Come on.. give me a break.. this is really all about envy.. As long as corporations are not doing anything illegal.. or let me put it this way.. as long as their illegal activities are non-public, they are entitled for praise for their ingenuity for growth.. Ethical/Un-Ethical is all subjective and can't be really put to the test of the time.. It all depends on Individual Corporations to define their ethical standards and consumers to make a balance and choose between the corporations.
As far as Chinese manufacturing conditions are concerned, in my view, it is up to Chinese government to enforce laws of their country. At the same time, it is free press' responsibility to bring such issues out in public, so consumers can make educated decisions and balance their own ethical standards with the benefit or loss they are getting by using or not using the products of such a company..
Executive compensation is again their to drive innovation and growth, fruits of which everyone gets, in some form or other.. In case, executive performs un-ethical or more importantly, illegal activity, at least we are sure that in US, that executive will end up behind the bars.. However big shot or rich that executive may be.. moreover, it is fairly democratic process.. it is purely driven by performance and drive in the individual to become top shot executive.. Luck and other things may matter but they may at the most aid you.. if you have problem with their compensation, go and become CEO and don't take salary or stock..
Here is the original article in WSJ:
http://online.wsj.com/article/SB10001424052970204624204577183603902017984.html
Let's play a guessing game. See if you can deduce the company that I am describing below.
Company X is the envy of its industry. It's the leader in all the categories where it competes. Its competitors take aim at it in their advertising. Rivals deride Company X's practices privately and publicly.
They say Company X doesn't innovate, that its success comes from marketing. Company X has a Teflon image. But even the most disinterested observer knows Company X's foes are just jealous. Everyone wants Company X's products. Everyone wants to work there.
Why wouldn't they? Every quarter, Company X stuns Wall Street by producing earnings that outshine even the most optimistic expectations.
It appears there is no stopping X.
OK, so who is it?
If you need a hint, try this multiple choice.
A. Today's Apple Inc.
B. Goldman Sachs Group Inc. of just a few years ago.
C. Both of the above.
The answer, of course, is C. But that's the easy part. What I would argue is that Apple and Goldman, very different companies in very different industries, really are much closer to each other in their business practices than Wall Street and the general public think.
Reuters
Tim Cook, Apple's chief executive, last year was awarded restricted stock worth more than $445 million that will vest during the next 10 years.
For instance, Goldman has been tangled in lawsuits and investigations over its practices.
And Apple? Eastman Kodak Co. alleged Apple stole its patented camera technology. Nokia Corp. alleged that Apple copied parts of its operating system.
Goldman has been accused of fueling the mortgage boom and criticized for fumbling in front of lawmakers. Apple has had to defend its privacy practices, most notably its use of iPhone location data, before congressional committees, where executives gave stumbling and vague answers.
And we all know that Goldman has been taken to task for selling mortgage securities and structuring deals to, in the words of investigators, "bet against its clients."
The companies have said the criticisms are distorted, flat-out wrong, sour grapes or worse.
Less talked about are the benefits Goldman has bestowed on clients in the form of advice, financing and trading prowess. That's why Goldman continues to be in demand by companies, pension funds and investors even after its reputation was sullied. Facebook, perhaps the hottest company in the world, picked Goldman to run its private placement last year.
And as much as Apple is heralded for its product design, its efforts to run an environmentally friendly business and create products that make the world a better place, there is almost no attention paid to the fact that Apple is one of the nation's biggest users of outsourced labor.
Almost all of Apple's components are made or assembled overseas in conditions the company has acknowledged are sometimes brutal: grueling hours, low pay and abysmal working conditions in factory dormitories.
The labor issue isn't negligible. To do some back-of-the-envelope math: Apple reported $33 billion in profits during the last year. If 10% of those profits were attributable to labor savings and if that cash was given to U.S. workers at the median income rate of $26,364 (not including benefits), Apple could effectively hire 125,170 Americans to assemble iPhones, iPads and Macs.
That means Apple could effectively lower the U.S. unemployment rate by a tenth of a percentage point, not counting the economic effect of adding those jobs back into the U.S. economy.
Meanwhile, Apple executives take home tremendous compensation. Its seven-member board split more than $1.5 million last year. Tim Cook, Apple's chief executive, last year was awarded restricted stock worth more than $445 million that will vest during the next 10 years.
In contrast, Lloyd Blankfein, Goldman's chairman and CEO, reaped $19 million in total compensation in 2010, and $54 million in 2007, Goldman's best year. Goldman has a majority of its jobs in the U.S., and its work force is compensated handsomely.
Finally, consider each company's performance for investors. During Goldman's heyday from 2002 to 2008, the stock appreciated 229%.
Apple's stock appreciation since 2004 is roughly 2,300%.
Those runs were the result of ever-increasing profits such as those Apple reported Tuesday. Unlike Apple, though, Goldman is suffering from a backlash.
Will public opinion of Apple change? Who knows? One thing is clear. Both companies are hardly alone in their controversial practices. Mortgage fraud and indulgent risk-taking have been alleged against the entire banking industry, not just Goldman. Outsourcing and the stealing of patents in the consumer-technology business is standard practice, too.
That contrast dwells in the eye of the public. Think different, indeed.
Write to David Weidner at david.weidner@dowjones.com
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