Giving Away The Bank To All Its Employees

When Leonard Abess sold a majority stake in Miami-based City National Bank last fall, he did something very unusual. He took US$60 million of that money and gave it out as bonuses to 399 current bank employees and 72 former employees.

Knowledge@Wharton asked Leonard Abess, who remains chairman and CEO of the bank, to talk about the motivation

behind his gift, leadership and the current economic crisis. Q: Can you explain in more depth exactly why you decided to distribute US$60 million to your employees?

A: I just never thought that I was solely responsible for the success of the bank. I owned the bank. I enjoyed the profits, the dividends. And I always realized that while there were 400-plus people doing the work, making it successful, the profits were going in one direction.... I felt, particularly based on longevity, that these people were owners. They acted like owners. They worked like owners ... I wanted to acknowledge that.

We had excellent compensation. Unlike many companies, we didn't just pay it out in huge ways to the top people. But I had a formula based on how long people had been there. No one really knows that formula but me. The longer you were there, the more money you got. In many companies, the people who stay the longest are closer to the bottom of the compensation scale. People near the top tend to move around a lot more.



Q: Some people worked at the company for an incredibly long time - 39 years, 43 years, 51 years. How do you explain that longevity at a time when many employees expect to stay no more than three to five years at a job before they move on?

A: I do think that (faster turnover) is truer today, (but) many people who entered the workplace 40, 50 years ago, did hope to stay at one place and retire there. Over the years, I never really liked separation, unless I instigated it. So I would always encourage people to stay ...

We have multiple generations there, multiple members of families, people who have met at work and married. And then their children have come to work there.



Q: In broad terms, you think that top executives frequently say their employees are their most valuable asset, but then act in ways that don't back that up?

A: I do believe that in many companies, especially larger ones, (thanking employees) is perfunctory. I think that senior management is removed from the day-to-day people and has lost touch with what goes on. I think they all have lunch together, dinner together, live in the same neighborhoods, come to work and flip out something nice to somebody as they pass by them.

But I think that at the end of the day, it's head count. And at the end of the day, often, the employees are the ones - especially those who have worked very hard - who suffer.

We have never had a layoff. We have paid a bonus to every employee, every year. We have never raised the cost of insurance. Today, the employee's cost is the same as it was 20 years ago ...

I tell young CEOs that before you cut anybody's compensation, before you fire anybody for economic reasons, you deal with yourself.

Your perks go, your bonus goes, your salary goes. I am very surprised when I see huge amounts of money that go to the people at the top (even) as there are massive layoffs, especially when they accept government money.



Q: Do you think that's going to change?

A: I think that there's a change happening right now in America - in corporate America. I hope it's sustainable. I (worry) that when the economy takes off again, we (will) return to the old ways ... It's not enough to go in there and bail it out and save industries. Some of these industries - or the businesses in them - should not be saved.



Q: You have an undergraduate degree from Wharton. Do you think that ethical issues - including how you treat employees, how you compensate yourself - can be taught in school?

A: I think we get them at home, at the dinner table, in the community, at church or temple, or wherever we go for spiritual guidance.

And I think ethics can, must, be talked about in the schools. It's a combination of all of the above. But I've never really felt the schools are responsible for teaching ethics or morality. I think they're responsible for enforcing it. But I think it has to be learned at home and in the community.



Q: From your perspective, what caused today's financial crisis? And when will it be over?

A: I got a D in money and banking when I was here at Wharton.

In the old days, you would gather deposits in the community and then reinvest them through loans to help businesses. Citibank came out and said, "Look, you need to leverage your capital. There are other forms of capital." Which I call debt...

So rather than go out in the community to get people's savings, you can manage your liabilities by borrowing money from the Federal Reserve, the home loan bank.

That was the beginning of really leveraging up in the financial industry. There wasn't much leverage before that. I got a D because Wharton was teaching that at the time. It was the theory of the day.

I'd grown up with a father who was livid about it, who just said, "No, you manage your assets." So I wrote a paper saying, "This is all wrong." I didn't have a teacher who appreciated dissent...

Mystery Donor Gives Away Millions

By Ed Pilkington /New York

A new parlour game has entered the normally restrained world of US philanthropy: guessing the identity of a mystery donor who is lavishing millions of dollars on colleges with the proviso that his or her identity remains unknown.

The buzz around the anonymous donations - currently 14 of them worth a total of about $75mn - has been heightened by the fact that all but one of the universities are public, with none of the advantages of the Ivy League. Even more intriguingly, all the recipient colleges are led by presidents who are women.

The money started hitting the universities about seven weeks ago and there has been a steady stream of offers since then. A faceless intermediary - often a bank or financial house - contacts the college administrators, offers the donation on behalf of the nameless client, and then send cheques or money orders for millions of dollars.


Michigan State University was given $10mn and 10 colleges have each been handed $5mn or more, with the stipulation that most of the money should go towards financial grants helping poor students, particularly women and people from ethnic minorities.

Speculation is rampant about the possible donor or donors, though recipients have been careful not to follow their curiosity so far that they risk the terms of the gift. The name of Oprah Winfrey has perhaps inevitably been floated, as has the thought that the individual is a publicity-shy billionaire or even dead and leaving instructions in a will.

Melissa Berman, who runs a New York-based advisory service for donors, Rockefeller Philanthropy Advisers, said she had no idea who the mystery donor was, but she did have a sense of the character type.

“My belief is that it’s an older woman or her estate, from the Second World War generation ... Women of that generation had no automatic opportunity to go to college even if they came from a family with money, and the role of women in leadership positions was still new and exciting.” - Guardian News & Media

Will.i.am Gives Away College Educations!!

The Real Homeland Security, by Will.i.am

what is homeland security when the youth can not afford education to secure a future?

what is homeland security when there are no jobs at home when kids graduate from college...???

i want to change what homeland security means...

and... i don't want to write a song about it...

i want to act on it...

and put my money where my mouth is...

i recently got paid a nice amount of money to dj at a tech convention...

when my manager told me the amount i was getting, all i could do was remember when i was 14 and i asked my mom for 2 turntables and a mixer...

when i was 14 my mom's rent in the projects was 150 dollars a month...

and here i am getting $xxx,000 dollars to dj...

in this economic crisis...

i didn't feel right...

maybe i'm crazy...

or maybe my mama just raised me right...

but i didn't feel right just taking it...

but i ain't stupid...

so i took the money...

but i want to do something smart with the money...

i want to invest the money in america's "real" future...

"the youth"

i want to send a kid to college for 4 years...

and i don't want them to pay me back...

i don't want them to rack up debt...

i don't want their parents or "parent" to stress...

i just want to give them an opportunity to make their dreams come true...

i want to re-define homeland security...

i want to take action...

especially now in a financial crisis...

you don't run for the hills...

you don't leave our future leaders behind...

you don't turn your backs on the youth in the name of "recession"...

you don't...

if anything...

you make personal sacrifices and assist our "tomorrow"...

you usher in a new mind state...

you nurture our future...

you support dreams...

you provide opportunities...

and thank you Oprah for letting me take a bold stand and show the youth "we are here" for them...

thank you mama for my 2 turntables and a mixer when you couldn't even afford it...

look what those 2 turntables did...

it sent 4 strangers to college...

thank you nanny for raising my mama the way you did...

because she raised us with a heart to give...

Read more about the i am Scholarship Program here.