| William J. McDonough, President and Chief Executive
Remarks by President
William J. McDonough at the September 11 Commemorative Service
at Trinity Church
My dear friends,
We meet on the first anniversary of an act of great evil,
in which almost 3,000 of our neighbors were murdered. The
perpetrators of that crime pretended to act in the name of
God, adding blasphemy to the sin of Cain.
How has New York responded? It did not take time out for vengeance,
but rather New Yorkers, supported by the world community of
decent people, rallied together to help the wounded and to
help in their grief the many families who lost their dear
After mourning, one of the first tasks was to rebuild. The
efforts to reconstruct Lower Manhattan as a 21st century urban
area, combining transportation links, cultural institutions,
a thriving and interesting residential area and the traditional
anchors of high finance such as the New York Stock Exchange
and the Federal Reserve Bank of New York are exciting and
challenging. We will achieve that dream.
That is just one of the several challenges that we Americans
and New Yorkers must face in the years and decades ahead.
In looking for guidance on how to address those challenges,
those of us in secular life must ask ourselves if we can be
guided by moral principles and apply them to the practical
world. How or should we apply the good thoughts of the Sabbath
to the rest of the week?
As guidance, and turning to my own background as a Christian,
I suggest we look to the 22nd Chapter of the Gospel of Saint
Matthew. Jesus was asked by a Pharisee which was the greatest
commandment of the law. In the language of the Saint James
edition, here is the reply:
36. Jesus said unto him, Thou shalt love the Lord thy God
with all thy heart, and with all thy soul, and with all thy
37. This is the first and great commandment.
38. And the second is like unto it, Thou shalt love thy neighbour
Let us consider the second of the great commandments.
I will not try to concentrate on the challenges presented
to us by the terrorists, but I do want to speak on the many
demands placed on our democratic political system and our
market economic system by the terrorists, and, more importantly,
some ongoing challenges which are not created, but only dramatized,
by that attack.
The democracy envisioned by the towering figures of the Enlightenment
who were our Founding Fathers was one of limited participation
in the right to vote, but a society meant to serve the interests
of all the people. Now, most people can vote, but are their
interests equally attended?
Loving our neighbor as ourselves requires that the remaining
imperfections in our democracy be corrected. Mainly, we have
to make sure that all of our people, not just the privileged
who can use their financial resources to satisfy their desires,
be fully represented. These include children without the benefit
of loving parents of adequate means, the elderly troubled
by the rising cost of medical care, good workers who lose
their jobs because of structural economic change or a weaker
Working towards a more safe and sound and sensible world demands
the leadership of the United States. Our challenge is not
just geopolitics, but moral responsibility.
A market economy recognizes that human beings respond to the
stimulus of different rewards for different contributions
and it does, in fact, provide differentiated rewards. Some
win more than others. Idealistic societies of socialist or
other theories simply have not worked. Men and women are not
angels. But, even given this pragmatic view, should there
not be both economic and moral limitations on the gaps created
by the market-driven reward system?
This is not an easy question. The United States leads the
world economically because we are extraordinarily good at
adjusting to economic developments and are highly skilled
at accepting and implementing structural change. Above all,
we benefit from an incredibly flexible labor force, of people
willing to change not only their jobs, but where they live,
as economic change demands. Rapidly changing technology puts
a huge premium on better education and better technical training.
Compared to when I entered the workforce, the relative benefit
of higher skills versus a good strong back has increased dramatically.
However, even given that economic reality, we must recognize
that the leadership of the American economy has made a large
number of American citizens, and countless more around the
world, question our judgment and/or our ethics.
I believe that most American business executives at all levels
are believers in and followers of the laws of our country.
It is important that we not label as sinners everybody who
has been successful because a relative few have been noticeably
lacking in virtue. The world depends on the economic leadership
of the United States, at least as much as it does on our relative
military and geopolitical strength.
I believe there is one issue in particular which requires
corrective action. A recent study shows that, 20 years ago,
the average chief executive officer of a publicly-traded company
made 42 times more than the average production worker. Perhaps
one could justify that by the additional education required,
the greater dedication, perhaps even the harder work. The
same study shows that the average present day CEO makes over
400 times the average employee's income.
It is hard to find somebody more convinced than I of the superiority
of the American economic system, but I can find nothing in
economic theory that justifies this development. I am old
enough to have known both the CEO's of 20 years ago and those
of today. I can assure you that we CEO's of today are not
10 times better than those of 20 years ago.
What happened? Sadly, all too many members of the inner circle
of the business elite participated in the over-expansion of
executive compensation. It was justified by a claimed identity
between the motivation of the executives and shareholder value.
It is reasonably clear now that this theory has left a large
number of poorer stockholders, especially including employee
stockholders, not only unconvinced, but understandably disillusioned
The policy of vastly increasing executive compensation was
also, at least with the brilliant vision of hindsight, terribly
bad social policy and perhaps even bad morals. Looked at from
the vantage of the second great commandment, Love they neighbor
as thyself, there are some clear questions. Is not my fellow
worker my neighbor? Are not other members of the community,
such as the widows and orphans of 9/11 victims my neighbors?
Are not the homeless my neighbors? The elderly? The dispossessed
by conflicts in many countries?
It is important for those of us who have lives of great comfort
and success that we recognize that the reasons for our good
fortune and the reasons for the relative lack of success of
the neighbors I have just described have very little to do
with our own virtue. In this house of God, I should perhaps
attribute it to the divinity, although such a God would be
a bit too controlling for my taste. In another locale, I would
suggest it is mainly good luck. A good set of genes, good
health, being born to loving parents, the help of a loving
friend, the support of a great teacher-any and all of these
got us where we are. Yes, we deserve some credit. But we should
remember that two most attractive virtues are realism and
What should be done, if anything, about this recent explosion
of claimed privilege? Any notion of moral balance has to say
to our fellow leaders of the private community that corrective
action is required. We should avoid, as much as possible,
government action because laws or regulations are far too
blunt instruments to deal with the myriad of differences in
the highly sophisticated and flexible American economic system.
It should be done voluntarily. Why?
Because we will be a stronger society by coming closer to
the commandment: And thou shalt love thy neighbor as thyself.
But, how? Beginning with the strongest companies, CEO's and
their boards should simply reach the conclusion that executive
pay is excessive and adjust it to more reasonable and justifiable
levels truly related to the benefit of shareholders and other
stakeholders such as workers and the community. If the best
companies lead the way, the market economy, through the stock
market, will force other companies to follow.
Money not going to excess executive compensation will be available
for distribution to the shareholders or kept in the company
to finance its development, a far sounder way to finance expansion
than by borrowing.
And if there is some left over to give to good causes, that
truly will benefit our society now and in the future. From
pure corporate self-interest, an obvious contribution should
be to education, the source of the highly trained and motivated
workers which our ever more demanding economy will require.
Many tasks await us and not just those I have suggested. There
can and should be a moral theme to all of our actions.
May all of us commemorate this day by making our world, our
country, our city, our neighborhood a better place because
we are making ourselves better people.
And thou shalt love thy neighbor as thyself.