In Business This Week
Edited by Monica Roman
HEADLINER
Thomas Pritzker: Point Man in a Family Feud
Hyatt Chairman Thomas Pritzker has feted a Chinese premier and brokered global deals--but keeping his feuding family from busting apart its $15 billion empire may prove a humbling challenge. The 52-year-old lawyer will likely stay in charge of Hyatt--as long as he keeps the support of cousins Nicholas and Penny Pritzker, the other members of the family's ruling triumvirate, sources say. But the trio is now seeking ways to cash out eight other cousins--probably by selling parts of the family's $6 billion Marmon Industries Group conglomerate and perhaps by taking Hyatt public. "I can't foreclose our options in the future, but I can say we have no plans to take Hyatt public in the next several years," says Hyatt's chief.
The family's woes have become public because of a lawsuit by Liesel Pritzker Bagley, a Columbia University freshman. Bagley has sued her father, Robert, and cousins seeking a bigger share of the pie. And the cousins, in a rare public statement, said on Dec. 10 they "regret" her action and are trying to resolve the dispute.
By Joseph Weber
Coke: "The Tank" Heads to the Front
When Steven Heyer was president of Turner Broadcasting System, staffers nicknamed him "The Tank" for his hard-charging ways. And from the moment he joined Coca-Cola (KO
) as executive vice-president and president of Coca-Cola Ventures in March, 2001, Heyer has made his mark. He reshuffled Coke's ad agencies and shook up its product mix with a number of brand extensions such as Vanilla Coke. Last year, Heyer even persuaded CEO Douglas Daft to swallow his pride and pull the plug on his planned joint venture in juice and snacks with Procter & Gamble (PG
). But it's clear that Daft and the board like what they see: On Dec. 11, Heyer was named Coke's president and chief operating officer--a move that clearly positions the 50-year-old former ad executive and management consultant to succeed Daft, 59, when he retires in coming years.
The Cendant Dragnet Drags On
The pressure is mounting on former executives involved in the Cendant (CD
) accounting scandal. On Dec. 11, a federal grand jury indicted former Cendant Chairman Walter Forbes and former Vice-Chairman Kirk Shelton on additional charges, including insider trading for Forbes. The two were previously indicted on other charges, including securities fraud. The indictments stem from the 1998 accounting blowup in which executives at the former CUC International, which merged with the franchising company HFS to form Cendant in 1997, were alleged to have booked $500 million in fictitious revenue over several years. An attorney for Forbes declined to comment while Shelton's attorney says his client "vigorously denies all the charges."
What Price to Fix WorldCom?
Is former Hewlett-Packard (HPQ
) President Michael Capellas getting rich off WorldCom's woes? U.S. District Judge Jed Rakoff, who is overseeing federal investigations of the fallen telecom giant, thinks so. Rakoff has ordered WorldCom to explain why Capellas' $3.5 million salary and signing bonus isn't excessive. WorldCom says Capellas' salary is in line with the job of rebuilding the $30 billion company, now in bankruptcy. More important, WorldCom General Counsel Michael Salsbury notes that court-appointed monitor Richard Breeden hasn't objected to Capellas' package. Breeden could not be reached for comment, but observers believe that Rakoff will ultimately accept Capellas' pay as fair.
A Brisker Walk Down Mad Ave
Is the deepest advertising slump in decades finally fading? Media buying agency Universal McCann is projecting a 5% gain in U.S. advertising spending next year, to $249.3 billion. Coming after an expected 2.6% increase this year, the projected 2003 levels would bring ad spending above the record $247.5 billion hit in 2000, says McCann. Others, such as media buyer Zenith Optimedia and economist Jack Myers, aren't as upbeat, but are predicting gains in the 2% range.
A Really Big Free-Trade Zone
The Bush administration moved a step closer to its goal of a hemispheric free-trade zone on Dec. 11 by concluding a deal with Chile. The comprehensive pact would reduce nearly all tariffs on bilateral trade in manufactured goods to zero once Congress approves, probably by next fall. Agricultural duties would be phased out over four years. The Administration is playing catch-up since Chile already has deals with Europe, Mexico, and Canada. But the White House is hoping the deal will put pressure on Brazil to drop its opposition to a 34-nation Free Trade Area of the Americas. President Bush plans to open free-trade talks next year with Central America.
Et Cetera...
-- Northrop Grumman (NOC
) completed its $6.8 billion merger with TRW.
-- Raytheon (RTN
) Chief Financial Officer Frank Caine resigned.
-- The National Transportation Safety Board blamed Alaska Airlines (ALK
) for the fatal crash of Flight 261.
CLOSING BELL
Tripped Up
Skechers USA (SKX
) shocked investors on Dec. 9 by predicting fourth-quarter sales would be 14% less than expected. The teen-oriented shoemaker is facing weak consumer spending and changing tastes. Investors knocked 42% off the shares, which recovered slightly to close at $8.10 on Dec. 11.
CLOSING BELL
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Copyright 2002, by The McGraw-Hill Companies Inc. All rights reserved.
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