In 1987, Oliver Stone’s hit Wall Street debuted and its popularity swept the nation by storm. The Oscar winning blockbuster shined a light on the world of corporate take overs and the devastating effects they can have on businesses and the individuals that work in them. The most memorable take away from that movie is Michael Douglas’ character giving a speech on greed. To quote Gordon Gekko…
“The point is, ladies and gentlemen, that greed, for lack of a better word, is good. Greed is right. Greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit.”
Now for those that have seen the movie, you know that the "greed" in which Gordon Gekko spoke of wasn’t just unethical, but illegal and he finds himself in jail by the end of it. This is a happy sort of ending for the those out there rooting for the good of the people. Since this was just a movie, we can give ourselves that happy ending, or at least Oliver Stone can. Unfortunately, the real wall street functions a little differently.
In the late 1910’s Ford was the most dominate force in auto manufacturing and had built quite the empire. The Ford corporation was sitting on a hefty surplus and instead of paying out larger dividends to its shareholders, Ford set off to raise wages, expand his business, and lower the cost of his automobiles for the people. The Dodge brother, who were minority shareholders, were not happy about this decision and took Ford to court. In 1919 the Michigan Supreme Court gave it’s ruling on Dodge v. Ford Motor Company and that ruling was in favor of its shareholders. Essential stating that corporations owe their wealth to shareholders and nothing to its employees.
Let us now fast forward a bit to 2020 and why I bring this up. ExxonMobil announced a couple weeks ago that it will be raising its debt in order to pay out dividends to shareholders. This isn’t a tactic I agree with, but obviously I don’t have a say in the matter.
However, this is where all these stories mentioned before come together. This week an article was published announcing that Exxon will cut its match to employee’s 401ks. This isn’t out of the ordinary, in fact a few weeks ago we wrote an article on what actions to take if this happens with the company you work for. What is unacceptable is that Exxon still expects to payout dividends to its shareholders! How can something so unethical happen while so many middle- and lower-class families are suffering through this pandemic? Well, because in this instance greed isn’t just good, it’s legal.