Chief executive officers are about to go the way of constitutional monarchs. The real power in American industry will devolve to a new breed of CEOs, chief enforcement officers. At Wall Street firms, they might be called managing detectives.
After a decade in which they proved themselves competent at little else than their own enrichment, the old bosses will retain their titles but their duties will be ceremonial only. A president might sign the documents for a bond sale, for instance, but only after the chief enforcement officer has made sure the investment banker involved hasn't been hyping the company's wallowing stock.
Top corporate cops will be rare talents -- the antithesis of the back-slapping golfers we have known so well. The prototype may be Fuzzy Drummond, just hired as chief enforcer at BungleCo Inc, which has businesses running from rolling pins to mobile-home loans.
Fuzzy was a sergeant on the Cleveland police force who went back to college to get an accounting degree and then went through law school. He was working for the FBI, and about to take a job with the Securities and Exchange Commission, when BungleCo persuaded him to take charge of a company that had broken every imaginable accounting, disclosure and corporate governance rule.
So far so good, it appears.
Fuzzy has "persuaded" all 15 members of the current board of directors to resign in favor of a new slate of non-sycophants to be voted on next month. The chief enforcer also has fired the five CEOs from other companies who had made up the company's compensation committee and were quite naturally agreeable to paying BungleCo's former CEO well. Hiring substitutes has been a problem, however.
"The first candidate began by asking me if he could be flown to committee meetings in the corporate jet, which I got rid of the first day I was here," Fuzzy says. "Candidate two said he would try to work us in around his vacations to his company-owned resort." Fuzzy is now looking for candidates among his old cronies at the FBI.
Reforming BungleCo's audit committee has been equally troublesome. Fuzzy recently interviewed Hiram Workem Hard, the head of a retail chain, as a potential chairman for the group.
"Fuzzy showed the guy the door when he discovered he couldn't add, subtract, multiply and divide without a calculator," says I.C. Hope, BungleCo's new CFO. Another candidate thought a wash sale was something that happened at Sears, Roebuck twice a year, Hope says.
Fuzzy has canceled millions in severance pay for fired executives and some questionable retirement benefits like free apartments and office space. "Jack Welch may have earned front-row seats at the Knicks' games forever -- though I personally doubt it -- but these guys almost ruined our company," Fuzzy says.
Executives who survived Fuzzy's purge are having their perks cut too. Drummond has canceled their stock options, most of which were under water anyway with BungleCo shares down 97 percent this year. Instead, executives will be given shares outright -- if they meet certain goals. If not, they'll have to settle for their salaries.
"That @%&** called in my loan," a BungleCo vice president, Everett Upscale, was heard to complain recently. "You know, the one for US $2.5 million the old CEO approved last year. I had to sell my half-finished mansion to pay it off. Fuzzy says we have to be squeaky clean." Harvard Business School has been so impressed with what Fuzzy has done in such a short time, that it is planning a new two-year MBA program for chief enforcement officers.
Those who want to be top corporate cops will take such courses as: Black-and-White Accounting, Ethics, Plain Talk and Teaching Executives to Live on US $600,000 a Year. Candidates will spend the summer in between Harvard years at a US Marine Corps boot camp, modified to suit their ages and physiques.
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