Monday, June 22, 2009

Et tu Tom ?

Tom Peters is a legend in the business world. He's such a legend that this doesn't even have to be said.

But that doesn’t make him always right. Occasionally, he can be wrong, for he is after all, human. In this instance, I think he is dead wrong.

I refer to his blog post – “I do not wish you harm”. He rails and rants against Robert Diamond, the President of Barclays plc for his “earning” $36.5m consequent to the purchase of Barclays money management business by Blackrock. He objects to the grin on Diamond’s face calling it “appalling – insensitive – stupefying – outrageous – disgusting - sickening in June 2009”. He seems to be objecting to the public spectacle when “thousands are in the process of receiving pink slips”. Read the comments on this post which are even more vitriolic.

Blackrock , a US based money management firm is buying the fund management division (Barclays Global Investors) of Barclays for $ 13.5 bn. Barclays, an UK based bank has been badly hit by the financial crisis like every other bank. So far, it has shunned government help and this sale is a means of raising cash. Barclays staff who own shares in BGI will get a windfall. Diamond himself will get $ 36.5 m. This is what has got Tom’s goat.

Sorry Tom. I don’t grudge Diamond’s payday one bit. This transaction is completely legal and above board. Barclays stands to make a profit of $ 8.8 bn from this deal. Read that again - $ 8.8 bn. I don’t see why a CEO who realized a profit of $ 8.8 bn for his company, should not make $ 36.5 m as a consequence. And do it publicly , with a grin. Why should he be apologetic about it and do so under the table ??

Just like we don’t grudge you your speaking fees which reportedly go upto $ 100,000 per engagement. You are a guru. You have much wisdom. People are ready to pay that amount to listen to you speak. It may sound incredibly excessive for a Somali farmer on the brink of starvation. But that is absolutely irrelevant. I do not grudge your wealth one bit. For you have more than earned it.

The clamour over compensation for business people has gone completely uncontrolled. Where it is “unearned” or gotten by thievery, pelt stones for sure. But where it is earned, applaud it. The world won’t become a better place by pulling down the wealthy. It will become a better place by pulling up the poor. Deng Xiaoping, a great man, said “to be rich is glorious”. That’s what made China, what it is today.

Robert Diamond – I wish you well.