Friday, May 10, 2013
THE CEO IS NEVER WRONG
THE CEO IS NEVER WRONG
Years ago, when I was pushing paper for a large Wall Street brokerage firm, one of my departments responsibilities was to report certain trading statistics to upper management and ultimately to the CEO. One statistic which management was particularly interested in was the percentage of transactions on the New York Stock Exchange which were executed by our firm.
The percentage we reported daily claimed our firm executed around five percent of the total shares transacted on the NYSE. Every time we had a new Manager above our department level this statistic was challenged. (You are welcome to skip down to the meat of this post, as the following explanation will be a bit boring.) Every new manager would ask the same question, “If the transactions on the NYSE were 100 million shares, and we executed 10 million shares, why do you report that we execute five percent of the NYSE transactions instead of ten percent?” (Boring right!) The answer (bear with me here) is the NYSE reports a transaction, which is both sides of a trade, buy and sell, we count executions, total of our buys and total of our sells. Therefore our executions to NYSE transactions must be divided in two to make apples equal apples, not oranges (there, done, just know that our reported statistic was correct.)
Once explained, Management generally mulled it over for a bit and then agreed.
One day, I noticed an article in the Wall Street Journal in which our CEO was responding to several questions. It was really kind of a puff piece for our firm. Our CEO in the way of bragging about how large our firm was, used a statistic that our firm was responsible for over ten percent of all transactions executed on the NYSE.
I immediately showed this to my manager who then called his manager to explain that our CEO was reporting a statistic that was two times higher than the actual correct number. The Manager chose to not tell the CEO of this error, instead, apparently the naked CEO was in fact wearing clothes and we were advised that from now on we should report the trading statistic incorrectly times two.
No one ever noticed or challenged the error, so I guess it really was not very important. Anyway, several years later our firm got caught in the Mortgage Backed Securities mess which brought on our current recession and we nearly went out of business. In order to save money my position was dropped and I became retired. The firm was bought out because we were too big to fail, and our CEO also retired.
I was retired with fifty weeks’ severance, the CEO retired with a golden parachute of over one-hundred and fifty million dollars.
I would like to take the time to now say to our lauded CEO, “Thanks a lot for putting instant profit ahead of long term growth and driving what was the greatest firm on the street for almost one-hundred years out of business…you dumb frigging ass!! Oh and you got that statistic wrong by times two!!"
I’m pretty sure he doesn’t really care.