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NOVEMBER 10, 2003
Edited by Ira Sager Talk Show "We are now truly the bank of America." --Ken Lewis, Bank of America chairman and CEO, on the acquisition of FleetBoston, which creates the country's second-largest bank Sky-High Pay For Orbitz' Chief EVEN IF THE INITIAL public offering of Web travel agency Orbitz is a dud, CEO Jeffrey Katz will whistle past the pay window. Expectations aren't high: In September, company bankers predicted Orbitz would price its IPO at $30 or more a share. Instead, Orbitz is planning to go public at $22 a share the week of Nov. 24. But the Orbitz board has insulated Katz from such vagaries, according to provisions of his contract, detailed in an Oct. 21 Securities & Exchange Commission filing. The contract, signed in July, gives Katz 66,667 shares of restricted stock, worth $1.5 million. But Katz also gets cash to make up for the low price of the 83,333 shares he owned already. Then, if Orbitz trades near its offer price for most of the 30 days after the IPO, Katz can get $666,664 in cash -- or the $8 difference between the offer price and $30. "It's part of a broader trend of execs negotiating risk out of their contracts," says Patrick McGurn, of shareholder advisers Institutional Shareholder Services. Orbitz says Katz has the proper incentives "to promote value for all shareholders." Katz may still be glum: His 1.6 million stock options are worth $13 million less with Orbitz at $22 than at $30. By Timothy J. Mullaney   Microsoft: The Same Old Song? IF YOU THOUGHT Microsoft's (MSFT ) antitrust battles were over, think again. On Oct. 24, the federal government and 19 state attorneys general told the judge overseeing the settlement of the landmark antitrust case that Microsoft may be violating the consent decree. The regulators are worried about a feature in Windows XP that lets users buy music online. The problem? When users click on the "Shop for Music Online" link, the feature automatically uses Microsoft's Internet Explorer browser technology -- even if a person has selected another browser as their default. Regulators worry this could violate a core principle of the settlement, designed to prevent Microsoft from using its monopoly Windows operating system to gain leverage in other markets. Microsoft denies that it's doing anything wrong. It says the filing is proof that the settlement is working. "This is part of what the consent decree is all about, checking into these sorts of complaints," a spokesman says. If the issue isn't resolved, regulators could ask the court to order a change at the next hearing on Jan. 16. For Microsoft, charges of anticompetitive behavior won't go away. By Jay Greene, with Lorraine Woellert  When CEOs Play, So Do Companies Ewald Kist, CEO of financial- services giant ING Group, is a former Olympian and six-time marathoner. But he won't be running in the New York City marathon on Nov. 2. Instead, Kist will play host, since ING is the new -- and first -- "title sponsor." ING also backed a marathon in Amsterdam this year and will organize an event in Brussels. Why marathons? "In business we focus on the long term," says Kist. "It's the same with running marathons." Other companies boost their CEOs' sports, too. Chipmaker Infineon's CEO, Ulrich Schumacher, (IFX ) races Porsches, and Infineon is the official supplier to the Ferrari Formula One team. Adidas-Salomon's Herbert Hainer was once a soccer pro -- his company sponsors a soccer team. Data-mining company Acxiom (ACXM ) is primary sponsor of the Grand American Road Racing Assn., a pro sportscar series in which CEO Charles Morgan competes. Kist says his sponsorship staff suggested backing marathons. Maybe they took a hint from ING's new Amsterdam HQ (left). By David Fairlamb Local Support In September, investors cashed out $4 billion from Janus, after news of a probe into improper trading. Little of that money went to shareholders living near the mutual fund's Denver base, suspects financial adviser Peter Lengsfeld. When Janus lost its chief investment officer in 2000, Lengsfeld told clients to leave Janus. They wouldn't. When Janus stumbled in the bear market, he said sell. No way. Now, he's again saying get out, but only three of his 100 Denver-area clients have done so. "We appreciate the loyalty of our local shareholders," Janus says. Lengsfield looks at it differently. "Hometown team or not, if you are losing money, then get out." That could be sound advice. By Lauren Young  Jesse Jackson: Who's Jesse Leaning Toward? In 1988, Jesse Jackson won the Democratic Presidential primary in Michigan, prompting cries of "What does Jesse want?" To be President, of course. That didn't happen. But when Jackson visited BusinessWeek Oct. 23, we had to ask who he's supporting for President now. Surely not George W. Bush. Lost jobs, dwindling health benefits, and huge tax cuts that mostly benefit the rich raise Jackson's ire. "We'd have given Saddam Hussein a tax cut. After all, he was in the top 1%." Jackson, 62, also decries the "Wal-Mart-ization of the economy." He says the cost of low prices is high: low-paying jobs and factories idled by cheap imports. So Jackson wants to revisit trade pacts such as NAFTA. While he says he's intrigued by former Vermont Governor Howard Dean -- whom his son recently endorsed -- he isn't ready to support any candidate yet. He will instead continue to focus on issues of economic inequality. For now, that's what Jesse wants. By Robert McNatt Interiors By Smith & Wesson First came Harley-Davidson, with its branded apparel and cafés. Then Jack Daniel's, with alcoholic Hard Cola drinks available at the corner grocery. Now add Smith & Wesson (SWB ) to the list of manufacturers of machismo looking to extend their brands into mainstream consumer goods. On Oct. 14 the Springfield (Mass.) gunmaker launched its own line of furniture and other home items. The company hopes to help bolster sales, which were up 8%, to $76.5 million, last year, but still off 32%, from $112 million, in 2000. The products, sold under the Crossings label, are designed with a rustic Americana look to conjure up the Old West. "The products reflect the heritage that Smith & Wesson has long been associated with," says company spokeswoman Amy Armstrong. Among the more distinctive goods, available via catalog and the Internet (www.crossingsbysw.com), are a genuine cowboy boot lamp ($129), a Texas moon clock ($32), and a branding iron in the shape of an armadillo ($18) that can be used to brand everything from steaks on the grill to leather cases and saddles. While many gun lovers won't forgive Smith & Wesson for caving in to the Clinton Administration's request that it and other gunmakers build locks into their products, gun-rights advocates nonetheless predict that the new line will do well. "They already have a built-in market," says Joe Tartaro, president of the Second Amendment Foundation. Still, some design experts aren't sure Smith & Wesson's home products will appeal to the nongun crowd given the controversial nature of its goods. Michelle Snyder of the American Society of Interior Designers questions whether the company "will be able to separate the brand of their guns and the brand of their furniture." Smith & Wesson must figure it's worth a shot. By Anand Natarajan Global News With A French Twist France, tired of what it sees as an American spin on news, will soon launch its own international cable news network. By the end of 2004, state-financed, 24-hour French International News Channel (CFII) will be live. It will broadcast in Europe, Africa, and the Middle East -- but, to avoid competing with French networks, not in France. The U.S. and Asia will be added if the budget allows. Competitors will be ready. CNN (AOL ) is considering its own French and Arabic translations, while Al-Jazeera wants to broadcast in English. "This shows just how difficult it will be for CFII to get some kind of recognition," says Brad Adgate of researchers Horizon Media. Is France worried? Non. Enough with freedom fries. Soon, France will have its own voice to the world. By Stephanie Trastour and Christina Passariello 
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