So, how much would you pay to play a round of golf with Tiger Woods? $10,000? $50,000? $75,000?
Now, how much would you pay to play a round with Thomas Ryan? What, you've never heard of Thomas Ryan? Well, someone has and, according to the
Wall Street Journal, that someone paid $130,000 for the privilege of a round with Mr. Ryan, chief executive officer of CVS, the huge Rhode Island based chain of pharmacies.
CVS sponsors the annual CVS Caremark Charity Classic at the Rhode
CVS gave just 16% of its charity tournament proceeds to charity. Others gave more than 50%.
Island Country Club. An unnamed supplier to CVS was the successful bidder for the round of golf at the ultra-private Liberty National Golf Club with Mr. Ryan, who carries one of the lowest handicaps in American business. From the New Jersey course, you can see the Statue of Liberty and the south Manhattan skyline. Wall Street is down there somewhere.
The
Wall Street Journal reported all this and more today in a front-page story squeezed among articles on the nation's financial mess. The successful bidders for access to Mr. Ryan paid the $130,000 during the auction at the charity event's gala dinner. Let me restate that: The
shareowners of the companies that bid on access to the CEO actually paid for the golf. Other suppliers spent similarly lofty sums for access to other CVS executives, including to those who make key purchasing decisions. Why does this seem like déjà vu all over again?
It looks tacky at best, from a corporate ethics standpoint, but by itself seems a pardonable sin (although one wonders where CVS' board members
Move over Dennis Kozlowski and Jeffrey Skilling. More are on the way.
have been, if not out on the golf course with Mr. Ryan). After all, the tournament has the name "charity" in it. That, however, is the most galling aspect of CVS' loose approach to ethics. In 2006, the company gave to local charities just $1.7 million of the $10.5 million it raised, or a mere 16%, wrote the
Journal. If CVS were a non-profit, news headlines in the
Providence Journal would be screaming that the expense and administrative rate was a whopping 84%, high enough to launch a Federal investigation. These guys eat very well, apparently. Bi-Lo, a grocery chain based in South Carolina, runs a golf tournament of its own and is able to provide 56% of its tournament revenues to charity, according to the J
ournal article. Rite-Aid, a CVS competitor, gives away 53% of what it raises at its own tournament. CVS either cannot manage its expenses, which doesn't say much for its business acumen, or the charity thing is a cover to have a smashing good time at the expense of shareowners and good corporate practice.
Ostensibly, the auction bidding is open to anyone, but there seems to be no such open bidding when it comes to donating the proceeds. CEO Ryan is a board member of the Andrade Faxon Childrens Charities in Rhode Island, which receives the lion's share of the 16% from the tournament. The charity is named for its founders, professional tour players Brad Faxon and Billy Andrade, and depends on CVS for most of its income. Faxon is listed as one of the hosts of the annual CVS tournament. He is also Ryan's playing partner at the annual Pebble Beach Pro-Am, where the two won the tournament in 2003.
I cast no aspersions on Mr. Faxon, a genuine good guy. But this is icky stuff, not exactly CEO excess on the Dennis Kozlowski scale but it comes at a time when no CEO wants to appear to be playing the self-interest game. CVS and its CEO have a major public relations problem, but other CEOs may not be able to spin their way out of their predicaments. The FBI announced yesterday that it has started an investigation of AIG, Lehman Brothers, Countrywide Financial and other financial services companies whose greed and bad business practices have been instrumental in bringing our nation's financial system to the brink.
The blood is in the water, and the infamous Kozlowski and Jeffrey Skilling (of Enron fame) had better move over. Roommates are headed their way.
Here is a
link to the Wall Street Journal story. If you cannot access it, send me a note (Contact Us button at top of page) and I will forward it.
