Many Americans — from Main Street to Occupy Wall Street — have been shocked at how some corporate CEOs have made out like bandits after flying their companies right into the ground. Other chief executives have done extremely well after breaking their word to stockholders, the general public, and the people who work for them.
Looking at these high-level breaches of faith, we know in our bones that greed is not what made capitalism the best economic system ever devised. There is a moral dimension to capitalism — what Catholic philosopher Michael Novak calls the spirit of democratic capitalism. And many of us have forgotten this, not just CEOs. Our economic well-being as a society is built not just on individual intelligence and hard work, but on mutual trust and responsibility.
That’s why I’m so encouraged by the countercultural actions taken by Gerard Arpey, former CEO and chairman of American Airlines. I say “former” because Mr. Arpey walked away from American, his employer of 30 years, according to Michael Lindsay, “with no severance package and nearly worthless stock holdings.”
Writing in The New York Times, Lindsay, who is president of Gordon College and a graduate of our Centurions Program, says Arpey left American “out of a belief that bankruptcy was morally wrong, and that he could not, in good conscience, lead an organization that followed this familiar path.”
Now on the surface, bankruptcy seems like a reasonable option for American. It is the only major airline that posted a net loss last year. And it faces continuing daunting prospects with the pressure to lower airfares, combined with soaring wages, pensions, and medical benefits for its unionized workforce. Meanwhile, American saw its competitors — Continental, United, US Air, and Northwest—all file for Chapter 11, allowing them to cancel their debts, drop their responsibility for employee pensions, and negotiate more favorable union contracts — more favorable to them.
But Arpey takes the word “obligations” seriously. He told Lindsay, “I believe it’s important to the character of the company and its long-term success to do your very best to honor those commitments.” He continued, “It is not good thinking — either at the corporate level or at the personal level — to believe you can simply walk away from your circumstances.”
So sticking with his principles, Arpey resigned rather than preside as CEO over American’s bankruptcy — which the board had invited him to do. Lindsey says that he has interviewed 550 senior executives — including six airline CEOs — for a major academic study on leadership, and that Arpey is the only one with the firm conviction that the CEO must carefully attend to moral dimensions in business, “even if doing so blunts financial success.” Lindsay says, “For [Arpey], it is an obligation that goes with the corner office.”
We need more business executives like Gerard Arpey who understand that “Doing the Right Thing,” involves even more than maximizing profits.