Peter J. Meyer
Pete is a 30 year veteran of agricultural markets, an agribusiness consultant, and the publisher of Opening Print.
Severance? Did He Say Severance?
Nov 07, 2011
Jon Corzine’s resignation from MF Global Friday was pretty unremarkable to everyone who followed the story of the firm’s demise under this well-known figure. What was remarkable was the number of stories referencing Mr. Corzine’s decision not to pursue his severance of $12 million. His decision? Who gets severance from a bankrupt firm missing over $600 million in client funds? Who would even reference such a thing? Someone with a pretty large ego and devoid from reality.
It’s startling that at the same time tens of thousands of MF Global clients were scrambling to pick up the pieces of their financial lives (and still are), MF and Mr. Corzine highlighted this decision as if it was one to be admired. Mr. Corzine’s experience on Wall Street, in Washington, and in Trenton surely left him with an appreciation and understanding of the value of money and the ramifications of financial failure. After all it was this body of experience that made him the perfect executive to run a struggling futures brokerage firm named MF Global.
Years ago Mr. Corzine was the sole CEO of Goldman Sachs. At the time GS was still a partnership but under his guidance it went public, resulting in a reported $400 million payday for it’s leader. A King was crowned. However, after engineering a 1998 rescue package for Long Term Capital, the first highly leveraged Hedge Fund and well-known financial disaster, Mr. Corzine was unceremoniously demoted to co-CEO, a position he would have to share with one Mr. Hank Paulson.
Power sharing was not his forte and the demotion didn’t sit well with poor Jon so after he was pushed out at GS he decided to buy the US Senate seat from New Jersey, spending a record $62 million of his own money in the 2000 election. Mr. Corzine had neither time nor need to fund raise; he had all the money he needed. Besides, who knew better than him? If he took donations he would actually have to listen to other people’s ideas and concerns, an obvious waste of his time for a one-time King.
While in the US Senate, Senator Corzine was best known for co-authoring Sarbanes-Oxley, a law enacted specifically to combat major corporate and accounting scandals at firms like Enron and WorldCom that cost investors billions of dollars when their stock prices collapsed.
In case you’re keeping track of stock price collapses, MF was trading at $8.00 when Mr. Corzine took over in late March of 2010. With 163 million shares outstanding, MF was worth $1.3 billion at the time. Friday it closed at 26 cents a share for a market cap of $42 million. That would qualify as a $1+ billion loss to investors that the law he co-authored was designed to prevent.
Apparently Mr. Corzine was none too happy simply being the junior Senator from the Garden State. 99 other peers, who needs them? He needed a job similar to GS when he was the King. Well, up until the time when Hank came in and we know how that worked out.
Soon after then-Governor Jim McGreevey admitted to a homosexual relationship at a 2004 press conference with his wife by his side, Mr. Corzine seized the opportunity to spend another $38 million of his GS money to run for Governor. Again, no need to fund raise. Who needs those pesky people with their own ideas? When the votes were tallied, Mr. Corzine received 1,224,493, in essence paying $31.00 for each. A "one-termer" Mr. Corzine was defeated as an incumbent 2 years ago by current Governor Chris Christie who has spent most of his first two years in office attempting to repair the damage incurred by his predecessor.
Even though Mr. Corzine self-funded his campaign for Governor, it has recently come to light that an ex-employee of Mr. Corzine at Goldman Sachs, Gary Gensler, donated $10,000 to the NJ Democratic Party at the time. Mr. Gensler is the current Chairman of the Commodity Futures Trading Commission having been appointed by President Obama after lobbying hard for the position given his markets background as a vice-president at GS. Chairman Gensler recused himself Friday from any and all investigative proceedings regarding MF Global. Senator Chuck Grassley of Iowa called for the recusal citing possible conflict of interest with Mr. Corzine.
When you take the time to look at his body of work, it’s pretty clear why Mr. Corzine thinks that he’s doing everyone a favor by declining a $12 million severance. He’s above us all. He was a King.
It must seem like pocket change to someone who made $400 million on a stock sale and then dropped hundreds of millions of dollars to tell the rest of us that he knew better than we did. Obviously, there is neither shame nor humility in someone who’s been doted on since he started as a bond trader at the House of Goldman rising to the rank of King. Money does strange things to certain people, giving them a sense of invincibility to go along with a super-sized ego.
At the moment neither Mr. Corzine nor MF Global have been accused of any wrong doing though Mr. Corzine did hire a criminal defense attorney soon after he resigned on Friday. Mr. Corzine’s Goldman Crown has turned out to be a mirage. He’s cost a lot of people a lot of money proving he’s no better than the rest of us. He may not get his $12 million but he’ll always have that Senate and Governor’s pension. Mr. Corzine has turned out to be the gift that keeps on taking.