Using words

I recognize the power of specific words, but I think that effect is often overestimated. Take as an example the news about merging financial companies Morgan Stanley and Smith Barney. They're using their bailout money for, ahem, interesting purposes (from Sam Stein through Kevin Drum):

The soon-to-be-merged financial giants — Morgan Stanley and Citigroup's Smith Barney — announced the payments during an internal conference call last week, but warned advisers against describing them in terms that would cause PR headaches.

"There will be a retention award. Please do not call it a bonus," said James Gorman, co-president of Morgan Stanley. "It is not a bonus. It is an award. And it recognizes the importance of keeping our team in place as we go through this integration."

I've worked in corporate America a long time, and I never fail to be amazed at the ineptitude with which executives use words. That a president of a large firm would believe that "retention award" would somehow get people to say, "Ah, that's fine, at least it's not a bonus," is laughable.

Certainly, I've seen these before. AIG paid these out last year, even after we the people kept the insurance giant afloat. Lucent Technologies, despite the use of near-Enron accounting tricks, ponied up similar money back in 2002.

What I think happens is that management gets scared to death that the rats will desert the sinking ship, even if it's not clear that there's another ship to jump to. Then they'll be faced with two extra problems, one real, the other PR: they'll have to find replacements, and they'll be forced to explain the exodus. Neither of these is easy, and CEOs don't like hard; despite all their big talk about going head-to-head with the "big challenges," they actually prefer a path that is laid out for them. Risk is anathema, and they'll do a lot to avoid it, especially when they're playing with other people's money.

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Since we're talking about executives and words (and Kevin Drum), let me point out that Drum missed the point of a recent Hendrik Hertzberg post:

If America is a classless society*, why is that a manual worker gets paid wages and a middle manager or cop or teacher earns a salary, but a corporate boss condescends to accept “compensation”?

Compensation. I have to say, I get a little dizzy with disgust whenever I hear that word used to describe some C.E.O.’s pay envelope. “Compensation package” is even worse. What, exactly, are these people being “compensated” for? Are they victims of crime? Or is it the long hours, the loneliness, the inability to spend time with their children—so much more terrible than the plight of a middle-aged immigrant mother working double shifts as an office cleaner? Or the fear of having their company go on public assistance, in which case, thanks to Obama, their welfare payment will be slashed to less than $10,000 a week? Or the fear of getting laid off with nothing but a golden parachute to put food on the table and lifetime use of the private jet to get around on?

The poor dears.

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*I know—straw man. But still.

Drum commented on this:

This really isn't so hard. "Wages" refers to hourly earnings. "Salary" is typically a fixed yearly amount for exempt employees. "Compensation" is used for corporate honchos because you need a word that encompasses the fact that a big part of their earnings are in stock, deferred salary, capital gains, pension payments, and various perks. There's really nothing very sinister about all this.

He failed to see that Hertzberg's primary complaint was about the word "compensation," not that "honchos" had a different term to refer to their paychecks. He hasn't answered the question, "What are these people being compensated for?"