PLEASE Read Argmument - Speech by Stockholder of Consolidated Industries.

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The following appeared in a speech by a stockholder of Consolidated Industries at the company’s annual stockholders’’ meeting:
“In the computer hardware division last year, profits fell significantly below projections, the product line decreased from 20 to only 5 items, and expenditures for employee benefits increased by 15 percent. Never the less, Consolidated’s board of directors has approved an annual salary of more than $1 million for our company’s chief executive officer. The present board members should be replaced because they are unconcerned about the increasing costs of employee benefits and salaries, in spite of the company’s problems generating income.”

Discuss how well reasoned… etc.
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The author of the speech presents an argument, which seems like a solid one, raising some valid points. However upon closer examination of the statements that have been made I believe that the argument is unconvincing. And with some detailed explanations I shall make some helpful suggestions to strengthen the argument.


Firstly, the stockholder assumes that increase of expenditures for employee benefits led to the subsequent decrease of the company’s profits. There are many other reasons that could have brought about that result such as a recession, more competitors, rising cost of making the product, etc…


Second, the assumption that a decrease in the product line would decrease profits is unreasonable. The company could have decreased its product line to cut back on the cost of producing its other products. Or the company could simply be producing a four-in-one product to increase its sales or to be more competitive in the market.


Thirdly, the stockholder assumes that the Consolidated’s board of directors made an unreasonable decision in approving the company’s chief executive officer’s increased salary, saying that the present board members are not concerned about the rising costs of employee benefits. The board members may have taken those costs into consideration and still given the chief executive officer his or her promotion. That particular employee could be a very valuable employee that Consolidated Industries needs and intends to keep. We could take Jamie Dimon for an example; Mr. Dimon is a CEO at JP Morgan, who worked very hard towards taking over Bear Stearns. A transaction which would normally take a month, Jamie and his colleagues had completed in forty eight hours. Having taken this big risk and become successful, Mr. Dimon is now called America’s most important banker. The CEO of Consolidated may have made a decision that will, in the long-run, benefit the company.


To conclude, the stockholder makes some assumptions that clearly make the argument unconvincing. If he or she were to revise his or her statements and investigate the exact reason behind why the profits of the business enterprise fell, why the company now produces fewer products, and why Consolidated industries decided to give the CEO a promotion, so that the stockholder can support his or her conclusions.
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