As a former CEO of a publicly-traded company, I have watched the emerging revelations of corporate wrongdoing with more than a passing interest. While filled with the same revulsion shared by many to the immoral, illegal and greedy actions of some companies and their leaders, I am also concerned that we not overreact and undercut an economic system that is clearly the best in the world. The fault, my dear readers, is not with the system, but with an abuse of the system. We should also be careful to differentiate between the greedy abuse of the system and the criminal act of looting a company. As I read attacks on stock options and other forms of incentive compensation, my thoughts parallel the arguments of gun advocates who say, “Guns don’t kill. People kill.” Stock options don’t harm shareholders, greedy people do. Inhibiting or eliminating stock options and other forms of incentive compensation plans will make it more difficult for the greedy to gain, but such action will also reduce the incentive for employees to add to shareholder value. There is nothing wrong with trying to maximize corporate profits, the problem lies in doing it with lies. From my experience, all of these issues boil down to two causes; and they are greed and the system under which stocks are valued and marketed. Both of these are interwoven and feed of each other. With the CEO and other top management there is a phenomenon of “entitlement” that can cloud the thinking. Charles Shepard in his book “”Forgiven – The Rise and Fall of Jim Bakker and the PTL Ministry,” identified this feeling as the driving cause of Bakker’s downfall. Shepard pointed out that if PTL brought in $5 million a month and Bakker diverted $2 million to his personal use, the rationale was, “If it were not for me, PTL would not have the $3 million that remained.” This is a logic that can tempt many a CEO and, as we have seen, some can fall prey to this faulty logic. A number of CEOs and their management groups seemed to have adopted a philosophy that says, “Through my actions $1 billion has been added to shareholder value, so it’s ok for me to take $100 million. After all, If it were not for me, the shareholders would not have that $1 billion, so I am ‘entitled’ to this reward.” Of course, allowing those who add value to an organization to share in the value added is a good incentive to add value, but what we have seen is a corruption of that concept. The inclusion of other members of senior management in these schemes is an insidious form of control. And a reverse of the “share value for value added” concept. It’s difficult to stop corruption if you benefit from the corruption. The current system of valuing and marketing stock also contributes to the temptation to cut corners. I often felt the pressure from stock analysts and market makers of our stock to report consistent, increased quarterly earnings. To do so offered promises of increased stock value, and deviation led to swift punishment in the form of depressed stock value. In and off itself, this is not a bad system. Companies with increasing earnings should have increasing stock value and visa versa. The problem is the extent to which the system is so volatile. In an effort to report consistent earnings, there is encouragement to “manage” the earnings. “Squirreling” away earnings in good times and “stretching” for earnings in bad times. Either way, the shareholder does not receive a clear and accurate picture of the performance of the company, but the analyst and the market gets what it wants. Taken to the extreme causes the revelations we’ve seen in recent years. There’s a moral to this story for business owners of all sizes and their employees that make them successful and it is this: Pride, arrogance and secrets have a way of undoing even those with the best intentions. While most people will never face temptations on the same scale as Tammy Faye and Jim Bakker, or the multititude of other CEOs who fall from grace, the ingredients are often the same in small businesses and personal households. Whether large or small, they suggest there but for the grace of God, go any of us. Bob MacDonald is a business maverick who is a 40-year veteran of the insurance industry. He’s the retired CEO of Allianz Life of North America and presently CEO of Allianz Income Management. He brings a unique and sometimes controversial perspective to business ethics, entrepreneurial management and personal success. For more of his wit and wisdom visit Bob’s blog on the Internet at cheattowin.net.