Wednesday, June 07, 2006

A letter from Michael, and my reply.

Dear Mr. Karmazenuk:

Many thanks for your e-mail. What you are going through is no doubt very hard. But the decisions that we have to make to transform our business in this increasingly competitive environment are also not easy and they are not made lightly. Particularly given the impact that they have on our people.

We must, however, rethink and change the way we operate so that we can assure Bell’s success for another 125 years. Planning for the future of the whole company is a significant challenge and big part of my role as CEO.

Like virtually everyone in the company, I am paid a base salary plus incentives that are tied directly to the operating performance of the business and an assessment of my personal performance by the people I report to – the Board of Directors.

I also believe that incentive payments should be carefully controlled and made only when justified. So at least twice I have not accepted the incentives offered to me. In one case, it was a bonus associated with the reduction of capital expenditures. I turned that down because I thought doing that work was simply part of my job. Then, last year, I again refused my bonus in the wake of the billing issues in wireless because, at the end of the day, as CEO I was ultimately accountable.

When I have accepted an incentive compensation, I have made it a point to invest every nickel of bonus in our company because I believe deeply in the importance of what we do and where we are going. And because I have confidence that we will get there.

Best regards,

Michael Sabia
Dear Michael,

First, let me say that I am impressed that you deigned to reply to me at all, even though you only managed to do so one full month after I sent my email.

You’ll be happy to know I’ve decided to forego visiting you at the shareholders’ convention today, in favour of staying home and getting a head start on the domestic upkeep I’d scheduled for the weekend. Some other time, perhaps; I know a place that makes a great CafĂ© Americano.

As you have taken the time to reply to me, I think it only polite to likewise take the time to reply to you. Given that I have not yet been able to find employment elsewhere (Apparently prospective employers don’t put as much stock on someone having five or more years with Bell Canada on their resume as they used to), I have the time to do so more promptly than you.

I would like to first of all address the completely impersonal nature of your letter to me. It smacks almost of being form-fed, given the parroting of Bell Canada’s usual line about rethinking operations, remaining competitive and how hard it is to decide to lay people off. I won’t be cowed by such mindless platitudes. Frankly, I’m surprised it took you a month to have one of your underlings send out such a rubber-stamp response.

The fact of the matter is that despite increased competition, Bell Canada still maintains a stranglehold on telecommunications in this country. As unfortunate as that is, it is nonetheless fallacious to suggest the mass layoffs you’ve overseen as CEO are necessary for the company to remain competitive.

Bell posts and continues to post record profits and none of its divisions are losing money. This, despite a continually degrading level of customer service and across-the-board problems with the products and services offered. I think it is therefore safe to say that Bell Canada does not have to worry about remaining competitive.

So why not be honest, Michael? Why not admit that the people you work for, the board of directors and the majority shareholders of Bell Canada Enterprises are demanding more golden eggs from the arse of Bell Canada’s goose? The truth shall set you free, as they say.

I also find it particularly offensive that you so unapologetically defend your “decision” to accept the five-fold salary increase that has fattened your own coffers. That you have decided to re-invest your rather inflated pay rise back into the company suggests not any nobility or spirit of fidelity on your part, but instead simple insider knowledge that the company is going to continue to be engorged with profits, that will be reflected in stock dividends.

Your salary went from one point twenty-one million to six point seventy-two million per anum. That much of this is divested into stock options and various “incentive payouts” is irrelevant; you are getting roughly five and a half million dollars more per year than before. That works out to a tithe of about one thousand, three hundred and seventy-five dollars per employee sacked in the last few months, by the way; a little less than what I would gross each pay period.

On average, the employees you care so much about only get a one or two per cent annual increase in their rate of pay; it’s not even indexed with the cost of living. Yet you feel that you are somehow justified in taking such an obscene pay rise? I’d ask how you sleep at night, but the most obvious answer is, on the most comfortable bed that money can buy.

That you turned down previous pay packet increases only demonstrates that you were slightly less cynical in your approach to your job than you are now. That you honestly think I would believe it was an attack of conscience on your part that made you decide to refuse those previous raises tells me you underestimate the intelligence of your employees, both current and former.

I wonder Michael, eleven years after your mother’s death, how does it feel to have undermined so much of what she fought for as one of Canada’s leading feminist icons? Bell Canada’s employees are, after all, majoritarily women. Interesting, is it not, that Bell Canada’s upper management is generally masculine? Pay equity, outsourcing, closing and consolidating call centers and business offices…you’ve put quite a few women out of a job. Mom would be so proud.

I won’t bother to appeal to your sense of morality or principles; as Bell Canada Enterprises’ Corporate Executive Officer I doubt you have much of either to spare. You’ve successfully outwitted, outplayed and outlasted all of the competition both within and outside of the company. I can only hope for your sake that selling your soul for seven figures is worth it to you in the end; power and privilege are very cold bedmates in one’s twilight years.

One thing we can both agree on, however, is that Bell Canada Enterprises will, for better or worse, continue to exist long after we are gone. But be very careful what direction you steer the ship, Michael. Morally questionable practices like disregarding the letter and spirit of Collective Agreements, outsourcing in favour of Third-World slave labour and cutting jobs and disrupting lives and families lead to very murky waters.

My sincerest regards,