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COMMENTARY: HOT AIR IN THE EXECUTIVE SUITE (int'l edition)

European chief executives are rushing to declare themselves proponents of shareholder value and good corporate governance. But don't believe all the rhetoric. There are still plenty of Europe Inc.'s bosses who are distressed by increasing transparency and irritated by investor pressure to boost performance. Behind closed doors, some are fighting to slow the change, while publicly intoning the mantra of shareholder value.

Take Ron Sommer, chief of Deutsche Telekom, who recently complained that competition in the German market will make it hard to deliver the results his shareholders expect. That followed an announcement that profits failed to meet analysts' forecasts. Reading between the lines, Sommer's message basically is: I can't compete very well, and I'd like to blame my weak performance on somebody else. He also lashed out at regulators at a recent conference for allowing rivals to snatch market share by instigating ''a price war at Telekom's expense.'' In a final dismissal of the competitive ethos, Sommer warned that job losses could rise as a result of open markets. Germany's Social Democratic government fears nothing more than mounting unemployment. So Sommer's words seem designed to buy political protection.

German regulators shouldn't back down, however. The faster Sommer comes to grips with Deutsche Telekom's high cost structure and weakening markets, the better off shareholders and phone customers will be. Bucking up the financial performance of a former monopoly just when competition is at last delivering lower prices shouldn't even be on regulators' radar screens. Deutsche Telekom had years to prepare foropen markets. Now it's Sommer's job to whip the behemoth into shape.

BOTH WAYS. France is also a haven for CEOs whose strategies run counter to shareholders' interests. Jean Peyrelevade, an outspoken proponent of shareholder value, seems to want it both ways. He was appointed chairman of Credit Lyonnais after years of bad management led to losses that may top $30 billion. His urgent task is to get the bank ready for privatization. But Peyrelevade recently tried setting his own terms for the bank's future. He declared that he was hostile to bids from rivals Banque Nationale de Paris or SocietE Generale, but gave a nod to offers from Allianz, AXA UAP, or investment bank Paribas.

Engineering a friendly deal is hardly the way to win the highest offer for the bank. The government and bailout- weary French taxpayers certainly deserve a rich privatization price after footing the gargantuan bailout bill. Shareholder activists also complain that Peyrelevade, who is a proponent of greater board control over management, falls short of his ideals in practice. Activists say he holds too many board positions to competently execute all his supervisory duties. He sits on more than nine corporate boards. ''He should apply his own statements to himself,'' says Sophie L'Helias, president of Franklin Global Investor Services, a consultancy specializing in corporate governance.

Of course, executives fighting the rising tide of vocal shareholders may well lose their battle. But in the meantime, investors in European companies should remain vigilant against CEO double-speak.

By Gail Edmondson



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Updated Nov. 19, 1998 by bwwebmaster
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