Sunday, April 7, 2013
Sympathy for the Devil
Much has been made with regards to the role of the Executive Boards in a publicly owned business. The idea of the Board of Directors is to be the watch dog over the CEO and ensure that the company is pursuing business that is not only good for business overall but to ensure that the company is pursuing legitimate interests that serve the long term, not just the bottom line of the CEO and his Management team and their own first.
And in reality Boards are so stacked in favor of the CEO that they act more like lap dogs than watch ones. Occasionally when it becomes so apparent that there is an act of insouciance by a CEO they do some bitch slapping. This week the JC Penny CEO, Ron Johnson, found his pay cut when his actions to resuscitate the brand failed. When one of thinks of Apple, which is where he was originally recruited, one right away sees the JC Penny customer in mind, or not. But the Board hired him so who is really at fault. Hey even former con, Martha Stewart, manages to make an appearance on this one so it has some star power.
Then we have HP Board members stepping down when it too was exposed that they did not have the rousing votes of support needed to further maintain the company largess when it came to their own bottom line. HP a company whose well publicized troubles should have led to change awhile ago seemed to send a message that the only suite they were interested in changing was the CEO's, having gone through as many in number in the same amount of years of late. Well change comes slowly when the shit hits the HP.
And we have this article on Executive pay that is less direct and more indirect in the form of perks and bonuses that include private jet charter and other extraneous expenses to make the life of the CEO just a little easier after all that not doing anything that can be accounted for. It is hard to macro manage.
And finally the non public businesses (aka Hedge funds) that have no obligation to release payroll information so that dick swinging is done in those quiet rooms we hear so much about. But when you have a dick swinging contest its bound to get out.
And we have more challenges with the greatest Dick, Moby, up for negotiation with his fellow whales; Jamie Dimon CEO and Chairman of JP Morgan is actually once again being threatened by another Ahab in dividing his job title to simply CEO. When one job is simply not enough anymore and yet he seems to do both well, right? I mean that was those other people who he macro managed that did all that other "stuff" right? When you got two jobs you are kind of busy.
And my favorite, the retail therapy of Steve Cohen, CEO of SAC Capital, whose recent buying binge included a Picasso from Steve Wynn (who is specifically mentioned in the Executive pay article) and a $75 million dollar house in the Hampton's. And it appears hell hath no fury as the SEC investigation is now digging up his divorce of years ago. Well, if Mr. Cohen is ever charged for a crime he could get house arrest and that is a hell of place to wait that out, and you do need something to look at being trapped all day. I think Picasso would totally approve.
There is always hope. Shareholder activism not just confined to the wealthy businessman with his own agenda regarding a Company can come in the form of actual members of the Unions, shareholders themselves and many of the investment firms who buy them for their own resale. That latter one probably not so much, but in today's paper there seems to be a tide turning when it comes to reigning in the Kings and Masters of these Universes.
Some of this in sheer casting and numbers rival Game of Thrones, but in reality this is far more insidious than anything George Martin could write.