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#723508 - 07/14/02 08:32 PM What is considered a healthy corporation?
Jolly Offline
Yikes! 10000 Post Club Member

Registered: 06/20/01
Posts: 14051
Loc: Louisiana
In years past, when one invested in corporations, the primary reason for investing were the dividends generated by the stock held. It did not seem to me that an increase in stock price had as much weight back then, as it does now.

I don't agree with all of Derick's viewpoints concerning CEOs, but I will cede the point that many have been more greedy than the law permits. And if you break the law, you should go to jail.

But hasn't some of the intense pressure to inflate stock prices had an adverse effect on even the "good" businesses?

In the light of today's economy, what do you consider to be the hallmarks of a well-run and healthy corporation?
_________________________
www.coffee-room.com

Over 1,000,000 posts where pianists discuss everything. And nothing.

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#723509 - 07/15/02 12:04 PM Re: What is considered a healthy corporation?
Nina Offline
6000 Post Club Member

Registered: 08/13/01
Posts: 6467
Loc: Phoenix, AZ
Hi, Jolly:

This is a tough question on a lot of levels, but I will try to provide a simple answer, because at the bottom of everything, I believe the answer is quite simple.

A healthy corporation is one that recognizes some things should be prioritized higher than quarterly stock returns. The things that should be prioritized higher are: self-knowledge, a belief in decency, a respect for individual differences, a spirit of partnership, and a high priority for health and well- being. (This is taken verbatim from a speech by Dr. Robert Rosen of Healthy Companies International.)

The key is understanding that the values above WILL, IN THE LONG RUN, lead to profitability. We've had ample evidence that failing to manage a corporation according to the value set above will lead, eventually to disaster: Enron, Global Crossings, etc., are our most recent examples.

I fully understand that these ideas sound flaky and Pollyanna-ish. However, I've been working in organizational development for 20 years and I can personally attest to the importance of following these values, or similar ones.

Failing to take into account the fact that your employees are your true value, and they are human beings as well, is a formula for guaranteed failure, the question is just when.

A few "minor" things that a dehumanizing workplace can bring: high turnover, low morale, excessive costs, missed deadlines, all the way up to the truly yucky stuff, sabotage, whistle-blowing and subsequent fines, etc., and workplace violence (e.g., "going Postal").

Well, off my soapbox!

Although all CEOs have an obligation to maintain profitability, the paths they choose to get profitable and keep profitable make all the difference in the world.

See you
Nina

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#723510 - 07/16/02 11:06 PM Re: What is considered a healthy corporation?
Steve Miller Offline
3000 Post Club Member

Registered: 05/26/01
Posts: 3290
Loc: Yorba Linda, CA
 Quote:
Originally posted by Nina:


The key is understanding that the values above WILL, IN THE LONG RUN, lead to profitability. [/b]
(Pushing soap box in to room...... standing on soapbox........)

"If American business does not come up with a business model that does not focus strictly on quarter-by-quarter stock prices, American business is doomed".[/b]

(Returning soap box to dumpster.....)
_________________________
Defender of the Landfill Piano

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#723511 - 07/17/02 07:49 PM Re: What is considered a healthy corporation?
Nina Offline
6000 Post Club Member

Registered: 08/13/01
Posts: 6467
Loc: Phoenix, AZ
Hey don't throw out that soap box! I may need it again! (Besides, it's a nice one..)

Nina

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#723512 - 07/17/02 11:09 PM Re: What is considered a healthy corporation?
Anonymous
Unregistered


 Quote:
Originally posted by Steve Miller:

"If American business does not come up with a business model that does not focus strictly on quarter-by-quarter stock prices, American business is doomed". [/b]
I think you have hit the nail squarely on the head here, Steve.

But then, as long as CEO's know that even if the company tanks, they will still get a multi-million dollar severance package, why should things change?

I think we call it greed -- one of the seven deadly sins. It has become the guiding virtue of our economy. God must be so pleased with us.

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#723513 - 07/17/02 11:52 PM Re: What is considered a healthy corporation?
Derick Offline
3000 Post Club Member

Registered: 01/03/02
Posts: 3290
Loc: New York
I agree George. But let's not forget about the greedy stockholders who have a RIGHT to DEMAND a return on their investment. (At any cost.) That's a lecture I was given on this forum. Companies do not exist for the good of the employees, they exist for the good of the shareholders.

Seems to me greedy, selfish, short-sighted, are words that apply to shareholders as well as corporate executives. It's a shame that there aren't a whole hell of a lot of people who work for publicly traded companies on this forum. I have all my life and I know the devastation they inflict. But ONLY in the United States. NO WHERE ELSE. Then they send internal emails about how necessary it was to make some very "painful" decisions.

I know an IBM Fellow (the highest attainable technical level at IBM of which there are less than 100 worldwide) who was 'downsized' out of his job. You know what he now does to make ends meet? He sweeps the parking lot at McDonald's!

Ahhhh but think of all the money IBM saved by axing this guy. And those shareholders, well they have an inalienable RIGHT, to DEMAND a profit. To hell with the little guy, just as long as they get their crappy dividend check that they have a RIGHT to.

Actually, I should say he HAD a job sweeping the parking lot in McDonald's. He died. He got sick and didn't have medical insurance, he couldn't afford it. He had gone thru a very messy divorce and the wife took him for just about everything.

Screw him, ain't that right SHAREHOLDERS? Come out, come out wherever you are. Explain to me NOW about your right to your lousy dividend check. Tell me why you are not just as greedy as the filthy pieces of slime that run MOST, yes MOST, American corporations?

You've been noticably absent from The Coffee Room ever since the scandals hit. Perhaps you'll come back and explain your side? Hmmmm? I'm all ears.

Derick
_________________________
Don't worry about people stealing your ideas. If your ideas are any good, you'll have to ram them down people's throats.

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#723514 - 07/18/02 12:03 AM Re: What is considered a healthy corporation?
Anonymous
Unregistered


 Quote:
Originally posted by Derick:
I agree George. But let's not forget about the greedy stockholders who have a RIGHT to DEMAND a return on their investment. (At any cost.) That's a lecture I was given on this forum. Companies do not exist for the good of the employees, they exist for the good of the shareholders. [/b]
Technically, from a legal sense, this is correct. As one who has sat on corporate Boards of Directors, the Boards are (or should be) well versed in their fiduciary responsibility to the stock holders. It is legally their primary responsibility as members of the Board.

However, what has happened to American business is a redefinition of what is good for the stockholders. At one time, it was a fiscally sound company, with solid performance indicators and a strong future of steady growth. Now it is defined as the current price of the stock.

I have wondered if stockholders who have lost so much because of this immediate financial gratification binge we are on could sue the Boards for not fulfilling their fiduciary responsibility because of a misplaced emphasis on immediate returns and not showing adequate attention to the long term benefit of the stockholders.

Might be a very interesting case.

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#723515 - 07/18/02 12:10 AM Re: What is considered a healthy corporation?
Derick Offline
3000 Post Club Member

Registered: 01/03/02
Posts: 3290
Loc: New York
One way to spot a healthy company is when they pay little or not income tax. Or, get a tax rebate.

I'm sure the greedy shareholders and corporate execs like this. Too bad the shareholders are as stupid as they are greedy. These are the same shareholders that get their panties in a bunch over welfare for individuals, but are more than happy to give welfare to the mega-wealthy corporations.

Here's a few of my favorite, healthy, corporations and the taxes they paid (take special note of Enron):

-------------------------------------------------
Even before this year’s new corporate loopholes, corporate tax welfare had been expanding rapidly. Tax breaks for stock options, congressional indifference to abusive offshore corporate tax shelters, and other tax breaks have allowed many companies to earn billions in profits, yet pay little or nothing in federal income taxes.

From 1996 through 2000, just ten large profitable companies enjoyed a total of $50 billion in corporate tax breaks. That brought their combined tax bills down to only 8.9 percent of their $191 billion in U.S. profits over the five years. In just the most recent two years for which data are available, these ten companies got $29 billion in tax welfare, and paid a mere 5.9 percent of their profits in federal income taxes.

Microsoft enjoyed more than $12 billion in total tax breaks over the past five years. In fact, Microsoft actually paid no tax at all in 1999, despite $12.3 billion in reported U.S. profits. Microsoft’s tax rate for the past two years was only 1.8 percent on $21.9 billion in pretax U.S. profits.

General Electric, America’s most profitable corporation, reported $50.8 billion in U.S. profits over the past five years, but paid only 11.5 percent of that in federal income taxes. That low tax rate reflected almost $12 billion in corporate tax welfare for GE.

Ford enjoyed $9.1 billion in corporate tax welfare over the past five years. It reported $18.6 billion in U.S. profits over the past two years, but paid a tax rate of only 5.7 percent.

Worldcom paid no taxes at all in two of the last three years, despite reported U.S. profits of $15.2 billion. Worldcom’s total tax rate over the three years was only 1.6%. Corporate tax welfare slashed Worldcom’s tax bill by $5.3 billion over the past five years.

IBM reported $5.7 billion in U.S. profits in 2000, but paid only 3.4 percent of that in federal income taxes. In 1997, IBM reported $3.1 billion in U.S. profits, and instead of paying taxes, got an outright tax rebate. Over the past five years, IBM enjoyed a total of $4.7 billion in corporate tax welfare.

General Motors paid no taxes at all in three of the last five years, despite $12.5 billion in reported U.S. profits. GM’s tax rate for the past three years was negative 1.3 percent. Its corporate tax welfare totaled $3.6 billion over the past five years.

Enron paid no income taxes at all in four of the past five years, despite $1.8 billion in reported U.S. profits. Enron’s total taxes over the five years were a negative $381 million. Its corporate tax welfare totaled $1.0 billion.

El Paso Energy reported $1.6 billion in U.S. profits over the past five years, but paid less than nothing in federal income taxes, getting tax rebates of $254 million. El Paso’s tax rate over the five years was negative 15.5 percent. Its corporate welfare totaled $827 million.

Colgate-Palmolive paid no taxes at all in three of the past five years, despite $1.6 billion in reported U.S. profits. Colgate’s total tax rate over the five years was negative 1.3 percent, due to $595 million in corporate tax welfare.

Navistar, on $1.4 billion in U.S. profits over the past five years, paid only $28 million in federal income taxes, a tax rate of only 2 percent. Navistar’s corporate tax welfare totaled $451 million.
_________________________
Don't worry about people stealing your ideas. If your ideas are any good, you'll have to ram them down people's throats.

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#723516 - 07/18/02 12:37 AM Re: What is considered a healthy corporation?
Anonymous
Unregistered


 Quote:
Originally posted by Derick:
One way to spot a healthy company is when they pay little or not income tax. Or, get a tax rebate. [/b]
I never get upset about corporations or individuals who take advantage of tax breaks. If the law allows it, it is their right to take it.

What ****es me off is the legislators and Presidents who give these tax breaks. It is done only because we do not have public financing of elections, so the candidates must rely on the wealthy to finance their election campaigns.

We could pay for public financing of campaigns very easily -- get rid of the corporate tax breaks ands use the increased taxes to pay for the elections.

And if we got smart enough to require those corporations who use the publicly owned airwaves to provide free time as a conmdition of getting the license for making billions off these airwaves, we could get the remainder of the funds from eliminating corporate tax breaks and still have money to put towards Il Duce's deficit.

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#723517 - 07/18/02 12:38 AM Re: What is considered a healthy corporation?
Derick Offline
3000 Post Club Member

Registered: 01/03/02
Posts: 3290
Loc: New York
George,

Theoretically, that would be an interesting case. But the article below explains why such a case will never see the light of day...

_________________________________________________

Why Corporate Crooks Are Tough to Nail

Prosecutors are on the prowl, but given the hurdles they have to clear, convictions may be few.


The day of reckoning finally seems to be at hand. Emboldened by the criminal conviction of Arthur Andersen LLP for obstruction of justice on June 15, government lawyers are steaming ahead with the Enron Corp. investigation--and are probing malfeasance at an ever expanding list of companies that now includes Tyco International (TYC ), Adelphia Communications (ADELA ), Computer Associates (CA ), Qwest Communications (Q ), and Global Crossing.

As more scandals come to light, the White House is growing increasingly enthusiastic about throwing corporate crooks in jail. Although the Bush Administration is skeptical of new business regulation, it has no qualms about vigorously enforcing existing rules--and is, in fact, on a campaign to convince the public that energetic prosecution is a better way of coping with America's white-collar crime wave than cumbersome legislation. "Cops who maybe were asleep at the switch when a lot of the abuses were taking place are now aggressively patrolling," says Chief White House Economic Adviser Lawrence B. Lindsey. "Boards of directors and management are now on notice that this is a new day."

So does this mean that the rogue's gallery of irresponsible execs who have populated the business pages over the past several months will finally go to jail? Will the little guy finally be avenged? Don't count on it. While there will certainly be more prosecutions--and some of them will bear fruit--criminal enforcement is a risky game. The laws regulating companies are ambiguous, juries have a hard time grasping abstract financial concepts, and well-counseled executives have plenty of tricks for distancing themselves from responsibility.

The Andersen case underscores the difficulties ahead for the government. The feds almost lost Andersen--even though they had an inside whistle-blower, a simple story line, and a hometown jury packed with people who had seen the devastation Enron caused close-up. "After Arthur Andersen, nobody is going to talk about slam-dunk cases anymore," says Columbia University Law School securities law professor John C. Coffee.

What's more, many of the abuses that have enraged the public are entirely legal. Companies can file misleading accounting statements that are in complete compliance with generally accepted accounting principles (GAAP). They can boost their income, for example, simply by assuming that their pension plan investments will earn a higher rate of return in the future. Executives are also allowed to enjoy outrageous incomes and baronial perks without breaking any laws at all--so long as the board approves. And because so many of the laws governing corporate conduct are weak, there's no way criminal or civil prosecution can ever be a complete substitute for regulatory reform--no matter how aggressive the White House promises to be. "Enforcement works for the tiny percentage of people who engage in truly egregious behavior," says Henry T.C. Hu, a corporate and securities law professor at the University of Texas. "But for the far more numerous instances of lesser behavior, it is hard to reach them through enforcement."

Of course, the fact that criminal law applies only to extreme cases is probably little comfort to those under scrutiny. In the wake of the Andersen victory, government lawyers are turning their attention to the biggest target of all: Enron. Using their verdict against the energy giant's auditor as leverage, they're hoping to win the cooperation of insiders and build a case against top executives Kenneth L. Lay, Jeffrey K. Skilling, and Andrew S. Fastow. Enron and the individual officers all deny they've broken any laws.

Many of the scandals that have emerged since Enron are also on the government's radar screen. Criminal charges have already been leveled against former Tyco CEO L. Dennis Kozlowski for tax fraud and former ImClone Systems Inc. CEO Samuel D. Waksal for insider trading. Both claim they are innocent. Meanwhile, several other companies and their executives, including Global Crossing and Adelphia, are under investigation.

Sensing the public's anger, law enforcers across the country are taking a new interest in corporate crime. While most federal securities fraud suits have historically been filed by U.S. Attorneys in Manhattan and Brooklyn, cases are currently pending in an unprecedented 17 offices, ranging from San Francisco to Miami to Alexandria, Va. State and local prosecutors, such as New York State Attorney General Eliot Spitzer and New York City District Attorney Robert Morgenthau, are also getting in on the act. "In the aftermath of Enron, it is becoming easier to interest criminal prosecutors in complex securities cases," says Stephen M. Cutler, director of the Securities & Exchange Commission's Enforcement Div., which lacks the ability to file its own criminal prosecutions. "Their reluctance in the past came from a fear that these cases wouldn't play wellin front of juries."

As it turns out, that fear is not entirely unfounded. Indeed, the current flurry of activity may not necessarily yield a string of convictions. In a country with a long-established tradition of criminal rights, prosecutors always face high hurdles. They must, for starters, prove their cases beyond a reasonable doubt. In business cases, they also have to educate jurors about sophisticated financial concepts. That's no small job. Andersen should have been a prosecutor's dream: a clear-cut case of obstruction of justice where no one disputed that reams of documents had been destroyed. But the prosecution nearly unraveled under the skilled counteroffensive of the defense. And just getting jurors to understand the basics can be a chore. According to one news report, an Andersen juror initially believed that the case involved the National Aeronautics & Space Administration.

Imagine how much harder it would be to teach jurors about special-purpose entities or complex derivatives, as the prosecutors in any potential case against Enron would probably have to do. That's why government lawyers will try to steer clear of arcane minutiae, stick to clear themes, and try to pose their arguments as simple human morality tales. "What you really need to win any of these cases is an insider who can recount the conversations people were having and explain what people were thinking," says New York litigator Richard A. Martin, a former Assistant U.S. Attorney.

Finding such a whistle-blower is tough. Enough evidence has to be marshaled to persuade an insider to cooperate and then turn on his or her associates. And that's not the biggest challenge. To win a criminal case, prosecutors have to prove that an exec willfully broke the law--that he or she knew, for example, that the 10-K was fraudulent. If the executive has any legitimate reason for believing that the document was accurate, no matter how implausible, criminal charges will fail. In contrast, the plaintiffs in a civil lawsuit would have to prove only that the exec was reckless about the legitimacy of the 10-K--that he or she should have been aware it was misleading.

Big companies have lots of lawyers, and these lawyers specialize in creating exactly the type of paper trail that will exonerate top execs. Aggressive actions are routinely fortified with sanitizing formalities: file memos that justify iffy decisions, board approvals, and blessings from outside lawyers and accountants. Even if they helped nurture a corrupt corporate culture, CEOs and CFOs can often plausibly claim that they knew nothing about wrongdoing three or four levels down the hierarchy. All of these factors help to create the type of reasonable doubt that kills criminal prosecutions. In the Enron case, Lay, Skilling, and Fastow are all likely to argue that the company's disclosures were approved by Andersen. "They're going to say, `Look, I'm not an accountant. I told them what I wanted to do, and they said it was O.K.,"' says Houston criminal and civil defense attorney David Berg.

The difficulty of proving what's going on inside an executive's head makes it hard to prosecute cases where the law is unclear. The more ambiguity there is, the easier it is for execs to plead ignorance. As a result, government lawyers may have a tough time pinning blame on corporations and individuals in cases focusing on new types of derivatives, complex tax dodges, and exotic partnerships and joint ventures. That's a broad category that could include many recent accounting controversies, including the off-balance-sheet partnerships used by companies such as Enron and PNC Financial Services Group Inc.

Still, despite the obstacles, public anger is on the rise, so prosecutors are likely to keep the heat on. Jail is the best way ever invented to grab executives' attention. A busy CEO can buy insurance to cover legal damages. But there's no way to hire someone to serve jail time. And prison can't be counted as a business expense. Had government lawyers been more aggressive about bringing criminal cases a decade ago, says Joel Seligman, a securities expert at Washington University School of Law, many of the recent abuses might never have occurred. "Fraud is not a steady-state phenomenon," says Seligman. "It's binge and purge. What has become absolutely clear is that the late '90s were a binge period--in part, because the sensitivity to prosecution was reduced." That sensitivity is increasing. What's not clear, though, is how effective the coming purge will be.

By Mike France and Dan Carney
With Mike McNamee and Amy Borrus in Washington
_________________________
Don't worry about people stealing your ideas. If your ideas are any good, you'll have to ram them down people's throats.

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#723518 - 07/18/02 12:49 AM Re: What is considered a healthy corporation?
Anonymous
Unregistered


 Quote:
Originally posted by Derick:
George,

Theoretically, that would be an interesting case. But the article below explains why such a case will never see the light of day...[/b]
Ahhh, but Derick. Civil suits are easier to win -- proponderance of evidence, not beyond a reasonable doubt.

Suppose those who had 401k's in corporate stock, clearly investing with the expectation of the long term viability of the stock for their retirement, were to sue the officers, Boards and individual Board members for malfeasance because of a focus on immediate returns and imprudent policies for long term viability. Prudent decision making is one of the legal bases for determining whether a Board is meeting its fiduciary responsibility.

Keep in mind, when there is malfeasance of the fiduciary responsibility, there is individual personal liability of the officers and Board memebrs, not just corporate liability.

One big suit like this, won by the stockholders and causing indviduals to have to pay out of their personal fortunes, could send shock waves through the corporate officers and Boards and could change the entire way policy is made concerning the fiscal health of corporations.

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#723519 - 07/18/02 01:00 AM Re: What is considered a healthy corporation?
Derick Offline
3000 Post Club Member

Registered: 01/03/02
Posts: 3290
Loc: New York
How 'bout you and I make a little news... I've got a couple of company boards I'd love to sue for every penny they are worth.

Wanna do it? I'm up for it.

Derick
_________________________
Don't worry about people stealing your ideas. If your ideas are any good, you'll have to ram them down people's throats.

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#723520 - 07/18/02 02:29 AM Re: What is considered a healthy corporation?
JohnC Offline
1000 Post Club Member

Registered: 03/10/02
Posts: 1672
Loc: Lower Left Coast
 Quote:
Seems to me greedy, selfish, short-sighted, are words that apply to shareholders as well as corporate executives. It's a shame that there aren't a whole hell of a lot of people who work for publicly traded companies on this forum.[/b]
Derick,

At the risk of incurring your wrath I will try to give you my perspective. Fisrt of all I, like you, have worked mostly for publicly traded companies all my life, including right now. Two of my previous employers closed operations where I worked and moved them elsewhere. The first many years ago involved Frank Lorenzo of Eastern Airlines fame. The second involved a company that in the early 90's got on the "bash California" bandwagon and closed our plant, moving the work to Puerto Rico.

I lost jobs I didn't deserve to lose. It wasn't right but it happened. I agree with you regarding greedy executives and the shortsightedness in how 99% of public companies are run. Quarter to quarter is no way to run any business.

That having been said, no employer can guarantee employment to everybody for as long as they want. There are times when industries change, consumers' demands change, government regulations change, and companies have to react. Sometimes, companies just get lazy and fat over time. While I am not a proponent of cold, ruthless layoffs, I would rather see 90% of the people keep their jobs, than all 100% lose their jobs when the company can no longer be competitive in their marketplace.

While it sounds cold hearted to say investors demand a return on their investment, it is the basis and foundation of capitalism. Investors are taking a chance and risking their money on the hopes of that return. When it works (as it does in so many companies *not* making news) everybody wins. Jobs are created, communities prosper, shareholders receive returns, etc. Would you invest any of your money in a company if they said "Gee, thanks Derick. Don't ever expect anything in return but know that we will spend all your money hiring as many people as we can and never worrying if we can successfully compete."?

Capitalism has many faults as I mentioned somewhere else before. But it is still miles ahead of any other system out there.

As I said above, I'm with you on a lot of the CEO stuff and the short sightedness in managing earnings. But let's not throw the baby out with the bath water.

Let me leave you with this thought...."Capitalism without bankruptcy is like Christianity without hell"

Now ducking for incoming! \:D
_________________________
There are few joys in life greater than the absence of pain.

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#723521 - 07/18/02 10:24 AM Re: What is considered a healthy corporation?
Nina Offline
6000 Post Club Member

Registered: 08/13/01
Posts: 6467
Loc: Phoenix, AZ
At the risk of jumping into the attack, I think there's a LOT being made about a minority of highly spectacular flame-outs and a ridiculous 24-36 months of stockholder delirium.

The vast majority of publicly traded companies aren't in bankruptcy, nor are their CEOs being considered for "crook of the year." Many of them have turned profits in the past 18 months and returned dividends to their shareholders. Most of them are being affected by the downturn in the overall economy.

IMHO, the "greedy" shareholders being referred to here are better labeled as the "stupid" shareholders. To expect 15% or better rates of return Q/Q, indefinitely, is insane. Yet people did exactly that: take their hard-earned money and, with little or no research or knowledge, buy stock in companies and expect to make a killing.

I'm talking about the majority of companies here. Enron, Global Crossings, ArthurAnderson, etc., are at best unethical slimeballs and at worst criminals that should be behind bars.

Eeeek! I'm going to get my flak jacket!

Nina

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#723522 - 07/18/02 01:48 PM Re: What is considered a healthy corporation?
Derick Offline
3000 Post Club Member

Registered: 01/03/02
Posts: 3290
Loc: New York
John C. and Nina,

I'm not angry with what either of you said, in fact I agree with you *almost* 100%.

John - For the most part, I agree that companies cannot guarantee employees jobs. My beef with layoffs is with companies that have employees around the world. American companies. But as soon as they need to trim costs, the ONLY employees to be let go are American employees. THAT is un-American. THAT needs to be addressed in any corporate reform bill.

Moreover, as I said in another post, IBM laid off thousands of people in one of its chip making plants and moved the operation to China. Again, un-American and should be addressed by Congress.

But who benefits from all of this? Well the shareholders do, of course, but we are talking pennies/share here (if that). But corporate execs rake in millions more in bonuses and stock options because of their cost cutting measures. Measures that cost AMERICAN jobs.

One last point... My father worked for IBM. Times were bad for IBM in the early '70's (maybe all over, I was too young to know/care), he was an engineer. But during the early '70's, his department had nothing to do. Rather than fire employees, IBM let the maintenance contractors go and had their employees painting, mowing lawns, etc... I remember my Dad coming home covered in paint.

IBM was a blue-chip stock back then as it is now. But things have changed dramatically. IBM had a full employment policy until 1994. What changed?
I worked at IBM in 1994. I can tell you what changed... 20,000 US (ONLY), I cannot emphasize that enough UNITED STATES EMPLOYEES ONLY, were layed off, a new CEO came in whose compensation package was twice the former CEO's. His whopping compensation package was all negotiated before he did anything. A contract. A guarantee. So while this CEO really did nothing for IBM in 10 years (2.9% growth rate), he was guaranteed a job and a HUGE salary. Want to guess how many AMERICAN employees were layed off under this CEO over the course of 10 years? 100,000. Yet the number of employees IBM has is roughly the same now as it was then. Why? Well India, China and Mexico are just three companies where IBM opened shop, after closing shop in the US.

Nina - my use of the phrase 'greedy shareholders' was to emphasize the 'lesson' I was taught by a forum member who made it clear that it was a shareholders right to expect a return. Nevertheless, you are also correct, a lot of shareholders are stupid shareholders.

About CEO's... I'm sure there are some very honest CEO's out there, who want the best for their shareholders and employees. But, as the article in my "Who said CEO's are overpaid" thread" point out, the highest paid CEO's are the worst performing CEO's and also the first to swing the ax and cut AMERICAN *ONLY* jobs.

A lot of what CEO's/companies do is perfectly legal. But CEO's are granted special privileges that you and I could NEVER get. Imagine getting a
personal loan for $800,000 and not paying interest on it for 8 years. That's what President Bush got. Yet he's not alone. Most CEO's have the same sweet deal. Or how about NEVER having to pay the loan back? The company simply writes it off as a business expense. It happens all the time. There's nothing illegal about it. But you or I, who certainly need it more than some millionaire, would NEVER get such special treatment. Even in a time of dire need.

And what about stock options? Companies don't have to include options they give execs as expenses. So they can give away as much as they like to the execs. Yet my income is an expense to the company. In fact, even my stock options (which are worthless) are expenses to the company.

While all CEO's are not crooked, certainly a vast majority are treated VERY differently than the common folk. And their special treatment, though technically legal, borders on criminal IMO.

Derick
_________________________
Don't worry about people stealing your ideas. If your ideas are any good, you'll have to ram them down people's throats.

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