One of the Republican candidates running for president made an excellent point during Wednesday night’s debate. This happens so rarely I am compelled to write about it.

The candidate in question was Mike Huckabee, one of the low-pollers who had to holler his point from the left fringe of the stage. The subject was economic vitality, and Huckabee fired off: “When CEO income has risen 90 percent above the average worker, when the bottom 90 percent of this economy has had stagnant wages for the past 40 years, somebody is taking it in the teeth.”

Nothing could be more true, and the fear that you might fall behind economically—through no fault of your own—is the driving force in American politics right now.

What Huckabee did, however (deliberately or not; I’m guessing not), was to put this huge political issue within spitting distance of a ruinous force running wild through Corporate America these days—one that shows how much all the talk about corporate ethics, social responsibility, and good governance can fall aside as soon as they get in the way of good profits.

And if you want the perfect example of this force at work, look no further than one of the big business news stories of this week: Valeant Pharmaceuticals.

Valeant is under fire from all sides right now, and rightly so. The company is the brainchild of Mike Pearson, a McKinsey management consultant who took over as CEO of Valeant in 2010. Pearson’s strategy has been to acquire many other pharmaceutical companies that already had drug products on the market, consolidate their operations, cut research staff, and raise prices. The market did cheer Pearson’s strategy for a while; its share price increased 20-fold under his tenure until earlier this year. Then some people started to question whether firing research staff and raising prices is really a viable long-term growth strategy for a pharma company. Investors started to question its $30 billion debt load.

Now Congress is hot on Valeant’s case, as are the New York Times, and the Wall Street Journal. CVS Caremark and other pharmacy chains turned against Valeant on Thursday, too; that’s when they ceased doing business with Philidor, a pharmacy wholesaler with some kooky connection to Valeant that sounds like an off-balance-sheet time bomb to lots of people, including me. (Valeant dropped Philidor on Friday morning.) But the best zinger of Valeant I’ve seen came in the Financial Times, where columnist John Gapper said this:

“Valeant is an innovative pharmaceuticals company, but most of the innovation has been in its corporate structure rather than discovering new drugs.”

Ponder that point for a moment: the innovation has been in corporate structure. Now let’s bring this back to Mike Huckabee’s outburst. Why are so many people taking it in the teeth? Because they are at the mercy of a slim few who get the privilege of running corporations, and too many of those few—like Pearson—spend their time fiddling with corporate structure rather than creating economic value.

That is the Corporate America that most Americans fear and dislike: where executives borrow lots of money to acquire more businesses, and then experiment with corporate structure to extract more value rather than create new value.

Valeant’s predicament is a corporate governance failure of the highest order, and of the entire board. Pearson attempted to create value for shareholders in an amoral way—and I mean that literally; his strategy gave no consideration to whether the underlying values were right or wrong. It was entirely divorced from any values at all. Its only objective was increasing profit to add more value to shareholders. 

That is the Corporate America that most Americans fear and dislike: where executives borrow lots of money to acquire more businesses, and then experiment with corporate structure to extract more value rather than create new value. They see businesses as assets to be acquired, groomed, and resold; rather than as patches of economic soil that you till over and over, to cultivate enough value that everyone can make ends meet and have enough spare cash to enjoy a good drink at the end of the day, too.

Are we entirely in that gloomy world yet? No, thankfully. But too many businesses like Valeant think that world is a good place to create, and their boards go along with it. Then they wonder why their workforces are cynical, distrustful, unresponsive, and roll their eyes right out of their skulls when the company talks about values and culture.  

Corporate America must break those bad habits if it ever hopes to win back its workers and the public. And geez, if even a cranky longshot like Mike Huckabee can see that, then it’s got to be a real problem. 

Matt Kelly has been editor of Compliance Week for 10 years. He will step down from that role at the end of this year. You can find him on LinkedIn at or on GoogleTalk at 

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