UnitedHealth Group: Intentions with the ACA (2010-2014)

Background

UnitedHealth Group Co. Logo

UnitedHealth Group is one of the largest health care companies in America. It is a publicly traded company on the New York Stock Exchange. The company was founded in 1977 by Richard Burke and was known as UnitedHealth Care until 1998. They offer health insurance for families and individuals under the age of 64. They also offer Medicare Advantage plans, Medicare supplement insurance, Medicare prescription drug plans, and Special Needs Plans most with the association of AARP. They also offer Palliative and Hospice Care for those with long-term or serious illness and their caregivers. UnitedHealth group also offers medical databases through their subsidiaries. They are an innovative company consistently coming up with new ideas to improve their services.
Anthony Welters was President and CEO of Americhoice, which was a public health insurance provider, meaning they were funded by taxpayer money. The company was investigated for fraudulent activity. It was found that Welters and associates had paid themselves millions in management fees and received large yearly bonuses through back doors. They would send the money to other businesses which they owned marking it off as expenses for the company. They were also investigated for the poor quality of their facilities. It was found that most of these facilities were staffed solely by nurse practitioners and physician assistants both of whom require the supervision of a physician. After the investigation was complete the company was fined $2 million to be paid to Medicaid.

Timeline

·2002: Acquired AmeriChoice (including Anthony Welters)

·2010: United spent $2.5 million lobbying for President Obama’s Affordable Health Care Act

·October 2011: QSSI (Quality Software Services Inc.) was contracted by the federal government to work on the data hub for the federal healthcare exchange [Affordable Care Act website]

·September 2012: UnitedHealth Group purchased QSSI. This information was never disclosed to the public

·2012 Presidential Campaign: Welters donated over $500,000 to President Obama’s campaign

·October 2013: QSSI was re-contracted by the federal government to fix the mistakes with the federal healthcare exchange. This meant that UnitedHealth Group now had access to the database. Welters put in charge of overseeing project

·November 2013: $150 million compensation received thus far

·October 2014: UnitedHealth Group announces entry as an insurance provider for the Affordable Care Act

Summary
Well QSSI was under contract with the federal government to work on the federal health exchange website UnitedHealth Group, a major health insurance company, purchased the company. They failed to reveal this to the public or the federal government. This gave them access to the federal health data hub in which no other company had access to. This made United millions. UnitedHealth Group had also donated millions in order to get the Affordable Health Care Act approved making the website necessary to begin with. When the 2012 presidential campaign rolled around the Executive Vice President, Anthony Welters, donated over $500,000 to President Obama’s campaign, for which he won. When the government realized there were problems with the website they called upon QSSI again to fix the mistakes they had made. Then UnitedHealth Group announced they would be joining the other members in offering public health insurance on the website they created causing many people to question United’s true intentions.

Stakeholders

Anthony Welters, former CEO of Americhoice

The stakeholders involved are UnitedHealth Group and Anthony Welters because they face any consequences associated with their own actions of which Welters has experience with. They also face the possibility of a bad reputation due to their involvement with the website. Another group included would be the employees because whatever happens to the company can put their job on the line or improve where they stand in the company. Other stakeholders include UnitedHealth Groups current clients because they may benefit or suffer from United’s involvement. The competition and the federal government are both stakeholders because United has the possibility to dominate federal health care insurance with their increased knowledge. Another important stakeholder is the people of the public who will be purchasing through the federal health exchange in which United designed. Lastly stockholders are always included as stakeholders because they own part of the company and are affected by any action the company makes, good or bad.

Individualism
The individualism model of ethics focuses on benefiting the business. The idea of spending money on anything that will not incur a profit, including on employees and resources, is considered “wrong because it is essentially stealing from the owner or owners of the company.” The idea of corporate social responsibility is seen as unethical through this view because these actions will not definitively increase profits. But every action, even in this viewpoint, must be done within the limitations of the law. UnitedHealth Group did not meet the expectations of this ethical theory. It seemed as if the company was following it when they purchased QSSI. They were in search of profit gain which they knew would come from the current contract. In fact over the next couple of years their stock price increased about $24, with a stock price of $74 at the start of 2014. But if they were only after profit gain why donate so much to political campaigns? The donations by UnitedHealth Group and Anthony Welters gave no definitive profit to the company. The company did not follow the legal aspect of this theory either because they essentially participated in bribery of the federal government. They were not prosecuted for it though because it was in the form of a political donation which means there is no direct link indicating that the money was given for promise of anything in return. UnitedHealth Group’s actions have hurt their reputation though. There are many people who have begun to question United’s intentions of their actions. They have begun to make the connections between the events discussed in the timeline realizing that they cannot be coincidental. Before these events United’s integrity was not under question and although it is not clear how this has affected their profits it makes people wary of trusting them with such an important aspect of their life.

Utilitarianism
The utilitarian ethics model is based on the concept of maximizing the happiness of all involved in the long term. The focus is on the most likely outcomes of an action, where the long term costs and benefits are analyzed for each potential course of action. Looking at those involved it appears that happiness was maximized. The stockholders were pleased with the increase in stock prices as was the company as a whole. The increased profits increases the potential happiness of UnitedHealth Group customer base because it gives the company an opportunity to offer more benefits and services.
The federal government’s happiness is increased because the necessary repairs to the website were completed, and on time. Now UnitedHealth Group’s decision to be one of the providers on the Affordable Care Act website brings a different view of the ethicalness. Another group to look at that is impacted by this decision is the public. The people who are purchasing through this website may not be happy to know that Anthony Welters is involved. His past with fraud was concerning public health care and this makes the public nervous because he is a key decision maker at UnitedHealth Group. Many people are already disturbed by his involvement. Another group that is affected by United’s decision is the competition. When speaking of business the competition isn’t usually taken into consideration but in the health insurance business I believe it is important to. Since United worked on the federal health care data hub they had access to all information contained in it. This gives them an unfair advantage over the competition which could lead to the domination of the insurance industry. This is also bad news for consumers because when one company dominates it takes away variety offered which is huge in insurance.

Kantianism

UnitedHealth Group headquarters in Minnetonka, MN

The ethical model of Kantianism is based on the ideas of rational decision making, honesty, and freedom. It is the fundamental concepts we are brought up with as children, “don’t lie, cheat, manipulate or harm others to get your way.” Kantianism also works off of the idea of the formula of humanity also known as the categorical imperative. It treats humanity as the end result where determination of ethical actions is determined by the intentions of the actions. So a company could be doing something such as donate money to a charity but if they donated it for personal gain it would still be considered ethically wrong according to the formula of humanity. The concept summed up says that it is wrong to use people to get what you want. UnitedHealth Group lied and cheated in order to get the better outcome for themselves. They failed to inform the public of the acquisition of QSSI even though they are a publicly owned company. The federal government was unaware of this purchase as well. They kept the information from the government to keep their involvement with the website quiet. Their intentions of purchasing this company were unethical in themselves. They did so to have access to the federal health database in order to gain a competitive advantage over the competition. The other fundamental concept they broke is do not cheat. Although they did not bribe the president according to legal terms they donated money to his cause and campaign in order to receive a benefit. Donating the money it is still a form of manipulation because it is human instinct to feel obligated to pay back for the generous things others do for us. In other words they could guilt trip President Obama into giving a new contract to QSSI even though they were now owned by UnitedHealth Group. Their intentions are considered unethical because they used the President as a means to get what they wanted, another contract. There intentions are proved through their decision to enter into the public health care market in 2015 through the website they designed. They have access to all the information before they enter the market and so have a huge advantage over the competition. If they had decided to enter the market solely to benefit the public they would be considered ethical but UnitedHealth Group, as shown, is motivated by profits, not ethicalness. Although they cannot take it back now the company and affiliates should have refrained from donating money for profitable returns because it gives the negative appearance of manipulation to the public. If they want to appear as an ethical company they should be donating money to organizations that have no affiliation with the health care system such as a food shelter.

Virtue Theory Virtue theory is based on characteristics that “promote wellness or flourishing of Individuals within a society.” In the business context there are four virtues focused on which are courage, honesty, temperance, and justice. The business and affiliates should act so as to embody these virtues, or character traits. The people who need to possess these virtues would be the company’s decision makers, which includes Anthony Welters. A company, though, should embody these virtues as whole unit. So the following analysis is discussed in reference to the company’s decision makers as a whole. Justice is the idea of “hard work, quality products, good ideas, and fair practices.” UnitedHealth Group did not follow this virtue. They purchased a subsidy that was currently being contracted by the federal government in order to gain access to federal health care information, which is the market they are in. This information is unavailable to health insurance competitors which gives them an unfair advantage. Another virtue discussed is honesty which encompasses “honesty in agreements, hiring and treatment of employees, customers, and other companies.” by not revealing the purchase of QSSI to the public, their customers, they are keeping critical information from them. This information could sway consumer’s decisions whether to do business with the company. So without this information they are not able to make a decision based off of all relevant information. While discussing honesty the unfair advantage United gains over the competition applies. It is unfair for the information they obtained to be kept from the competition. Federal government information shared with one party should be shared to all parties because the government is essentially owned by the people. Another virtue is the concept of courage which is the idea of “risk taking and willingness to stand up for what is right.” United fails to do this in the specific situation. They knew the offer for the second contract was not right and they should have denied the government’s request knowing it gave them this advantage.


References

Bolton, Alexander. "Conflict-of-interest Concerns Raised as Obama Races to Implement Health Reform." TheHill. N.p., 03 Nov. 2012. Web. 03 Oct. 2014. <http://thehill.com/policy/healthcare/265659-conflict-of-interests-concerns-raised-as-obama-races-to-implement-health-reform>.

Conradis, Brandon. "Key Figure at UnitedHealth Group Was Major Obama Donor." Opensecrets RSS. N.p., 28 Oct. 2013. Web. 30 Sept. 2014. <http://www.opensecrets.org/news/2013/10/key-figure-at-unitedhealth-group-was-major-obama-donor/>.

Demko, Paul. "Afraid of Getting Left Behind, Big Insurers Expand Exchange Participation for
2015." Modern Healthcare. N.p., 25 Oct. 2014. Web. 21 Nov. 2014.

Klein, Joseph. "The Next Big Obamacare Scandal." FrontPage Magazine. N.p., 06 Nov. 2013. Web. 30 Sept. 2014. <http://www.frontpagemag.com/2013/joseph-klein/the-next-big-obamacare-scandal/>.

Young, Jeffrey. "Obamacare Critics Just Lost Another Talking Point." The Huffington Post. TheHuffingtonPost.com, 23 Sept. 2014. Web. 03 Oct. 2014. <http://www.huffingtonpost.com/2014/09/23/obamacare-competition_n_5869710.html>.

"Project Sunshine." Herald Online. Business Wire, 30 Sept. 2014. Web. 01 Oct. 2014. <http://www.heraldonline.com/2014/09/30/6376151_project-sunshine-and-unitedhealth.html?sp=/100/773/385/&rh=1>.

"Stock Mapping Tool." StockMapper. N.p., n.d. Web. 02 Oct. 2014. <http://www.stockmapper.com/?q=UNH&range=r5y>.

Tesla: Handling Model S Fires (2013)

Testla Motors logo

Controversy
In 2003, Tesla Motors was founded with the mission “to help expedite the move from a mine-and-burn hydrocarbon economy towards a solar electric economy”. A little over a decade later, Tesla has transformed from an idealistic start-up with a big vision, into, according to Morgan Stanley, “the most important car company in the world”. Armed with a growing fleet of high-tech, high performance, and fuel efficient electric automobiles, Tesla has to lead the charge in the current alternative fuel revolution in the automotive industry. The company’s latest model, the Model S, created shockwaves when it was released in 2012, receiving the first ever unanimous vote as Motortrend’s “2013 Car of the Year”, as well as being the highest scoring car ever tested by Consumer Reports and named the on TIME’s “Best Inventions of the Year 2012” list. A quick look at its stats sheet proves why. Not only did the Model S achieve the highest crash-test score in history, but offers a 0-60 as low as 3.9 seconds, returns the equivalent of 89mpg, well-designed, American-made, chaise, and luxurious interior, all for a base price of around $70,000. The Model S’ release. 
The first incident occurred October 2, 2013, in Washington State. According to reports of the incident, the driver ran over a “large metallic object in the middle of the road”. As a result, a warning light engaged in the cabin telling the driver to pull over. After pulling over and exiting the car, it ignited. Photos show that the flames consumed a large portion of the front of the car, but it was reported that the fire did not enter the cabin. After the investigation, it was found that a piece of metal that had fallen off a tractor trailer had punctured a hole in the quarter inch thick, ballistics grade aluminum underbody shield, allowing debris to damage the battery causing the fire. Elon Musk personally released a statement concerning the incident on Tesla’s website two days after the crash. The release provided a full synopsis of the event, as well as the email correspondence between Tesla and the involved car owner. 

Washington 10/2 -Collision with metal object

The second incident occurred on November 6th in Tennessee, roughly one month after the first Model S fire. According to a firsthand account by the owner of the Model S in the incident, Juris Shibayama, the car caught fire as a result of running over road debris. Shibayama states he was driving at an estimated 70 miles per hour on the highway when he ran over a three-pronged metal trailer hitch. The hitch made noticeable contact with underbody of the vehicle, lifting it off the ground for a brief time. Shibayama continued to drive, pulling over roughly a minute and a half later after warning lights instructed him to do so. After exiting the car, Shibayama saw smoke shortly before the car caught fire about two minutes later. The fire was contained to the front of the vehicle and did not damage the cabin. Shibayama states he was in control of the car after the collision and that both he and his passenger did not sustain any injuries. Even after the incident, Shibayama is so impressed by the Tesla, he stated he would like to purchase another one.
In the aftermath of the third fire, the NHTSA launched a federal investigation dated November 15, 2013, to investigate “Deformation/intrusion into the propulsion battery by roadway debris may result in a thermal reaction and fire”. The investigation considered the two incidents occurring in the United States that resulted in fires, as well as 29 other instances of undercarriage strike damage in Model S vehicles that did not result in fire or disablement. The investigation did not consider an October 18^th case occurring in Mexico also resulted in the fire, as previous investigations determined the fire was due to driver negligence. Tesla responded to the Federal investigation by conducting their own. Upon conclusion, Tesla stated that although the battery and shield design makes the Model S five times less likely than a gasoline vehicle to catch fire, the company made several plans to enhance the design as a result of their findings.

Upon closing the federal investigation on March 26, 2014, the Department of Transportation confirmed that both fires occurred after debris penetrated the under-mounted battery shield, resulting in damage to the car’s batteries. Despite this finding, it did not find any defects in the shielding or batteries used in the Tesla Model S. The case report stated that impact with road debris is a “normal and foreseeable” part of driving, thus implying that the damage occurring in the incidents was not due to a system failure. The NHTSA did not issue a recall did not require Tesla to take any further actions. Despite the ruling, Tesla voluntarily chose to work to provide solutions to prevent future collision-related fires because, as Elon states in a press release, “we felt it was important to bring this risk down to virtually zero to give Model S owners complete peace of mind”.

Tennessee -11/6/2013-second fire in nearly one month

To provide “complete peace of mind”, Tesla released a free, wireless suspension update that automatically increased the ride high of all current and future S Models in November of 2013, shortly after the third incident. Tesla also created a new shield for the battery. The new design improves upon the old shield by consisting of three separate layers of titanium and aluminum plates. After testing the shield in 152 vehicle level tests, Tesla informed the public on March 28, 2014 that they would be implementing the shield on all future S model cars. The press release, written by Musk, goes into detail about the events of all three incidents, provided information and test videos explaining the new shield technology, and explained why Tesla decided to implement the shield, despite the lack of a recall. Elon also stated that S Models currently on the road can receive the upgrade at any time in the future, free of charge.
Individualism
The fact that Tesla took the time and resources to voluntarily research and address an issue involving only two of it vehicles is rather dumbfounding, especially considering Tesla operates in an industry that assumes safety recalls are a “cost of doing business”. For comparison, on of Tesla’s competitors, General Motors, is currently finds itself amidst the largest automotive recall in history: 24.6 million vehicles, responsible for at least 30 deaths, due to a defective ignition part GM knowingly and continually installed in over 15 model years. Compared to GM, Tesla’s action appears to be very heartfelt and at a quick glance, “ethical”. Yet despite Tesla’s seemingly good-faith effort to provide the best product possible for their customers, Tesla’s actions would still be considered unethical under a strict interpretation of Milton Friedman’s ethical school of thought, Individualism. Individualist believes that the only function a company serves is to provide profit to its shareholders. Therefore, any action that does that does not prioritize profits and the maximization of shareholder wealth are unethical and impermissible. Although Tesla’s actions may be viewed by many as the “responsible” thing to do in such a situation, they directly contrast Friedman’s views. Since Tesla voluntarily decided to spend company profits on a non-issue, without the intention of directly producing more profits from the endeavor, Tesla, in essence, stole profits that could have to go to the company’s shareholders. Since Tesla’s actions contradict and inhibit the main goal of any company, as defined Friedman, to produce profits for shareholders, the company’s actions are unethical under Individualism.

Utilitarianism

Elon Musk, CEO of Tesla Motors

In contrast to Individualism, the three other major schools of ethical analysis assert that Tesla’s actions are ethical. Utilitarianism, which determines an action's morality based upon the net benefit or detriment it provides to the involved stakeholders, would rule that Tesla’s actions are in fact ethical. Stakeholders are anything, both human and non-human, that could potentially be affected by an action. In the case of Tesla, the only stakeholder that could potentially receive any detriment are the shareholders. Although individualists argue that Tesla’s action shows a disregard for shareholders by misspending profits, Tesla’s actions actually improved the company’s financial position due to the positive implications for the company’s brand and goodwill. Tesla’s actions also provided a benefit for customers and potential buyers, giving them the peace of mind associated with a safer car and providing safer roadways for general drivers.

Kantianism
Tesla’s actions are the most consistent with the third major theory of morality, Kantianism. Based upon the theories of Immanuel Kant theory, Kantianism states that the motivation or justification behind an action must be rational in order to be ethical. Actions must also promote rational decision making. Rational motives produce ethical actions because rational thinking can only occur when information is honest and transparent and individuals are respected. Therefore, transparency in all actions is key, as rationality is compromised if information is withheld. By releasing raw test footage, and taking voluntary action in response to the fires, shows that Tesla intended to promote rational decision making among anybody analyzing their products or company.

Virtue Theory
Telsa’s actions are also considered ethical under the oldest theory of morality, Virtue theory. Originally developed by Aristotle, Virtue Theory assesses morality based upon the vicious or virtuous nature of an action. Actions which demonstrate the four core virtues of courage, honesty, temperance, and justice. As a small and growing company, Tesla took a big chance on spending company profits on an issue which was not assessed to be their fault. Tesla’s actions show a general concern for both the company and its customers, as seen through the company’s dedication, borderline fixation, with providing the highest quality product possible. By upholding these foundational virtues in their actions, Tesla was able to overcome the negative publicity associated with the event and build a positive reputation as an ethically responsible company.

References

"2013 Car Of The Year." Motortrend. N.p., n.d. Web. 2 Oct. 2014. [link]

"Blog." Model S Fire. N.p., n.d. Web. 02 Oct. 2014. [link]

"Blog." The Mission of Tesla. N.p., 18 Nov. 2013. Web. 02 Oct. 2014. [link]

Godfrey, Will. Tesla Federal Investigation. 26, March. 2013. 02 Oct. 2014; [link]

Musk, Elon. "Blog." Tesla Adds Titanium Underbody Shield and Aluminum Deflector Plates to Model S. N.p., 28 Mar. 2014. Web. 02 Oct. 2014. [link] 

"Tesla 0-60 Times  ." Tesla 0-60 Times & Tesla Quarter Mile Times. N.p., n.d. Web. 22 Nov. 2014.

"Tesla Model S Makes TIME Magazine's 'Best Inventions of 2012' List." - Torque News. N.p., n.d. Web. 22 Nov. 2014.

Valdes-Dapena, Peter. "Tesla Gets Near-perfect Score from Consumer Reports." CNNMoney. Cable News Network, 09 May 2013. Web. 22 Nov. 2014.

ExxonMobil: Pipeline Negligence (2011-2013)

Controversy

ExxonMobile Pipline Co. logo

Oil company ExxonMobil is currently facing litigation, both private and federal, for its alleged willful negligence in prevention and response to a number of pipeline oil spills that have occurred in the last three years. The three most prominent pipeline spills are the Yellowstone River spill, which occurred in 2011, the Torbert spill, which occurred in 2012, and the Mayflower spill, which occurred in 2013. All of these incidents involved thousands of barrels of oil spilling into land and waterways, both public and private. As a result of spills such as these, ExxonMobil is being accused of a number of unethical actions. The US Department of Transportation found that ExxonMobil's pipeline tests provided enough information to suggest that sections of the pipeline that ruptured were prone to failure, and that ExxonMobil was not performing pipeline inspections every five years as is legally required. ExxonMobil was also found to be in violation of the Clean Water Act, as crude oil spilled into nearby waterways. ExxonMobil is accused of putting off repairs and selectively reporting risks to understate the vulnerable condition of the pipeline. ExxonMobil is also accused of having a delayed and insufficient response to spills, significantly increasing the level of damage. The Yellowstone spill occurred on July 1, 2011, in Montana, spilling 63000 gallons of crude oil into at least 70 miles of the scenic Yellowstone River. Federal regulators estimated this could have been reduced by nearly 2/3 if Exxon had been quicker in its actions. When the rupture occurred, the pipeline controllers did not immediately shut down the pipeline. Rather, it was partially shut down and oil continued to spill for another 46 minutes when the necessary valve was closed. (Brown) Exxon did not have the proper emergency procedures in place, which would have allowed the valves to be closed immediately. (AP) On April 12, 2012, there was a pipeline burst in the town of Torbet, Louisiana, about 20 miles west of Baton Rouge. In this incident, at least 2800 barrels (117000 gallons) of crude oil were spilled from the pipeline, spilling into a nearby stream and bayou. Government officials determined this to in violation of the Clean Water Act, which makes it illegal to spill hazardous substances in to waterways and shorelines in amounts that could be harmful to the environment or the public. (Young) On March 29, 2013, the Mayflower oil spill occurred. In this incident, a pipeline ruptured, leaking 210,000 gallons of Canadian crude oil into the town of Mayflower, Arkansas. After the spill, the people who lived in the small town began to report a number of maladies, such as “respiratory disorders, nausea, fatigue, nosebleeds, bowel issues, and throbbing headaches”. These are consistent with the effects of exposure to heavy crude oil from Canada, which is a rawer variety than what is mined in the United States. (Caplan)
Since at least 2006, ExxonMobil has been aware of the poor condition of its Pegasus Pipeline, which includes the sections that ruptured. The Pegasus pipeline was constructed in the 1940s, using materials that are considered especially brittle and that are more prone to fractures and cracks. Despite these facts, ExxonMobil chose to add additional stress to the pipeline, with heavy crude oil from Canada and with larger volumes of oil. (Douglass) In 2006, a hydrostatic test was performed on the pipeline, to determine its fitness. This test uses pressure to detect and eliminate cracks that could be problematic. In 2006, this test was conducted at pressure suitable for calibrating maximum operating pressures, but not at a high enough level to detect seam cracks – the kind that caused the rupture. It is also worth noting that the pressure used in 2006 was lower than the pressure Exxon used in 1991 to test a newer segment of the pipeline. (Douglass) During the 2006 test, 11 seam welds failed, despite the relatively low pressure. During a 2010 inspection of the pipeline, 12 seam cracks were discovered near what would be the failure area. This should have led the corporation to be more wary of increasing stress to the pipeline. It is alleged here that Exxon took a calculated risk when it decided to not properly maintain its pipeline. (Douglass) This would mean that ExxonMobil would not be in line with its own corporate ethical policy:

“The policy of Exxon Mobil Corporation is to comply with all governmental laws, rules, and regulations applicable to its business. The Corporation's Ethics policy does not stop there. Even where the law is permissive, the Corporation chooses the course of highest integrity.” Another line of the policy states that “The Corporation cares how results are obtained, not just that they are obtained”

These negligent actions would be against that corporate policy, as the company had the ability to prevent the resulting damage to the environment and the surrounding population, both human and wildlife. It took a gamble with the health and lives of the populations and of the local landowners, an action that would be deemed unethical even by the company’s own standards.

Stakeholders

Aerial photo of the Yellowstone River after the oil spill

ExxonMobil has one of the highest amounts of revenue in the world, posting revenue of $438.26 billion for 2013, ranked only behind Walmart. They have 75,000 employees. They have 25.2 billion BOE (barrels of oil equivalent) in reserves. Exxon Mobil is the largest refiner in the world with a daily production of 3.921 million BOE per day. Overall, this data can be used to show that ExxonMobil is one of the largest and most valuable companies in the world. ExxonMobil’s key player is Rex W. Tillerson, who serves as the current Chairman of the Board and as the CEO of the company, a position he has held since 2006.There are many stakeholders in this situation. The group impacted the most would be the local communities where the pipelines burst. These people have suffered the worst from the ruptures. There are direct personal health effects to them as a result of the exposed oil. There is also damage to their property, a direct monetary cost. Oil spills also have the effects of reducing desirability and land values of an area. As the pipelines have been in place for decades, many were even unaware of the presence of such a potential threat. The environment and wildlife of these communities was also affected, leading to oil-covered plants and animals. Oil was also spilled into waterways that run for several miles, putting even more distant communities at risk. ExxonMobil itself is also a stakeholder – both its employees and shareholders. Essentially, the company gambled on not maintaining risky pipelines to save money, and it failed. The company faces lawsuits, civil penalties, and cleanup and repair costs, and even though these amounts are in tens of millions of dollars, the impact can more or less be absorbed as the company has annual revenues in the hundreds of billions. There is also a negative image for the company, which can be harder to estimate the cost of. If the impact had been greater, costs could have been passed on to employees in the form of layoffs or reduced pay. The government is also a stakeholder. The government must use its resources to investigate the company’s negligence and enforce rules. By extension, the taxpayers are also stakeholders. In this case, the Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA) was the government entity most involved. It is also notable that PHMSA defined the pipeline’s location as a “High Consequence Area” (HCA) defined by the PHMSA as “specific locales and areas where a release could have the most significant adverse consequences.” An area will get HCA status for the presence of a population, a drinking water source, or for being an unusually sensitive ecological area.

Individualism

People protesting ExxonMobile's negligence towards the oil spill

The values of individualism are “the business, the owner’s choices, and business profits.” The ethical rule of individualism is described as “business actions should maximize profits for the owners of a business, but do so within the law.” (Salazar) The company should operate in a way that achieves the highest profit, within the boundaries of the law. In this case, an individualist could not ethically support Exxon’s actions as they were illegal. Exxon was not using its resources to be “socially responsible” here but it was also not following the laws put in place to prevent incidents such as this rupture. Specifically, the PHSMA found Exxon to have committed several probable violations of the Pipeline Safety Regulations, under Title 49 of the Code of Federal Regulation, as well as the federal Clean Water Act for polluting waterways with spilt oil. The report listed eight violations of §195.452 - “Pipeline integrity management in high consequence areas” as well as one violation of §195.402 - “Procedural manual for operations, maintenance, and emergencies”. The PHMSA states that “Once identified, operators are required to devote additional focus, efforts, and analysis in HCAs to ensure the integrity of pipelines.” Exxon was found to be in violation of not taking these extra precautions. As a result, all stakeholders were negatively affected. ExxonMobil was likely operating under the assumption that postponing repairs and ignoring pipeline vulnerabilities would allow for costs to be saved, resulting in higher profits. Exxon’s beliefs were in this case false, as the combination of repair, cleanup, and bad publicity are all more costly than what preemptive repairs could have been. Exxon was not operating in its long term interests in this situation.

Utilitarianism

Crude oil cleanup in Yellowstone river

The values of utilitarianism are described as “happiness of all conscious beings, often interpreted hedonistically as pleasure and the absence of pain, but also sometimes interpreted as the satisfaction of desires.” The ethical rule of utilitarianism is described as “business actions should aim to maximize the happiness in the long run for all conscious beings that are affected by the business action. (Salazar) According to author Joseph DesJardins in An Introduction to Business Ethics (2014), utilitarianism can be defined as “an ethical tradition that directs us to make decisions based on the overall consequences of our acts” (p. 24). By extension, a utilitarian would be a person whose beliefs are in line with those of utilitarianism. To a utilitarian, a morally good action will benefit as many people as possible (p. 29). A utilitarian view would likely not support Exxon in this case. The happiness created by not repairing pipelines would be negligible, as the cost would not dent a company that earns billions in annual revenue. The amount used to repair these segments of pipeline would not be enough to influence the decisions of creditors and inventors of the company. Employees would not have suffered if maintenance was done. As for the local community, only unhappiness could result. Many were unaware that a pipeline even existed, as they are small and underground. There could be no benefit for them if pipeline maintenance was ignored. They could also not have had their happiness increased by its maintenance, as most were unaware of its existence until the incident. Therefore Exxon knew the only effect of improper maintenance could be bad or neutral for the community. If the pipeline had been kept in proper shape, this would have resulted in the maximum happiness. Exxon would have benefited in the long term and there would have been no effect on the community. The negative effects of the spill could have been avoided.

Kantianism
The values of Kantianism are “rational decision-making, autonomy of individuals, honesty and freedom” with its ethical rule described as “always act in ways that respect and honor individuals and their choices. Don’t lie, cheat, manipulate or harm others to get your way. Rather, use informed and rational consent from all parties.” (Salazar) According to Kantianism, “You should act rationally – don’t act inconsistently in your own actions or consider yourself exempt from rules. Also, allow and help people to make rational decisions. Next, respect people, their autonomy, and individual needs and differences. Lastly, you should be motivated by Good Will, seeking to do what is right because it is right,” (Salazar) ExxonMobil seems to have considered itself “exempt from the rules” in this situation. The government created laws to explicitly state that pipelines must inspected at least every 5 years, and Exxon did not maintain its schedule, amongst its other violations. It was also not consistent, in the form of its pipeline testing. Testing was done on these old and weak pipelines are lower pressures than recommended. Testing was also performed using tools that were inadequate for detecting the type of fractures that caused the rupture. Rather than perform a hydrostatic test, which is comparatively costly and requires pipeline flow to be stopped during testing, Exxon chose a cheaper method that could not detect smaller fractures along seams. The company did not help people make rational decisions. Even for its own employees, Exxon did not have the proper emergency procedures in place and it did not provide them with information that could have stopped the spill. It offered very little support to effected residents of the community, and did not show respect for them or their humanity. The company was not motivated by good will in its actions, but rather by saving money. The company was aware of the fact that pipelines were old and brittle, and it knew or should have reasonably known that the cheaper tests were not sufficient in assuring the quality of the pipeline. Under the formula of humanity, Exxon would likely not be seen as using humanity as means to an end. Rather, the company was hoping to leave individuals unaffected and has attempted to compensate those that were impacted by its actions.

Virtue Theory

ExxonMobile headquarters in  downtown Houston, TX

The values of the virtue theory are “character traits that promote wellness or flourishing of individuals within a society.” The ethical rule of the virtue theory is described as “act so as to embody a variety of virtuous or good character traits and so as to avoid vicious or bad character traits.” The virtue theory is based on the four primary virtues of courage, honesty, temperance, and justice (Salazar). ExxonMobil and its decision makers did not appear to demonstrate courage at any point until the response, where courage has less of an impact. Exxon takes responsibility for the spill and as such is willing to pay for the cleanup and fines, as well as direct monetary compensation of $10,000 to the families that were forced to evacuate. It has also offered to buy directly affected homes at pre-spill value. As for honesty, Exxon can be seen as dishonest by not providing information. The PHMSA reported that Exxon modified its maintenance schedule to postpone maintenance by a year and did not notify the PHMSA as required. This was again followed by a postponement the next year, again without the proper notification. ExxonMobil also failed to report the discovery of four separate integrity issues along its pipeline between 2010 and 2013. In response to the spills, Exxon has not been forthcoming with information. Exxon did not show temperance in its actions. The PHMSA allows for reasonable exceptions to its rules if the company can demonstrate a valid reason. Exxon did not report any such reason and it is unlikely there was a valid reason at all. It is hard to paint Exxon as in control of its excess, as it consistently ranks as one of the largest companies in the world. Exxon did not display justice with its lack of prevention. As for response to the spills, Exxon attempts to be just by paying for cleanup and fines. Exxon does not appear to have avoided vices in this situation. It is likely that all the cost-saving measures were motivated by greed or just a disregard for others. Exxon had the ability to protect the community as well as its own interests, but it did not.


References 

AP. "Feds: Delayed Response Worsened Yellowstone Oil Spill." USA Today. Gannett, 02 Jan 2013. Web. 04 Oct. 2014.
Brown, Matthew. "Report: Yellowstone Spill Negligent." Concord Monitor. N.p., 2 Jan. 2013. Web. 04 Oct. 2014.
Caplan, Nora. "This Is What Happens When a Pipeline Bursts in Your Town." New Republic. N.p., 18 Nov. 2013. Web. 04 Oct. 2014.
DesJardins, Joseph R. An Introduction to Business Ethics. New York, NY: McGraw-Hill/Irwin, 2014. Print.
Douglass, Elizabeth. "Exxon Knew Its Ruptured Pipeline Was Old, Defective and Brittle, and Still Added New Stresses." Inside Climate News. N.p., 12 Aug. 2013. Web. 04 Oct. 2014.
Osborne, James. "Lawsuits against Exxon Mobil Mount over Big Oil Pipeline Spills." The Dallas Morning News. N.p., 14 Sept. 2013. Web. 04 Oct. 2014.
Pipeline and Hazardous Materials Safety Administration. "NOTICE OF PROBABLE VIOLATION and PROPOSED COMPLIANCE ORDER." (n.d.): n. pag. Pipeline and Hazardous Materials Safety Administration. 6 Nov. 2013. Web.
Salazar, Heather. The Business Ethics Case Manual. 2014.
Young, Renita. "ExxonMobil to Pay $1.4 Million to Settle Alleged Violation of the Clean Water Act in 2012 Torbert Oil Spill." NOLA.com. N.p., 27 Aug. 2014. Web. 04 Oct. 2014.

Microsoft: Satya Nadella's Compensation as CEO (2014)

Controversy

Microsoft Company logo

For most people, the company Microsoft is synonymous with “Windows” and “MS-DOS”. It’s true, Microsoft Corporation primarily focuses on the development, licensing, and support of a myriad of software packages. In particular, the application suite Microsoft Office and the operating system Microsoft Windows are their most successful and well-known software packages. In addition, Microsoft has their own web browser (Internet Explorer), search engine (Bing), instant messenger (MSN), e-mail server (Outlook), video/voice chat application (Skype), and many more software products. In the past several years, Microsoft has also taken on hardware endeavors with a gaming console (Xbox), mobile phone (Windows Phone), media players (Zune), tablets (Microsoft Surface), and more.

As a corporation in the technology industry, Microsoft is among the most valuable with $86.83B in revenue for fiscal year 2014. Also, several of Microsoft’s products hold a majority market share among their competitors. The most dominating product line is Microsoft Windows in the PC operating system market. Between Windows 8, Windows 8.1, Windows 7, and Windows Vista, the “Windows” operating system holds a staggering 91.91% of the operating system market.
Aside from Microsoft being a massively successful technology corporation, former CEO and chairman of Microsoft Bill Gates is currently the wealthiest person in the United States with a net worth of approximately $81B according to the current Forbes 400 list. The second CEO of Microsoft, Steve Ballmer, held this position from January 2000 to February 2014. Ballmer's net worth is also quite impressive at $22B; he is the current owner of the Los Angeles Clippers and owns 4% of Microsoft's stocks. Now, the focus of this article is on Microsoft's newest CEO, Satya Nadella. Nadella was previously the Executive Vice President of Microsoft's Cloud and Enterprise group. Nadella's new position is certainly a lucrative one: Satya Nadella will be receiving $84 million from Microsoft during his first year as CEO. (Bort)

When I researched Satya Nadella's compensation as CEO earlier in the semester, it was reported that his base salary was expected to be $1.2 million. When considered cash bonuses and stock incentives that are usually awarded to CEOs, it was speculated that Nadella could receive a total compensation of around $18 million. However, following company filing that Microsoft did recently, it was revealed that Nadella will be receiving much more than $18 million. His compensation, totaling at $84 million, is broken down as follows:

• base salary of $918,917

• cash bonus of $3.6 million

• one-time grant of stock - $59.2 million. (Won't be able to cash in until 2019)

• additional one-time stock grant (Bort)

Granted, not counting the one-time stock grants, his compensation will be nearer to the $18 million that was originally perceived. Compared to other CEOs of similar technology corporations, Nadella's compensation isn't astronomical. Here's what others received as first-year tech CEOs:

• Marissa Mayer was paid $36.6 million for her first year as Yahoo's CEO

• Tim Cook of Apple received $378 million for his first year as CEO. Similar to Nadella's situation, a significant portion of this compensation was in the form of one-time stock grants. His yearly pay now is around $4.3 million.

• Oracle has two co-CEOs, Safra Catz and Mark Hurd, both of which made $37.7 million for their first year. Furthermore, Larry Ellison is making $67 million this year. (Bort)

It seems Nadella's compensation as Microsoft's CEO isn't astounding compared to other tech CEOs. In addition to employing four different ethical analyses to evaluate the ethical merit of Nadella’s compensation from Microsoft, I'll also be referring to the bigger picture here: the widening gap between CEOs and their employees in the corporate world.

Stakeholders

Satya Nadella, CEO of Microsoft

As with any business action, there are stakeholders for Satya Nadella’s compensation as the CEO of Microsoft. Firstly, Satya himself is a primary stakeholder as he is the person receiving the compensation given by Microsoft. Employees of Microsoft are internal stakeholders as they should be concerned with how the executives are compensated versus themselves. Also, shareholders are stakeholders since a new CEO may change how the corporation is structured or performed. In addition, a big chunk of Nadella’s portion is stock incentives, so his earnings are directly proportional to how Microsoft’s stock will change in the coming year. Therefore, Microsoft as a corporate entity can be considered a shareholder; they are "investing" in Satya Nadella with the expectation that he'll be moving the company forward.

Individualism
Within the scope of individualism, Microsoft giving Satya Nadella a “generous” salary for his first year as CEO is ethical. The ethical rule of Individualism is: "Business actions should maximize profits for the owners of a business, but do so within the law" (Salazar 17). A business under the belief of individualism tends to give incentive to their employees to perform well via compensation. Microsoft has been effective in this way since Nadella’s total compensation could amount to $84 million for his first 12 months as CEO (Bort). However, Microsoft also compensates their employees generously. For instance, the average salary of a software engineer is around $116,000, 14% above the market normal (Glassdoor). When you consider that Microsoft’s revenue for fiscal year 2014 was $86.83 billion, there’s no doubting that Microsoft can afford to compensate their CEO and software engineers the way they do (Microsoft). Therefore, under an individualism context, Microsoft is being ethical with how much its paying its employees, particularly Nadella. A corporation that pays its employees well and has exceptional revenue is actually achieving Friedman’s business ideals. This creates competition among employees to outperform each other, sparking innovation by finding new ways to cut costs and increase efficiency within processes or systems.
While the concept of individualism meshes well with this particular situation, it fails to grasp the bigger picture: The widening wealth gap between executives and their employees. Although it’s within Microsoft’s right and well within their budget to reward Nadella and his employees generously, is it necessary? According to individualism, there is nothing wrong here.

Utilitarianism

Employing the utilitarianism mindset in this situation is a bit more complex. Utilitarianism is a theory in which an action’s ethical value is determined by the long-term happiness that it provides to all stakeholders of the business and its decision (Salazar 19). So, unlike individualism, there is more to consider than the benefits that each individual receives from how Microsoft pays its employees. Therefore, the ethical value of this situation from a utilitarian point of view is more of a gray area than through individualism. In the long run, some employees may feel jealousy and contempt that their executives get paid up to or over 200x more than them. This is the major drawback since Microsoft’s change in profit would be negligible if Nadella was paid $1,000,000 a year as opposed to the $84 million he'll be receiving in his first year. Overall, the costs are small. On the other hand, the benefit is that Nadella should be incentivized to perform well under his role as CEO, especially since $13.2 million of his compensation is stock rewards for fiscal year 2015. In other words, his performance is entwined to his compensation and the financial status of Microsoft. The difficult part in determining the ethical value of Nadella’s compensation is comparing the costs (disgruntled employees) to the benefits (Nadella potentially improving Microsoft in a positive way). There can be arguments on both sides, whether the costs outweigh the benefits or vice versa. In this situation, both the costs and the benefits are long-term are difficult to quantify.

Kantianism

Microsoft headquarters in Redmond, WA

Kantianism is an ethical theory that focuses more on human nature and “doing the right thing" principles are the pillar of Kantianism as opposed to utility and profit for utilitarianism and individualism respectively. Kantianism’s belief is centered around good will and in ethical decision making, avoiding immoral actions such as lying, stealing and cheating. Again, within the context of Nadella’s compensation as CEO of Microsoft, there is nothing explicitly immoral here that would violate Kantian beliefs. The rationality of the amount that Nadella will be receiving ($84 million in the first 12 months) is up for debate. While it is around 200 times more than the average Microsoft employee, it’s still well within Microsoft’s budget. And while Microsoft is paying Nadella particularly well, it doesn’t really violate the Categorical Imperative. The Categorical Imperative, or the formula for humanity “states that it is wrong to use people as a mere means to get what you want. Treating someone as a mere means uses them or exploits them. It disregards their rationality and freedom and usually it involves an attempt to manipulate them” (Salazar 22). Since Nadella is getting paid for his work, which implies that his performance along with Microsoft’s performance affects his pay, it’s not sensible to say that he is being manipulated by the corporation in any way. The moral worth, however, is a bit more questionable. What if Microsoft pays Nadella the same amount that it paid Steve Ballmer, the previous CEO of Microsoft, the same salary at $700,000 (Pollock, Calia)? And what if the remaining money was used for employee bonuses or additional undergraduate scholarships? This action would be closer to ideal from a Kantian perspective, since helping others is the right thing to do. However, the decision that Microsoft made does not label them as immoral as far as Kantianism goes.

Virtue Theory

Lastly, virtue theory will be applied to determine the ethical value of Microsoft paying its new CEO, Satya Nadella, up to $84 million during his first year. Seeing as the decision was made by as a corporation, it’s a bit awkward to employ virtue theory since it clearly maps to a person’s character. However, in this situation Microsoft could be considered a “person” and his virtue questioned. Since there are innumerable virtues and vices that could be considered, the main virtues that will be evaluated are courage, honesty, temperance, and justice (the four virtues of business) (PH 211-53 PowerPoint). First off, Microsoft was courageous in their decision: Satya Nadella’s salary can be seen as controversial by many and they’re preparing to justify their action if need be. Microsoft is also courageous in the fact that they're willing to compensate Nadella so graciously with the expectation that it will pay off. Next, Microsoft is forced to be honest since they have to disclose the terms of the CEO’s compensation. Temperance and justice both fall in a grey area since the reasonability and justification for Nadella’s $84 million pay is open to interpretation.

References

Pollock, Lauren and Calia, Michael. "Microsoft Sets New CEO's Pay at $1.2 Million." The Wall Street Journal. Dow Jones & Company, n.d. Web. 21 Nov. 2014.

<http://online.wsj.com/articles/SB10001424052702303942404579363301476744222>

Bort, Julie. "Microsoft Is Paying CEO Satya Nadella $84 Million." Business Insider. n.d. Web. 21 Nov. 2014

<http://www.businessinsider.com/microsoft-ceo-satya-nadella-pay-84-million-2014-10>

Salazar, Heather The Case Manual. Print.

"Average Salary for Microsoft Corp Employees." Microsoft Corporation Salaries. Glassdoor, n.d. Web. 18 Oct. 2014.
<http://www.payscale.com/research/US/Employer=Microsoft_Corp/Salary>.

"Microsoft Facts - Revenue/Headcount." N.p., n.d. Web 21 Nov. 2014.

<http://news.microsoft.com/facts-about-microsoft/#RevenueHeadcount>

PH 211-53 PowerPoint 5: Business Ethics and Virtue

Delta Airlines: Mistreating Disabled Passengers (2012)

Delta Airlines logo & plane

Controversy
Delta Air Lines as most people know is a very well known commercial airline that has been around for many years. Although in the recent years, Delta Air Lines has been in the eyes of media for several cases that the company has gone against the mission of their Advisory Board on Disability, which says their goal is "to promote accessibility for all of their customers by providing leadership in making Delta the carrier of choice for customers with disabilities in all aspects of their business” (Advisory). The most recent accusation of the company's mistreatment of their customers with disabilities was on July 27, 2012. On this day, Baraka Kanaan, who has partial paralysis of his legs, states that he was “forced to crawl down the aisle of the airplane, down the stairs of the aircraft and across the tarmac to his wheelchair without any assistance” (Shaw, 2013). He also needed to crawl off onto his return flight home. He filed a lawsuit on July 23, 2013 after only receiving flier miles and $100 voucher as compensation, which he ultimately denied. The contents of the lawsuit settlement between Delta Air Lines and Kanaan were confidential and not disclosed to the public.
Carrie Salberg also says she was mistreated by Delta because she was kicked off of a plane because of her disability. She has muscular dystrophy and requires a ventilator to breathe and the flight attendants told her she was not allowed to have it on the aircraft even after she had gotten preapproval. The company received a civil penalty back in 2011 for violating the rules that protected air travelers with disabilities. Delta was fined $2 million, of which $1,250,000 was to be used to specifically improve their service to passengers with disabilities.

Stakeholders
Stakeholders of a company are any person, group, or organization that has an interest or concern in the company or is affected by the company’s actions. Delta Air Lines has many stakeholders because thousands and thousands of people are have an interest in the company and are affected by actions taken by them. The passengers of the Delta aircraft are stakeholders in the corporation because they depend on this airliner, along with others, to get them to destinations they would like to go in a safe and timely manner. The stockholders and other owners of Delta Air Lines are considered to be stakeholders in the company because their income and lives depend on how well the company is doing and if value is being added to the company. The employees of Delta are stakeholders because their job and well-being depends on how well the company is doing and any actions they take, especially in terms of pay cuts or raises, layoffs, etc. Also the communities surrounding the airports that Delta flies out of have an interest in them because those airports benefit from having their aircraft fly their and then provides jobs to the surrounding community and increases the number of people passing through those communities. Airports across the world are stakeholders in this case because airports rely on big airliners, like Delta, to increase their revenues.

Individualism
Individualism believes that “the sole responsibility of a business should be to maximize profits for the owners of a business, but doing so within the law” (Salazar p.17). This ethical theory only focuses on one set of stakeholders, the owners of the business. Milton Friedman, a leader of individualism, argues “businesses should not attempt to be socially responsible” because being socially responsible takes money away from the owners instead of maximizing their profits (Salazar, p.17). Specifically for this case individualists would not be concerned with how the passengers were affected by the actions of making the man crawl or kicking the woman off of the plane. When analyzing this case they would be only concerned with the stockholders and other owners of Delta and whether or not the actions gave these owners the most profit. The fact that the company did not use the equipment that was needed to help Mr. Kanaan onto and off his plane and not training employees on the current regulations of ventilators lowered some of the company's costs, which increased owners’ profits. But after being caught for the actions that broke laws, the owners lost profits because they were fined $2 million by the Department of Transportation. This fine ultimately made the company lose money as a consequence of their actions. A key part of individualism is that it believes the actions should also be within the law. Delta did in fact violate laws and rules that are “set to protect air travelers with disabilities” (Delta 2011). Airliners are required by laws to provide assistance to passengers with disabilities and to provide them with the necessary approved equipment as needed. Therefore because the actions broke the law and ultimately decreased profits for the owner’s of the company, Delta Air Lines was acting unethically in the eyes of individualism.

Baraka Kanaan was forced to crawl off a Delta aircraft.

Utilitarianism

Utilitarianism believes that businesses “should aim to maximize the happiness in the long run for all conscious beings that are affected by the business action” (Salazar p.19). A utilitarian would be concerned about the happiness of all of the stakeholders in the company and if the action creates the greatest level of happiness for the most amount of people compared to taking a different course of action. A utilitarian is not interested in the short-term affects, but rather “concerned about the long-term costs and benefits of actions” (Salazar, p.20). In terms of Delta's treatment of employees, utilitarians would look at the long term costs and benefits of this on all stakeholders, including passengers, employees, owners, and the surrounding communities. The passengers in the long run are unhappy because they felt very disrespected because of their disabilities and ultimately filed lawsuits. The employees may be unhappy because they may lose their jobs for not knowing the proper information or not having the proper equipment. In the long run the stockholders and other owners are unhappy because they lost over $2 million because of being fined and for compensation to the passengers who were emotionally harmed. The surrounding communities that Delta work in are not affected so much by the mistreatment of the passengers other than the slight possibility that if they don’t change their ways then the company could shrink in size and decrease the economic status of those communities in the long run. The cost of the company’s actions of mistreating several passengers with disabilities led to over $2 million in civil penalties and compensation to those passengers. It also cost the company some of their high reputation to go down because of these stories being released to the public and then leading future passengers to possibly go with another airliner. If Delta had treated these passengers the way that they deserved and had the proper knowledge and equipment available to them then the happiness level in all affected parties would be much higher. Therefore based on the analysis done in the eyes of a utilitarian, they would consider Delta to have acted unethically because the happiness of the affected parties was not maximized.

Carrie Salberg was kicked off flight due
to medical equipment for her disability,
making her 5 hours late to her destination.

Kantianism

Kantianism believes that “it is wrong to manipulate, exploit, or use people” or “to lie, cheat, and steal, no matter the positive consequences that may occur” (Salazar, p. 21). Under Kantianism actions are ethical only if the decisions was motivated by good will and rational decision making. Kant says that good will “necessitates that people have good intentions and use good reasoning to come to conclusions that will make their good intentions effective” (Salazar, p.21). This ethical theory uses the formulation of humanity, which “states that it is wrong to use people as a mere means to get what you want” (Salazar, p.22). A Kantian would look at the Delta case and could say that the flight attendants that kicked Salberg off her plane did have the good intention of thinking they were protecting the other passengers and following protocol. However for failing to help Kanaan off the plane with the proper equipment the employees did not have good intentions because they exploited him and embarrassed him to save them from having the proper equipment ready at the terminal. The company also lied to both of these passengers because they said that they would be able to fly and would have the proper equipment available for them. But in reality the equipment was not available to help Kanaan off and on to the aircraft and the flight attendant did not allow Salberg to fly even though she had gotten preapproval of her ventilator. According to the formulation of humanity, Delta basically used these customers with disabilities to get their money from the airfare without considering their needs or giving them what they promised. Therefore Delta manipulated several of their passengers to buy tickets based on the knowledge that they would be able to fly and have the required equipment, but the airliner never followed through on promises. A Kantian would considered Delta’s actions to be unethical because the motivations were not from good will and the company did not make rational decisions. The company's compensations to their passengers wouldn't be approved by Kantianism either unless they were given out of goodwill and not simply to make the company look good to the public.

Virtue Theory

Virtue theory follows the ethical rule to “act so as to embody a variety of virtuous or good character traits and so as to avoid vicious or bad character traits” (Salazar, p.22). A virtue is “any character trait that aids flourishing” and a vice is “any character trait that inhibits flourishing” (Salazar, p.23). According to Aristotle the four primary virtues of business people are courage, honesty, temperance, and justice. Actions are analyzed under the virtue theory by deciding whether those actions advance virtues or advance vices. Delta Air Lines did not show any of the four primary virtues in business. The Delta employee that told Kanaan that the lift to get him on and off the aircraft would be readily available for him showed the vice of dishonesty. The dishonesty also occurred when the flight attendant told Salberg that the ventilator was not allowed to be on the plane. They were dishonest because the lied to these customers and gave them false information which their trips depended on. The employees that told Kanaan that he would be forced to crawl on and off of the plane was being selfish. The selfishness inhibited or harmed the flourishing of these employees. The owners of the company, or the ones that make the decisions of when equipment should be ready, portrayed the vice of greed. They were greedy because all they were worried about was getting paid their airfare and showing carelessness for ensuring that all the needs for their passengers with disabilities were met. As a whole the company did not have the virtue of courage because they did not take a stand for disabilities because they showed their passengers who had disabilities with disrespect in several cases. The company's actions regarding the treatment of their passengers with disabilities inhibited any advancement in all of the primary virtues. Since the company's actions inhibited their virtues, Delta would be considered to have acted unethically under the virtue theory. 

Works Cited

Advisory Board on Disability. (n.d.). Delta Air Lines. Retrieved September 23, 2014, from http://www.delta.com/content/www/en_US/traveling-with-us/special-travel-needs/disabilities/advisory-board-on-disability.html

Delta Fined for Violating Rules Protecting Air Travelers with Disabilities. (2011, February 17). Department of Transportation. Retrieved September 17, 2014, from http://www.dot.gov/briefing-room/delta-fined-violating-rules-protecting-air-travelers-disabilities

Pabst, L. (2011, April 21). Airline bumps disabled traveler. StarTribune. Retrieved September 19, 2014, from http://www.startribune.com/investigators/1

Salazar, H. (2014). The Business Ethics Case Manual: The Authoritative Step-by-Step Guide to Understanding and Improving the Ethics of Any Business. Unpublished manuscript.

Shaw, A. (2013, July 29). Disabled Man Claims Delta Forced Him to Crawl On and Off Plane. ABC News. Retrieved September 14, 2014, from http://abcnews.go.com/Travel/disabled-man-claims-delta-forced-crawl-off-plane/story?id=19801554