Bill Gates made big news this week with his charity pitch at the Davos World Economic Summit. Called 'kinder capitalism,' Bill wants his corporate friends to assign their best minds to charity projects, and to donate some of their net income, as well.
Give me a break!
There's Bill, looking appropriately nerdy, sitting with Michael Dell and.....Bono!
Now we get it!
Here's the five-year price chart for Bill's company, Microsoft, Dell, and the S&P500 Index.
Notice how neither Bill nor Michael have managed to do for their shareholders in the past five years what a cheap, passive S&P500 Index fund could have done?
Dell ends up flat- his shareholders basically finished dead even over five years. Bill returned 1/3 less to his shareholders than the index- and most of that occurred in just the past six months.
Gates has it all wrong. But, hey, if it gets you face time with a real rock star, who cares how you treat your shareholders? And looking at Gates and Dell, you can just see these guys as the nerdy college-age kids they were, busily building businesses in their dorm room or buying MS-DOS on the cheap from the original owner/developer, rather than develop normal social networks.
According to the plan, companies assign bright personnel to figure out what they can do to alleviate some global poverty ill, and levy a mandatory tax on their shareholders out of net income with a donation.
Bono had a great big, silly grin while telling CNBC viewers,
'You don't have to donate anything. You buy these guys' products, and make them donate.'
Well, uh, not quite Bono. Make that,
'..and make their shareholders donate, whether they want to, or not.'
Here's another idea, Bill. How's about you and Michael Dell learn how to outperform the market again. Then, ask shareholders if they will vote, individually, for their shares, to donate a portion of any dividend you pay, out of equity gains above those of the S&P, to the charity you choose?
That way, you have an incentive to actually do your job. And Mike, too, for that matter.
Honestly, if this wasn't so pathetic, it'd be funny. Gates makes his billions, and people still don't like him.
So he establishes a foundation, perhaps in hopes that this will make people like him. Then he suddenly gets religion, like Ebenezer Scrooge, and declares that now he'll be a kind and nice guy.
Perhaps Gates has it backwards. Allowing for his last five years of drought in performing for his shareholders, Gates at least once was good at making money from software. What if Bill concentrated on using his unique talents for that, and using some of the excess profits to do good.
Anyone can give (someone else's) money away. Or exhort others to do so. It seems to me that corporations should focus on enriching their shareholders, preferably in a consistently superior manner, and let the shareholders decide whether or not to support charities.
Gates' idea would sound a lot better had he discovered it when he was leading Microsoft to consistently superior total returns. Now, he just looks desperate to get attention and hang with the Davos "in" crowd.
Not content to merely underperform for his shareholders, now he wants to take their profits, too, so he can be popular with the international set.