If Smith Barney ex-boss invested in people, he'd earn the old-fashioned way

National Catholic Reporter, March 15, 1996 by Brian O'Shaughnessy

"$60 million for two years' worth of work." That's what Robert Greenhill is being paid, even though he was recently fired. "Guaranteed contract, which runs through 1998," continues the headline in the Jan. 11 Wall Street Journal.

Actually he wasn't fired. Greenhill, until recently chairman at Smith Barney, the nation's second-largest brokerage firm, "resigned after being stripped of some of his duties." He had been brought in "to catapult Smith Barney into an investment-banking powerhouse." For his two years of effort, Greenhill will earn $40 million.

Then there's the bonus, estimated to total "an additional $22.1 million over the next three years." For his successful work? Obviously not, but there is a guaranteed contract.

I don't think Greenhill should keep this $22.1 million, which the Journal rounded off to $20 million. He didn't earn it. Surely the very act. of giving the bonus sucks any lingering sincerity out of the Smith Barney TV commercial. "We make money the old-fashioned way -- we earn it." So why not give it away, Robert Greenhill? Every hundred thousand.

Isn't this one of the things wrong with America today? People taking what they don't earn?

Yes, that goes for those on public assistance looking only for a handout, even though eight out of 10 people on welfare are children, or women trying to steer their kids off drugs and out of jail and into education, hope and jobs. As for jobs at the bottom level, more than 9 million Americans worked last year. but their wages kept them in poverty, below $12,160 for a family of three. Their only bonus was a hopeless feeling that they'll never earn more.

So let's move the magnifying glass away from the underclass to the overachievers where some are paid $10,000 an hour for two years of work (presuming Greenhill averaged a 60-hour week). What does this look like through the lens of morality?

One prescription of the Catholic church is clearly stated in a 1967 papal encyclical: "Private property does not constitute for anyone an absolute or unconditioned right. No one is justified in keeping for his exclusive use what he does not need when others lack necessities." Yes, the freedom of business, entrepreneurship and finance should be protected, but "the accountability of this freedom to the common good and the norms of justice must be assured." the U.S. Catholic bishops taught 10 years ago.

And what are some "norms of justice" ? For Catholic morality, they are not theoretical principles, but certain concrete, minimum guarantees necessary to support a family in dignity. Besides an adequate wage, these include "adequate health care, security for old age or disability, unemployment compensation, healthful working conditions, weekly rest, periodic holidays for recreation and leisure and reasonable security against arbitrary dismissal."

At the time Greenhill was Smith Barney chairman, millions of Americans, constituting the flesh and bones of "the common good," received the $4.25 minimum wage and earned about $170 a week. Meanwhile, Greenhill made almost $170 a minute. Does he, morally, have an absolute or unconditioned right to such a salary? To such a bonus?

Here are some suggestions for what Greenhill could do with the $20 million that will soon be coming his way.

He could start the Robert Greenhill Trust Fund to avert foreclosures. It would keep families from losing their homes when the breadwinner is "stripped of some of his duties," or downsized. Assuming the $20 million unearned bonus earns 15 percent in a Smith Barney account, 600 families each year could receive a grant of $5,000 to assist in homeowner payments.

Many of the workers in danger of losing their homes once presumed that two "contracts" were guaranteed in a decent society. One says that if you work hard. you'll get ahead. It's been passed on for generations, only to be discarded recently. Note the 9 million working poor. And note Mr. Median Middle Class who has fallen further behind over the past two decades, despite hard work. His salary has decreased from $25?896 a year in 1979 to $24,700 in 1995. (On the other hand, salaries in the top 1 percent increased by 78 percent between 1977 and 1989.

The other "contract" says that when the company profits, so do its workers. This, too, has been shredded. Take General Electric in Schenectady, N.Y. Profits are soaring, yet productive workers are being fired, 350 recently, following the thousands last year, and so on.

Here's other possibilities for your bonus, Mr. Greenhill. How about giving $2 million to 10 of the best programs (private, of course) in the country that are successfully retraining workers for jobs of the future. Or to some of the excellent organizations that are providing skills, training and technical assistance to those who want to earn their takings, if given the opportunity. I'm involved with two such programs in the Capital District.

One, called the Troy Neighbor to Neighbor Program, is located at a federal housing site along the Hudson River. The other, the Employee Ownership Project, is in Albany's struggling Arbor hill section. Because of government cutbacks at the federal and state level, both programs could fold before the end of the year. Yet they are assisting low-income citizens to become employable and literate in English and computer skills, pass high school equivalency exams, get into colleges, start businesses and micro-enterprise efforts, and find work and child care. The total annual budget for both programs? One-half of 1 percent of Greenhill's $20 million unearned bonus.