I was watching Bloomberg TV this morning, and there was this excerpt from the news that focus on the social corporate responsibility (Citi and Chase buying new Corporate Jet). In this trying time when companies are embarking on massive lay off just to stay profitable, most of these companies are also receiving aids from the Federal Government to cushion the blow and effect of the financial crisis. Does it make any business or economic sense for our corporate bodies to invest proceeds from these FG loans and cost saving from job cut on Corporate Jet? What sort of argument justify laying off loyal employees who has been with the firm for more than 20 years just because a new corporate Jet is needed. What can we do on our part as a shareholders / tax payers / patriotic citizen to repudiate this idea of corporate greed?

@courage89,

How does a businees tool equal corporate greed?

enough of this populist craze. The 24 hr news cycle has turned the average american into an uninformed noise maker. How do you expect these conglomerates to make money if they have to be relying on mass transit to get from point A to B?

Tayo-D:

@courage89,

How does a businees tool equal corporate greed?

I equate buying corporate Jet to greed because it is done at the detriment of their laid off employee. My understanding is that these banks currently possess more than 4 fleets each that takes care of their daily business activities, so why buy more at this time. How many more fleet do you need to service your business, when you're not in the airline business. Do you guys know how many people has been laid off from Bear sterns (JP Morgan) and Citibank combined all in the name of cutting cost. Most of these laid off employee are loyal employee that have been with company for more than 20 years. They have mortgages, kids that they support, they have life that depend on the expected corporate income. Imagine if you or your family member have been with a company for more than 20 years, you've build your whole life around the company. Your boss called you into the office, told you they have to let you go because market crisis is affetcing their daily business and they need to cut cost. Four weeks later, you find out that the bank is using part of that proceeds from cost cutting activity as a down payment on a luxury Jet. How would you feel?

Also, we all know how much these companies received under TARP money. The purpose of TARP money is to fund revival of the economy. To increase liquidity within the business industry and consumer spending. These funds was and is to be utilized judiciously to bring laid off employee back to work. Most of these financial institution pushed for TARP money on the premise that Mortgage crisis, CDS, ABS and all other securitization are having their toll on their general asset. How is buying luxury corporate jet going to change this? Is buying a corporate jet going to increase revenue by 10-20%?

I am of the opinion that corporate mogul have specific responsibilities they have to attend to especially when they are receiving Tax Payers money to do business. They have to make sure they stand by and retain their loyal employee especially when these employee needed it the most and when they (corporate) have means for it. I don't work financial institutions, nor do i have family members that work for them. But, we hear stories everyday of how people loose their lifes, homes, families over this corporate lay offs. My yearning is not about corporate bodies buying luxury jet, but corporate body doing more to embrace their social responsibilities.

@courage89,

Let me try to set your thinking straight here.

I equate buying corporate Jet to greed because it is done at the detriment of their laid off employee. My understanding is that these banks currently possess more than 4 fleets each that takes care of their daily business activities, so why buy more at this time. How many more fleet do you need to service your business, when you're not in the airline business.

Do you think buying a jet is like walking into a car dealership, picking up the car of your choice, and walking out after writing a cheque? That they are receiving their jets now does not mean they just bought it. They probably placed an order for those jets no less than a year ago and would have put down an irretrievable and hefty downpayment towards the purchase. They would have lost all that money had they refused to take the jets. It is even possible that they would have had to ay the full price even if they refuse to take delivery of it. Did you consider this before jumping to such a conclusion?

Do you guys know how many people has been laid off from Bear sterns (JP Morgan) and Citibank combined all in the name of cutting cost. Most of these laid off employee are loyal employee that have been with company for more than 20 years. They have mortgages, kids that they support, they have life that depend on the expected corporate income. Imagine if you or your family member have been with a company for more than 20 years, you've build your whole life around the company. Your boss called you into the office, told you they have to let you go because market crisis is affetcing their daily business and they need to cut cost. Four weeks later, you find out that the bank is using part of that proceeds from cost cutting activity as a down payment on a luxury Jet. How would you feel?

Forget all that story about people being laid off. Corporations are set up for one purpose and one purpose only, to make money. If those employees could make them more money at this time, they will surely keep them. Why retain employees that become a liabilty rather than an asset? That is the beauty of the free market system. It does not respect your race, religion or sexual orientation. It is guided by one rule only, the desire to turn a profit. No employer will lay you off during this recession or at any time whatsoever if you can prove to that employer that for every dollar he pays you, you will make him a profit of $2. It may sound cold, but that is just the reality of the market place.

Also, we all know how much these companies received under TARP money. The purpose of TARP money is to fund revival of the economy. To increase liquidity within the business industry and consumer spending. These funds was and is to be utilized judiciously to bring laid off employee back to work. Most of these financial institution pushed for TARP money on the premise that Mortgage crisis, CDS, ABS and all other securitization are having their toll on their general asset. How is buying luxury corporate jet going to change this? Is buying a corporate jet going to increase revenue by 10-20%?

And is retaining employees whose services are not in demand or unaffordable in the market place going to increase revenue by 10-20%? Why don't you have us all get rid of our computers and hire people to do the work that computers would do more efficiently and quicker? The same concept applies here. The jets are business tools required to get the job done. If the enterprenueurs think it does not help them to make money, they will get rid of them quickly. Nothing is more important to them than to make a profit. I expect you'll son tell our President to get rid of his jets and rather give the money to the unemployed!

I am of the opinion that corporate mogul have specific responsibilities they have to attend to especially when they are receiving Tax Payers money to do business. They have to make sure they stand by and retain their loyal employee especially when these employee needed it the most and when they (corporate) have means for it. I don't work financial institutions, nor do i have family members that work for them. But, we hear stories everyday of how people loose their lifes, homes, families over this corporate lay offs. My yearning is not about corporate bodies buying luxury jet, but corporate body doing more to embrace their social responsibilities.

A CEO's objective is not to keep an employee around; rather it is to keep the company around. You cannot keep an employee around at the expense of the company. My company recently let about 3 senior managers go because their goals and vision was considered detrimental to the company. Our President took a decision he considered in the best interest of the company. His job is to look at numbers and make intelligent decisions free of his emotions. It aint easy, but that is what he is paid to do. This is comparable to a President signing the death sentence for a citizen who's actions is considerd a threat to the well being of the country.

A free market place by definition is not guided by social considerations, even though the society benefits from its success. People who tampered with the free market place are largely responsible for the current mess we are in. When the corporate world is muzzled by the govt to give out loans to people who can't afford them in order to alleviate a perceived social injustice, you end up with a subprime mortgage which is at the root of the global meltdown. The poor and disadvantage you now claim to protect are the same people who will bear the brunt of the wahala. Talk about the law of unintended consequences!

Tayo-D:

@courage89,

Let me try to set your thinking straight here.
Do you think buying a jet is like walking into a car dealership, picking up the car of your choice, and walking out after writing a cheque? That they are receiving their jets now does not mean they just bought it. They probably placed an order for those jets no less than a year ago and would have put down an irretrievable and hefty downpayment towards the purchase. They would have lost all that money had they refused to take the jets. It is even possible that they would have had to ay the full price even if they refuse to take delivery of it. Did you consider this before jumping to such a conclusion?

I understand that buying a jet is a different ball game compared to buying a car. First you have to cough up initial deposit of about 30-40% as downpayment in anticipation that these fleets will be ready within the next 2-4 years. But, this proposition is a new development and I don't think it has anything to do with justifying last year's expenditure Downpayment or so. Check this article out.
http://abcnews.go.com/Blotter/story?id=7146474&page=1

Tayo-D:

Forget all that story about people being laid off. Corporations are set up for one purpose and one purpose only, to make money. If those employees could make them more money at this time, they will surely keep them. Why retain employees that become a liabilty rather than an asset? That is the beauty of the free market system. It does not respect your race, religion or sexual orientation. It is guided by one rule only, the desire to turn a profit. No employer will lay you off during this recession or at any time whatsoever if you can prove to that employer that for every dollar he pays you, you will make him a profit of $2. It may sound cold, but that is just the reality of the market place.

I understand that corporations are established for profit and sometimes not for profit, and how you run both depends on attracting and retaining best talent. We have to understand that financial institutions are service companies that rely solely on asset (people) to execute their day to day activities. Any investment in training, benefits, and corporate responsibilities will yield improved ROI. Any deviation from empowerment investment will have a ripple effect on the company future profitability. Most of these lay offs happened because of order from the above have to be satisfied, and not because employee’s were render useless within their departments. Please understand that because you’re the best in your department doesn’t mean your job is guarantee as well. If JP Morgan’s loyal employees were released partly because the company needs to raise down payment for luxury jets, what kind of signal does this send to the rest of their employee and the environs? It simply means next person could be you. How does this affect the orientation of the current employee, company’s ability to attract and retain best talent going forward? I will end by saying protecting profitability at the detriment of your asset is a misguided priority, and if not carefully checked will threaten the existence of that company.

Tayo-D:

And is retaining employees whose services are not in demand or unaffordable in the market place going to increase revenue by 10-20%? Why don't you have us all get rid of our computers and hire people to do the work that computers would do more efficiently and quicker? The same concept applies here. The jets are business tools required to get the job done. If the enterprenueurs think it does not help them to make money, they will get rid of them quickly. Nothing is more important to them than to make a profit. I expect you'll son tell our President to get rid of his jets and rather give the money to the unemployed!

Retaining employee during economic recession might not yield 10-20% immediately, but what is the NPV of that retained employee out of recession. My understanding of corporate strategy is to device plan that will withstand the brutal force of market / economic downturn, while shaping the future opportunity of the company. Employees that are not productive during recession can be empowered through training to shape the future of the company.

I understand that undertaking corporate jet is part of company strategy; to be more efficient in their dealings, but don’t you think 3 or 4 jets should be enough. JP Morgan currently has more than 3 or 4 fleets, why more? Why now? Is this new investment going to make the company more efficient?

Tayo-D:

A CEO's objective is not to keep an employee around; rather it is to keep the company around. You cannot keep an employee around at the expense of the company. My company recently let about 3 senior managers go because their goals and vision was considered detrimental to the company. Our President took a decision he considered in the best interest of the company. His job is to look at numbers and make intelligent decisions free of his emotions. It aint easy, but that is what he is paid to do. This is comparable to a President signing the death sentence for a citizen who's actions is considerd a threat to the well being of the country.

A free market place by definition is not guided by social considerations, even though the society benefits from its success. People who tampered with the free market place are largely responsible for the current mess we are in. When the corporate world is muzzled by the govt to give out loans to people who can't afford them in order to alleviate a perceived social injustice, you end up with a subprime mortgage which is at the root of the global meltdown. The poor and disadvantage you now claim to protect are the same people who will bear the brunt of the wahala. Talk about the law of unintended consequences!

CEO’s has a fiduciary obligation to both shareholders and employees. They have to be able to make informed decision, taking into consideration current situation analysis. Companies cannot just explore one way option by attributing lay off to cost cutting. Other options can be explore to enhance their informed decision. They can dialogue with these people; come to some form of concession to restructure their pay in anticipation that changes will be made when the economy improves. I’m pretty sure employee will prefer and agree to 25-40 % reduction in pay rather than loose their job. But I understand that most corporate CEO will not want to take that route because that threatening their fat paycheck as well.