UC Execs Get an F

January 1, 2011 at 2:07 pm 5 comments

Dean Christopher Edley, graduate of the Lloyd Blankfein School of Public Relations

The San Francisco Chronicle reports that 36 top executives in the University of California system are demanding increases in their pensions. The group has written a letter to the UC Board of Regents calling the increase a “legal, moral obligation” and threatening to sue if the demand is denied. The executives cite a 1999 agreement to boost pensions if the IRS lifted a cap; it did so in 2007.

The UC system is currently in a budget crisis, as are all public schools in California and the state itself. Per the SF Chronicle, UC has over $20 billion in unfunded pension obligations. The increase demanded by the 36 executives would cost more than $5 million a year and $51 million in retroactive reimbursements from the 2007 trigger date.

Among possible self-inflicted PR wounds, money grabs are some of the most infuriating. The UC execs have infamous company:

2003, American Airlines. While exacting more than $1 billion in concessions from workers, executives at American Airlines concealed hefty retention bonuses and pension protection for themselves. After outcry, the execs surrendered the perks and CEO Don Carty left the following year.

2009, AIG. After receiving $170 billion in bailouts, insurance giant AIG announced $165 million in bonuses to members of the financial products unit, the company group at the center of the 2008 economic collapse. Public, political and media outrage came swiftly. Most of the top execs returned their bonuses.

2009, 2010, Goldman Sachs. The Wall Street giant has paid billions in quarterly bonuses during the Great Recession. Each bonus announcement burnished Goldman’s image as the epitome of Wall Street greed. The abrasiveness of their PR chief, Lucas van Praag, only worsened the firm’s rep. In an attempt to counter negative reactions, Goldman contributed $500 million to a small business development fund and switched compensation for its advisory committee from cash to stock.

All the above groups, including the UC execs, have made similar arguments: the financial rewards are necessary to attract and retain top talent. AIG’s rationale deserved a special honor for circular logic: the people receiving the bonuses were needed to undo the mess they had created.

As we have become a nation of expendable workers, no one can sustain an aura of indispensability. Scan the comments section accompanying any online news coverage of the UC execs’ pension demands and you will read dozens of calls for the execs’ termination.

Many have already turned the execs’ “a deal is a deal” argument back on them, citing the University of California’s deal to provide quality, affordable education, a deal undone by curtailed classes, slashed staff and hiked tuition. The UC homepage promises the system’s 10 schools will “open their doors to all who work hard and dream big.” The same homepage links to an overview of pension revisions for standard university employees. Here’s a hint: future retirees will take their lumps.

Amazingly, parties with self-inflicted PR wounds have the strength to twist the blade anew. As criticism and scrutiny mounted, Goldman CEO Lloyd Blankfein stated that his firm was “doing God’s work.” Amid the UC pension flap, Dean of the UC Berekley Law School, Christopher Edley, is the only one of the 36 UC execs to speak to the media to date. He defends the demands for higher pensions as important to his family. He sarcastically refers to himself and his 35 colleagues as “craven scum,” acknowledging yet dismissing the PR fallout of their actions.

Predictions for the new year:

  • Outrage and protests will grow as students, students’ families, and ordinary Californians return from the holidays. Social media will increase awareness of the story. I learned about it on Facebook from my state assemblyman, Jeff Gorell.
  • Every politician and pundit with a pulse will be able to score easy points off greedy execs and any milquetoast regents.
  • There will be defections among the 36 executives demanding higher pensions; people were ready to march on the homes of the AIG bonus recipients. By signing the letter to the regents, all these execs now bear a scarlet letter.
  • As self-appointed spokesman for the execs, Dean Christopher Edley stands with Goldman Sachs’ Lloyd Blankfein in issuing cringe-worthy quotes. If he keeps opening his mouth, he may join the league of BP’s Tony Hayward. Like Hayward, Dean Edley may be looking at an early retirement, with or without a fatter pension.

POSTSCRIPT 1: UC faculty launch an online petition condemning the pension demands of the high-paid execs, a group they dub “the gilded 36.” The executives’ disregard for public relations begins with disconnection from UC’s vast internal audience.

POSTSCRIPT 2: California State Assemblyman Jerry Hill introduces a bill to cap all state employee pensions. It would categorically enforce the upper limit of calculable annual income: $245,000. The IRS’ lifting of this rule for UC due to its nonprofit status precipitated the pension demand letter by the 36 UC execs, all of whom have salaries near the standard limit or well above it. The bill is a predictable response to the furor, resembling to moves in the U.S. Congress to staunch the AIG bonuses.

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Entry filed under: Crisis Communications, Employee Communications, Leadership, Public Affairs, Public Relations, Social Media. Tags: , , , , , , , , , , , , , , , , , .

Turning the Tide, Part 2 Mass Killers and Communication

5 Comments Add your own

  • 1. James Strock  |  January 3, 2011 at 8:57 am

    Brilliant!

    Reply
    • 2. jasonkarpf  |  January 3, 2011 at 9:21 am

      The UC execs’ actions and attitudes are clear violations of your excellent book, Serve to Lead. The execs have forgetten the people they serve. An insult to the students and the citizens of California.

      Reply
  • 3. Billy Sammons, Ph.D.  |  January 3, 2011 at 2:50 pm

    There are many willing and capable replacements just waiting for the opportunity to make six-figure incomes for doing “God’s work”…I say let the greedy execs go so they can get a taste of reality in the present economic maze of job uncertainty and duress…they should be ashamed…

    Reply
  • 4. Dan Rice  |  January 5, 2011 at 12:18 am

    Excellent article as always Jason!

    With students at UC and CSU systems already protesting over rate hikes over the last year, I can imagine a dean’s plea for better compensation will fall on deaf ears. That this comes from the UC system is particularly troubling, given that they recently reached that psychological barrier of $10,000 a year in fees for resident undergrads. At some point, the economics will bite back. Between higher fees, fiscal irresponsibility on the part of the state government, and a dwindling tax base (through unemployment and emigration), a breaking point will be reached. This statement strikes me as a “last one out, turn off the lights please” situation.

    Reply
    • 5. jasonkarpf  |  January 5, 2011 at 8:55 am

      Well put. Higher fees at California universities not only destroy affordability, they undermine the school’s positioning against other institutions per your psychological barrier. My son is a sophomore at Cal State Channel Islands. We’ve been seeing this first-hand.

      Reply

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