Kent Bush: Thain's costly office remodel comes at bad time

When someone becomes the CEO of a Fortune 500 company, you know they are among the most intelligent - or at least most cunning - people in the world.

Unfortunately, the rise in stature is often accompanied by a drop in logic.

Nothing poisons the mind like success. Wants become needs, and luxuries become necessities.

After all, this is what it takes to do the job at the level that is expected of a master of industry.

All too often these corporate stars fail to live up to the expectations of those who lifted them into the rarified air.

In good times, they merely become dead weight at the head of an otherwise successful company. In bad times, they become villains reviled for their waste while thousands of people lose their jobs and the company's stock goes into the tank.

John Thain is a perfect example of this syndrome.

Thain rose to leadership in financial giant Merrill Lynch. When failed investments began to weigh on the bottom line, Thain pushed through a sale of Merrill Lynch to Bank of America.

Since the sale, the company has been an albatross around the neck of B of A.

Millions of unexpected fourth-quarter losses have sabotaged Bank of America's attempts to regain stability after a huge influx of government bailout money.

But beyond the performance of the company Thain leads, he came under personal attack before his recent resignation.

He reportedly spent $1.22 million on remodeling his office and paid out more than $4 billion in end-of-the-year bonuses.

When asked why he would spend such a huge some of money on his own office when the previous office was sufficient and his firm was in financial trouble, Thain said the remodel was necessary.

"It would have been very difficult for me to use it in the state it was in," he said.

In order to bring the office into a serviceable condition, he personally signed for the addition of a $13,000 chandelier to provide light when he was working late into the night; $25,000 for a mahogany pedestal table to hold notes he received while eating in his private dining area that was also refurnished with $37,000 worth of chairs; a $68,000 credenza (it was hard to make fun of this purchase since I had to look up what a credenza is - too much CNN, not enough HGTV); $175,000 for a rug and two chairs to sit on the rug; and $35,000 for a commode on legs - which for the sake of the cleaning crew was hopefully for design purposes only.

If Merrill Lynch were going strong, these purchases would be jokes around water coolers and mental notes made by employees who weren't satisfied with their annual raise.

But when Rome is burning, no one appreciates the fiddle player.

However, not all of the employees are upset with Thain's spending style. Many employees shared in $4 billion worth of year-end bonuses. Most people find it hard to justify these bonuses that came directly from government bailout funds.

Thain can explain.

"If you don't pay your best people, you will destroy your franchise," Thain said. "Those people can get jobs somewhere else and they will."

Given that they had to receive bailout funds from Congress to survive, the assumption that taxpayers benefit from protecting the bank's franchise is beyond arrogant.

A real leader would have seen that it was time to change some of these "key people" in order to find a new direction that didn't lead the company in front of a Congressional subcommittee with its hand out hoping to be rescued from its own failures.

After all, it is the fast and loose financing, lending and investment policies that led to the fall of the first domino that eventually toppled our entire economy and left us in a deep recession.

Thain is not alone in his hubris.

Citigroup recently received $45 billion in federal aid. But that didn't stop them from adding a state of the art, foreign-made corporate jet to the fleet.

They went from bailout to blowout in less than a month.

Spending $50 million on a luxury jet while laying off 24,000 employees this year to cut expenses is the kind of decision that boggles the mind.

These corporate fat cats think nothing of such expenditures on their own "equipment." But they hold no value for the employees who make $20,000 to $50,000 a year.

These modern day Antoinettes look to the victims of the layoffs from the windows of their luxury suites and hope there is enough cake to go around.

Congress is partly culpable in these crimes against logic. They allocated vast sums of taxpayer dollars with no restrictions or requirements.

Free money is burning a hole in these corporate pockets.

The positive effects of the bailout, if they exist, have yet to be felt. Hopefully lessons have been learned that might allow round two to have more substantial results.

Augusta Gazette