Clicking on banner ads enables JWR to constantly improve
Jewish World Review July 12, 2002 / 3 Menachem-Av, 5762

Andy Rooney

Andy Rooney
JWR's Pundits
World Editorial
Cartoon Showcase

Mallard Fillmore

Michael Barone
Mona Charen
Linda Chavez
Ann Coulter
Greg Crosby
Larry Elder
Don Feder
Suzanne Fields
James Glassman
Paul Greenberg
Bob Greene
Betsy Hart
Nat Hentoff
David Horowitz
Marianne Jennings
Michael Kelly
Mort Kondracke
Ch. Krauthammer
Lawrence Kudlow
Dr. Laura
John Leo
Michelle Malkin
Jackie Mason
Chris Matthews
Michael Medved
MUGGER
Kathleen Parker
Wes Pruden
Sam Schulman
Amity Shlaes
Roger Simon
Tony Snow
Thomas Sowell
Cal Thomas
Jonathan S. Tobin
Ben Wattenberg
George Will
Bruce Williams
Walter Williams
Mort Zuckerman

Consumer Reports


Taking stock of the market


http://www.NewsAndOpinion.com | Financial experts were puzzled for several months over the fact that while the country seemed to be on the way out of its mini-depression, Americans with money to invest were not buying stocks.

The American public has never looked smarter.

Who among us believes that Enron and WorldCom are the only companies who committed fraud? They're the ones that got caught. Does the tip of the iceberg mean anything to you? The public is waiting for the other shoe stores to drop. Investors know there must be hundreds of companies cooking their books. Potential investors don't want to be caught owning shares in the one that turns out to be the next Enron.

The puzzle is, what happened to honesty, decency and ethical business practices? The corporate businessmen we're seeing in court - and they're mostly men - don't look or act like the criminals we see shackled after a bank robbery, holdup or murder. Did any of them ever step back, look at themselves and what they were doing and think, "Hey, I know what's right and what's wrong. This is wrong."?

President Bush said some good, tough things Tuesday in his Wall Street speech. Corporate criminals will get more prison time. We're all for that and we'll be checking the front page of the newspaper tomorrow to see which billionaire executive caught stealing goes to prison next. We remember the promise to catch and punish Osama bin Laden 10 months ago. Both promises were easier to make than keep. Enron and WorldCom executives probably aren't going anywhere but the Bahamas to join their bank accounts.

A few years ago, IBM sent a fat envelope to stockholders with several pages of proxy forms outlining 11 issues. Included was information on how members of the board of directors advised stockholders to vote.

Here were some of the 11 issues listed:

APPROVAL OF ANNUAL INCENTIVE COMPENSATION TERMS FOR CERTAIN EXECUTIVES

It will come as no surprise to hear that the directors recommended stockholders vote FOR extra money for "certain" executives, many of whom were probably on the board. You might think the million-dollar-plus salaries many of them were getting would be incentive enough to do their best work -- but apparently not, How many "certain" executives there were, the proxy didn't say. It didn't mention any uncertain executives, either.

There was no place on the proxy form where a stockholder could ask a question, such as, "If this proposition doesn't pass, does it mean certain executives won't do their best work because they won't be paid extra for it?"

RATIFICATION OF APPOINTMENT OF AUDITORS

The board recommended approving ratification of the auditors. Of course. If they have the auditors in their pocket, why not?

AFFIRMATION OF IBM'S POLITICAL NON-PARTISANSHIP

The board was against that proposition. Usually when a company gives $250,000 to the Republicans, it also gives $250,000 to the Democrats -- just to be fair -- not to mention to get in good with whomever wins.

ELIMINATION OF AWARDS OR BONUSES UPON COMPLETION OF SERVICE

This is the Golden Parachute clause. Of course, the directors were against eliminating it. They were the ones in line to pull the ripcord.

VARIABLE EXECUTIVE AND OTHER COMPENSATION PLAN

The board was in favor of this. It's hard for a stockholder to find out what a "variable executive" is.

STOCK PAYMENTS TO NON-EMPLOYEE DIRECTORS

How many of the directors who were not employees, do you think, opposed this? None, maybe?

The best thing about the IBM ballot was that it came with an envelope that said, NO POSTAGE NECESSARY. Board members probably thought if they covered the postage, stockholders wouldn't notice the few hundred million dollars they were giving themselves.

And keep in mind, IBM is probably one of the more honest companies.

Enjoy this writer's work? Why not sign-up for the daily JWR update. It's free. Just click here.



Comment on JWR contributor Andy Rooney's column by clicking here.

07/10/02 English as she is spoke
07/03/02 The sound of noise
06/28/02 Science: the first resort
06/26/02 Plenty is in a name
06/24/02 The truth about lying
06/17/02: War is heaven
06/07/02: The Kashmir maven
06/03/02: More of the same
05/29/02: I'm breaking a rule in this column that I won't likely ever do again
05/24/02: The "Days" of our years
05/22/02: The history of history
05/14/02: Cars I have known
03/27/02: A victim of theft
03/22/02: We're wasting away
03/13/02: Down with the semicolon!
03/11/02: War on a full stomach
03/06/02: Uninformed and misinformed
03/01/02: Some thoughts on aging
02/27/02: Saving is a cheap hobby

© 2002, TMS