createpositivechange

Tag: An Inconvenient Truth

  • Soft landings for Merrill’s O’Neal and other ex-chiefs

    The cushioned exit of Stan O’Neal as CEO of Merrill Lynch & Co. this week was proof again that nothing succeeds at the top levels of business like not succeeding.

    O’Neal is to receive a reported $161.5 million in stock options and retirement benefits. He was ushered out because he had lost favor with his board after announcing that the company had a $2.24 billion quarterly loss.

    While $161.5 million seems like enough to get by on, it doesn’t equal amounts received by other dismissed executives.

    In January of this year, Robert Nardelli, CEO of Home Depot, was given a $210 million severance package. That figure, according to the New York Times, “quickly made him the standard-bearer for failure-based pay.”

    Nardelli, like O’Neal, was said to have a harsh management style, a style that might have been tolerated if Home Depot’s stock hadn’t been in the doldrums.

    However, it may be a style that’s in demand. Nardelli became chairman and CEO of Chrysler in August.

    In 2006, Hank McKinnell, CEO and chairman of Pfizer Inc., exited his job ahead of schedule. He received close to $200 million in severance.

    McKinnell was certainly not alone. Citing a report by James F. Reda and Associates, the New York Times reported that 35 dismissed CEOs took away a total of $799 million in 2006.

    Among that year’s golden parachuters was Jay S. Sidhu, chairman and chief executive of Sovereign Bancorp Inc. He received a package worth $73.56 million when he resigned in 2006.

    The terms of these severance packages simply reflect the realities of the market place, analysts say.

    CEOs are in demand. Therefore, they can negotiate the plush terms of their firings at the times of their hirings.

    But, not surprisingly, the resignation packages do prompt criticism from the public, from shareholders and from politicians.

    That happened after Walt Disney Co. dismissed its president, Michael Ovitz, in 1996.

    Ovitz, who had been on the job for 14 months, was given $140 million in severance pay. Shareholders filed suit, but a judge ruled in 2005 that Disney had not violated its fiduciary duty.

    A severance package given to Carly Fiorina, CEO and Chairman of the Board, Hewlett-Packard Co. drew a shareholder suit that is yet to be settled.

    Her company dismissed Fiorina in February 2005. She received $21.4 million.

    Shareholders have pointed out that should the company’s stock improve, Fiorina also stands to make millions more by exercising stock options.

    Fiorina’s severance had other perks, including $50,000 in financial counseling. She also got to keep her personal computer equipment and receive free tech support for three years.

    Jill Barad, chief executive of Mattel Inc., received $37 million when she resigned in 2000 after the company reported a loss.

    As a part of her package, the company forgave a $3 million home loan and sold her a company car at “a nominal price.”

    Like some of the other executives who lost their jobs in the most public of fashions, Barad and Fiorina have landed on their feet.

    A website lists Barad’s speaking fee at $50,001 and above. Fiorina has signed on with the soon-to-air Fox News business news channel.

  • Google, Facebook battle for friends

    Despite losing to Microsoft in its bid for a piece of Facebook, Google isn’t giving up on social networks.

    The behemoth of search is partnering with other tech companies and social networks to develop a competing approach called OpenSocial. The open-source technology will enable developers to write applications that can be used on many sites, including partners in the project, such as LinkedIn and Friendster.

    This is a markedly different approach from that of Facebook, which does not share its technology with others.

    With 50 million users, a $240 million investment by Microsoft and a valuation of $15 billion, Facebook has a big head start. But the open-source approach has been proved over and over on the web. And then, of course, there’s the seemingly unlimited force of Google.

    A number of major players have been in both camps. PayPal co-founder Peter Thiel invested in both Facebook and LinkedIn. Napster co-founder Sean Parker was both the founding president of Facebook and a co-founder of Plaxo, which is a partner in OpenSocial.

    Thiel and Parker are not the only web kingpins in this fray. Netscape co-founder Marc Andreessen is involved in two OpenSocial partners – LinkedIn and Ning.

    With such a stellar cast, it’s going to be quite the show: Facebook and Microsoft and the millions of uncounted developers and publishers who will embrace open source.

    We’re in for a real spectacle.

  • Kay Bailey Hutchison Protects Oil Interests

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  • Colbert Vote Skyrockets

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  • Focus is on Nyc Charter Schools

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  • Cablevision’s James Dolan has string of losses

    As the chairman of Madison Square Garden, the company that owns the hapless New York Knicks, James L. Dolan should have already known a lot about losing.

    But Dolan, 51, who is also a blues/rock singer, has learned even more about embarrassing defeats during the last few weeks.

    Already vilified in the New York press as a rich kid whose dad gave him the Knicks as a plaything, Dolan is now depicted as a boss who tolerates bad behavior and bad language in the office.

    In addition, a Dolan family plan to make Cablevision Systems Corp. a private company has been rejected by shareholders.

    Cablevision, a dominant player in the New York City area, owns Madison Square Garden, which, in turn, owns the Knicks, the MSG Network, hockey’s New York Rangers, the New York Liberty of the Womens National Basketball Association and Radio City Music Hall.

    All in all, Dolan may be finding new wisdom in the first lines of one of his bands’ songs: “Who told you life would be easy? Who said you would smile every day?”

    On Oct. 2, a federal jury in Manhattan found that Madison Square Garden and Knicks coach Isiah Thomas had sexually discriminated against one of its executives.

    The verdict came after a trial that made the Knicks front office seem like a locker room where boys were, alas, boys.

    The Garden was ordered to pay $8.6 million to the executive, Anucha Browne Sanders. The jury found that the company had created a hostile work environment and that it fired Browne Sanders in retaliation for her complaints about inappropriate language and advances.

    The jury ordered Dolan, president and chief executive officer of Cablevision Systems, to pay Browne Sanders $3 million for the retaliatory firing.

    His father, Charles F. Dolan, the founder of HBO, is Cablevision’s chairman and founder.

    Several Dolan family members also serve on the company’s board. Among them is Lawrence Dolan, Charles’ brother and the owner of the Cleveland Indians.

    On Wednesday, shareholders rejected a $10.6 billion bid by the Dolan family to take Cablevision private. The Dolans had offered $36.26 a share. Some major shareholders said the price was too low.

    Charles and James Dolan, who have sometimes feuded, put the best face they could on the rejection, saying in a joint press release:

    “We see today’s outcome as a vote of confidence in the prospects of Cablevision, its management team, its 20,000 employees and the industry’s future.”

    James Dolan’s total compensation for 2006 was $8.71 million, Forbes magazine reported.

    Some of his earnings, over $300,000, have gone to political candidates, mostly Democrats. This year he has given to the presidential campaign of Sen. Hillary Rodham Clinton of New York.

    Dolan is also the lead singer and rhythm guitarist of JD & the Straight Shot.

    According the band’s website, mixing business and music gives Dolan “a sense of balance in his life.”

    The Rocky Mountain News in Denver described the band’s first album, as getting “grudgingly good reviews.”

    The grudging praise sometimes comes from Knicks fans. The team has not had a winning season since 2000-2001, despite a high payroll.

    After 2005-2006 losing season, the club found itself in a soap opera feud with its coach of one year, Larry Brown. The melodrama ended with the Knicks buying out Brown’s contract for $18.5 million.

    Last season, the team won 33 games and lost 49, certainly enough to make Dolan sing the blues.

  • The Real Dirty Sexy Money

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  • Dui is a Death Sentence for Lost Cast Members

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  • The Inherent Muckety of Times Wedding Announcements

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  • Mays and McCombs, the original Radioheads

    The radio business has been very good to Lowry Mays and Billie Joe “Red” McCombs.

    In 1972, they formed the San Antonio Broadcasting Company to buy an FM station for $125,000.

    Thirty-five years later, that company is called Clear Channel Communications and it owns more than 1,000 stations. Its shareholders recently approved a $19.5 billion private equity buyout that values Mays’ stock at more than $1.1 billion and McCombs’ shares at about $190 million. The deal is expected to close before the end of the year.

    In early 2000, when Clear Channel shares hit $95, the founders’ stock would have been valued at more than twice as much as now.

    Still, not a bad rate of return, especially when the founders’ families hold a significant stake in Live Nation, spun off from Clear Channel in 2005. Live Nation is trying to perform the same consolidation magic in the entertainment industry that Clear Channel did in radio.

    Another affiliate, Clear Channel Outdoor, trades publicly, but most of its stock is held by Clear Channel.

    In addition to making money, Clear Channel has made important connections.

    Along with Mays, his two sons, Mark and Randall, and McCombs, current board members include former Oklahoma congressman J.C. Watts and Ted Strauss, a former senior managing director of Bear, Stearns & Co. Strauss’ brother, Robert, was a long-time adviser to presidents, Republican and Democrat. Ted Strauss’ late wife, Annette, was mayor of Dallas.

    Former directors include Dallas billionaire Tom Hicks and Vernon Jordan, a presidential adviser to Bill Clinton.

    Live Nation’s directors include movie producer Harvey Weinstein and Henry Cisneros, the former U.S. secretary of housing and urban development, and a former mayor of San Antonio.

    In San Antonio, McCombs may be best known as a car dealer, but his business dealings range widely. He is a past owner of the Minnesota Vikings of the NFL and the San Antonio Spurs and Denver Nuggets of the NBA.

    Both McCombs and Mays have top-ranked business schools named after them, the McCombs School of Business at the University of Texas at Austin and the Mays Business School at Texas A&M.

    Clear Channel has been criticized for homogenizing radio across the country. Some of its controversies have involved Rush Limbaugh, Howard Stern, the Dixie Chicks and Madonna.

    Critics link Lowry Mays’ conservative politics to company decisions, such as when some Clear Channel stations stopped playing Dixie Chicks songs after they criticized President Bush because of the Iraq war.

    Clear Channel disputes that. “The radio company that banned the Dixie Chicks was Cumulus Media, not Clear Channel,” the company says in a “Know the Facts” section of its Web site. Some Clear Channel stations, in fact, increased their airplay of the Chicks, the company says.

    Live Nation’s recent $120 million deal with Madonna certainly belies any notion of retribution against the Material Girl and her politics.

    For Mays and McCombs, the original Radioheads, business seems to trump partisanship.