On my dresser sits a small oak box lightly coated with dust. In it, for reasons passing memory, I keep an assortment of random relics that have somehow survived years of domestic downsizing: an old watch, a black stone, younger versions of old friends, cuff links I haven't worn for 20 years, eight shares of IBM stock and a button that says "Bad Dog, No Biscuit."

The stock was once kept in a safe deposit box, but as I watched it lose nearly three-quarters of its value over the last seven years, an oak box seemed like the proper final resting place. I persist in keeping it because it entitles me to all the shareholder correspondence from IBM. Each year, as a loyal investor, I faithfully receive my copy of the annual report with quarterly updates on the goings-on at Armonk.

1993 was a year of contrasts; a year of record losses and big rewards for those who presided over them. But also a year of hope, marked by the first dividend in IBM's leadership gamble; the hiring of an outsider to head the corporation.

The brightest star in IBM's down-sized firmament is first-year chairman, Louis Gerstner. Un-bowed amidst the rubble of an $8 billion loss in 1993, Mr. Gerstner remains a persuasive fellow who-in the fashion of Scarlett O'Hara- has his corporation and its shareholders looking at tomorrow with determined optimism.

The silver lining to the worst year in IBM's history is a remarkable Gerstner- engineered fourth quarter reversal with $382 million in profit after five consecutive losing quarters. (Followed by an almost identical $392 million gain in the first quarter of 1994.) And all of it accomplished within a year of assuming the chairmanship.

However severe the 1993 losses, they cannot be justly laid at Gerstner's door since he inherited the decline, and it understandably took months to slow, then reverse the financial free-fall. And what of his predecessor, ex-chairman Akers? What does one do after presiding over a three-year $15 billion slide, massive reductions in work force and a 100 point drop in stock value? Why, get rewarded, of course.

John F. Akers retired on April 30, 1993 and so received one-third of his $925,000 salary or $308,333. Mr. Akers also received a $125,000 bonus; for what achievement it is not clear, so I called the IBM Investor Relations office to find out. They didn't know either.

Akers also managed to pick up a tidy $2,500,000 as part of a retirement incentive program that was available to all employees, albeit at far more modest levels. And to prove there were no hard feelings over the plight of the corporation, the Board of Directors chipped in another $925,000 in recognition of his 33 years of service. What ever happened, one might ask, to a gold watch and a handshake?

But, we're far from done. There's also the trifling matter of the $2,985,750 in restricted stock cashed out at retirement time. Oh, and yes, the $2,698 IBM contributed to Akers' Tax Deferred Savings Plan. Finally, there are stock options which roll out into the next century with the potential value of more than $7 million. Even excluding those stock options, Akers' total separation package comes to $6,846,781. If crime doesn't pay, you can be sunrise-certain that corporate failure consistently does.

Technically, Akers is "entitled" to much of the money by prior agreement, company policy and negotiated exit fees. The numbers would not seem so egregious were they not doled out against the background of 140,000 people losing their jobs. Such magnanimity inescapably suggests a double standard which rewards management failure at stockholder and employee expense. Ironically, five years ago IBM stockholders voted on a measure to prevent such excesses.

In 1989, responding to stockholder concerns about the company's declining fortunes, IBM's Board adopted a Long-Term Performance Plan to provide for the granting of stock options and cash awards to company management and selected employees. It was to be a financial tether which coupled personal interests with corporate success; a way to reward management for performance. The plan's guidelines clearly linked rewards to both "corporate financial performance and stockholder value."

"Was Mr. Akers' $6.8 million severance based on performance?" I asked the sympathetic woman at Investor Relations. She was not certain. "What would the figures have been if performance wasn't an issue?" I pressed. She would check.

This "heads-I-win, tails-you-lose" policy is perpetuated by a system of boards of directors dominated by present and former CEOs. In matters of management compensation, corporate boards resemble exclusive clubs whose fiscal loyalties never stray far from the limitless horizons of shared self interest.

Consider the galactic disparity resulting from a unprecedented decade of downsizing in American industry. Tom Peters, writing in "Thriving on Chaos," documents that "as many as 30 million people have been dislocated by the restructuring in manufacturing during the last decade. Since 1980, the Fortune 500 have shed a staggering 2.8 million jobs." During that same period, the increase in total salaries of people earning more than $1 million was 2,184 percent! (My source for this information is "America: What Went Wrong," Barlett and Steele. The authors are Pulitzer Prize-winning reporters for the Philadelphia Inquirer.) The nation's boards of directors presided over both the layoffs and the pay increases.

As of the annual stockholders meeting held in April of this year, IBM's Board numbered eleven and all but two have held top positions in corporate management or government. Their average age is 61.6 years. The two without business credentials-either through coincidence or concession to political correctness-are a woman and an African-American. Both were recruited from academia, and neither serves on the Board's Executive Compensation Committee.

Many share a common lineage, having worked for the same companies or served on the same boards or advisory councils. Johnson & Johnson, The Council on Foreign Relations and Credit Suisse are gene pools of IBM corporate directorship.

The Long-Term Performance Plan, originally proposed as a five-year fix to management compensation without accountability, has now expired and the board is asking stockholders to renew it. Probably because it worked really swell the first time.

Doubtless, it will be adopted, if only because stockholders seldom vote against the recommendations of the board. But a plan that would justly celebrate and reward the success of Louis Gerstner should not also endow decline. The bonuses, the stock options, the royal perks should not, like water, find the path of least resistance and automatically flow into the waiting bowls of top management. The conduit should remain performance; the flow restricted by the Board of Directors.

As IBM begins its long climb back to sustained growth and profitability, perhaps a small reminder would be helpful. I'm digging in my dusty oak box looking for that button. There. Just a minor change and, voila, it becomes a modest exhortation; a gift to the Board from one who wields the power of eight shares of devalued stock: "Bad Dog, No Bonus."

Victor Rozek has 17 years of experience in the data processing industry, including seven years with IBM in Operations Management and Systems Engineering.

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