Boneheaded Corporate PR: Take Two...Or is That Three?

Stupefyingly stupid.

You would think after this and this and this that corporate honchos would get the idea that lavish spending after you receive government bailout money is just plain stupid. JPMorgan Chase is the latest victim of their own greed and arrogance.

According to ABC News, the company, which is "the recipient of $25 billion in TARP funds, is going ahead with a $138 million plan to buy two new luxury corporate jets and build "the premiere corporate aircraft hangar on the eastern seaboard" to house them."

And they have no idea why that is outrageous:

But on March 11, the chairman of JPMorgan Chase, Jamie Dimon, said he could not understand why corporate America has such a bad image.

"When I hear the constant vilification of corporate America I personally don't understand it," Dimon said.

Dimon, whose 2008 compensation package, according to SEC documents, was worth more than $19 million in salary, stock and options, declined to speak with ABC News about the proposed plans.

Say what?

The Sauce

Their PR team either has some bizarre form of corporate Stockholm Syndrome or are the most incompetent people on the planet. What more can we say that has not been said before on this very blog? We'll let Nell Minow say it for us:

"It's a remarkably boneheaded decision," said corporate watchdog Nell Minow, the editor and founder of The Corporate Library, a group that provides independent corporate governance research and analysis. "It's completely tone deaf."
[...]
"There are going to be business school case studies for generations about exactly these decisions, and people will be learning forever about what incredible stupidity these executives showed," said Minow.

Oh yeah.

Smart PR: When You're Bailed Out By Taxpayers, Nix the Partying

Adam Bradbury of Dow Jones Newswires reports that "Citigroup has canceled a Christmas party for London-based staff in its fixed-income division because senior executives in the group decided it would be inappropriate amid ongoing layoffs, a person familiar with the matter said Tuesday.

The cancellation comes after Citigroup announced in November that it plans to shed 52,000 staff worldwide and reduce expenses by 20% in an attempt to weather the global financial crisis and a sharp economic downturn.

It also comes after the bank canned an equities division party, which was due to be held Dec. 3 at London's Cafe de Paris for the same reason.

The fixed-income party was due to be held Dec. 11 at Paper, an exclusive nightclub on Regent Street, in the West End of London, which boasts of a range of celebrity guests such as world champion Formula One driver Lewis Hamilton and actress Keira Knightley.

The event was going to be paid for by the managing directors in the bank's fixed-income division, which include the interest rates, foreign exchange and commodities businesses, the person said.

"It was obviously a commitment made a long time ago," said the person familiar with the matter. "Given that (Citigroup) is letting so many people go, the managing directors didn't feel it was right to host a big party for those who are staying so they decided to cancel it."

The Sauce

Good thinking. Bernays Sauce is all for celebrating the season (contact these guys!)--especially in depressing times such as these. However, if a company is laying off thousands and are the recipient of taxpayer largess to bail them out of poor business decisions, then perhaps they need to put down that egg nog and back away...quickly.

It's a no-brainer, but as big corporations have proven lately (see AIG, GM, Ford, etc.) public image is not always a serious consideration, even when they go hat in hand to the people for a rescue.

Disclosure: The writer of this post owns a miniscule amount of stock in Citigroup. Stop laughing.

The Tone Deaf PR of the Big Three

ABC's Brian Ross and Joseph Rhee report that the Big Three automaker CEOs flew private jets to Washington, D.C. to plead for taxpayer-subsidized bailouts:

The CEOs of the big three automakers flew to the nation's capital yesterday in private luxurious jets to make their case to Washington that the auto industry is running out of cash and needs $25 billion in taxpayer money to avoid bankruptcy.

The CEOs of GM, Ford and Chrysler may have told Congress that they will likely go out of business without a bailout yet that has not stopped them from traveling in style, not even First Class is good enough.

All three CEOs - Rick Wagoner of GM, Alan Mulally of Ford, and Robert Nardelli of Chrysler - exercised their perks Tuesday by flying in corporate jets to DC. Wagoner flew in GM's $36 million luxury aircraft to tell members of Congress that the company is burning through cash, asking for $10-12 billion for GM alone.

"We want to continue the vital role we've played for Americans for the past 100 years, but we can't do it alone," Wagoner told the Senate Banking Committee.

While Wagoner testified, his G4 private jet was parked at Dulles airport. It is just one of a fleet of luxury jets owned by GM that continues to ferry executives around the world despite the company's dire financial straits.

"This is a slap in the face of taxpayers," said Tom Schatz, President of Citizens Against Government Waste. "To come to Washington on a corporate jet, and asking for a hand out is outrageous."

Wagoner's private jet trip to Washington cost his ailing company an estimated $20,000roundtrip. In comparison, seats on Northwest Airlines flight 2364 from Detroit to Washington were going online for $288 coach and $837 first class.

After the hearing, Wagoner declined to answer questions about his travel.

Ford CEO Mulally's corporate jet is a perk included for both he and his wife as part of his employment contract along with a $28 million salary last year. Mulally actually lives in Seattle, not Detroit. The company jet takes him home and back on weekends.
[...]
"It appears that the senior management of the automakers simply don't get it," said Schatz.

The Sauce

"It appears that the senior management of the automakers simply don't get it," said Schatz.

It would seem so. It would also seem that their public relations advisors are either too "in the bubble" or too powerless to point this out to their bosses. This kind of tone deaf handling of a crisis situation could very well be a nail in their coffin when trying to shore up public support for a bailout. These guys apparently learned nothing from AIG, where executives of the bailed-out-by-taxpayers insurance behemoth met at swanky resorts.

Public relations professionals who are doing their jobs should be thinking "outside the bubble;" operating three steps ahead by analyzing how company actions will affect public opinion. This is especially true in a crisis period such as the one the automakers face. The PR professional should also have the nerve to tell the boss when he's about to make a very stupid move--even one that was unintentional.

I was once in this situation, and had the unenviable task of telling my boss, the CEO of a sizable firm, that he was making a mistake by doing XYZ. He responded very negatively, to which I replied, "Part of my job is to tell you the truth as I see it. The fact that you don't like the truth doesn't make it any less true."

Well, it did not end well for either of us. I didn't work there much longer (by my choice) and the company went out of business relatively quickly after my departure. Of course, the company didn't close because I left, but certainly some poor decisions affected the public image of the company-- and that certainly didn't help when other business woes struck.

Lesson: Stay out of the bubble!