A majority of shareholders have voted to eliminate the provision, which essentially prevented a takeover, on three occasions since 1999. In this year's tally, almost three-quarters of shareholders voting wanted the provision removed.
Companies routinely ignore shareholder votes when the proposals come from stockholders, not management. But to its credit, Northrop decided to listen to its owners this year. In this environment, that is progress.
Another encouraging move came from Representative Richard Baker, a Lousiana Republican and member of the House Financial Services Committee. Last spring, he put a provision into an investor protection bill that would cripple state regulators' ability to fight fraud. Last week, he said he would set aside the provision to see if state regulators developed ways to coordinate their investigations more closely with the Securities and Exchange Commission.
It is perhaps no coincidence that Baker backtracked a bit; the disturbing findings in the mutual funds investigation by Eliot Spitzer, the New York attorney general, make this an especially odd time to be defanging aggressive regulators. At least Baker is now moving in the right direction.
Finally, General Electric's board said last week that Jeffrey Immelt, the chief executive, would no longer receive stock options. Instead, he will get stock units that can vest in 2007 only if GE's cash flow from operating activities has risen an average of 10 percent a year in the period and if its total shareholder return is at least that of the Standard & Poor's 500-stock index.
Yes, these are incremental moves. But they seem to reflect an interest in doing right by investors.
Alas, suspicions that scandals will not abate soon are justified. Even now, too few companies see that doing the right thing is not an option, but an obligation.