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MARCH 1, 2004
Edited by Ira Sager Talk Show "I'm not a statistician. I'm not a predictor." -- George W. Bush, quoted by press secretary Scott McClellan, backing away from a White House estimate that 2.6 million jobs would be added in 2004 Pay That Raises IRS Eyebrows A new hotbed of creative accounting has caught the attention of the Internal Revenue Service: executive pay. The IRS says that some companies are bending tax laws and that it will prosecute any tax-law violators. The findings come from a recent probe into the tax returns of two dozen undisclosed companies. On Jan. 31, Alan Tawshunsky, an IRS assistant chief counsel, told lawyers in Kissimmee, Fla., that some companies treat pay not related to performance as if it were. That's a big no-no: For any exec, a corporation may deduct only $1 million in non-performance-related pay. But performance-based pay is exempt from the cap. Some top executives have put pressure on their underlings to exceed the caps on benefits, such as deferred compensation, according to an account of the meeting from the Bureau of National Affairs, a legal and regulatory publisher. "We are seeing instances of companies where top executives were basically using the company as a piggy bank," Tawshunsky told the lawyers. This could be just the start: Eventually, the agency will make an exec-pay review part of all corporate audits. By Louis Lavelle   A Battle For The Sierra Club's Soul The country's most powerful environmental group, the Sierra Club, is facing a hostile takeover by activists who want to use its $95 million budget to push curbs on immigration. Three of the club's 15 directors already support immigration limits. Now, three other like-minded candidates are running for board seats. They've teamed up with two other candidates who oppose human consumption of animals. If the coalition sweeps, it would gain control of the 750,000-member group. Board candidate and former Colorado Governor Richard Lamm maintains immigration is an environmental issue: "The last thing the ecological system of the world needs is 500 million more consuming Americans." Meanwhile, fringe groups, including anti-immigration white supremacists, are packing voter rolls. On Jan. 30, the board voted to warn members that "nonenvironmental outside organizations" were trying to influence the election. "We welcome debate, but when you get groups with very racist agendas...then you have to be concerned," says President Larry Fahn. When members vote on Apr. 21, he'll find out if they agree. By Lorraine Woellert  Headaches For Tablet PCs When Microsoft (MSFT ) launched the Tablet PC in the autumn of 2002, Asian hardware makers expected it to be a big hit. Microsoft had developed the technology for the portable computer, which lets users write with a stylus on its screen. But so far, sales have been like writing compared with typing: slow. Taiwanese computer maker Acer sold 120,000 machines in 2003, half of what it expected. "It has been a disappointment," says Jim Wong, president of Acer's information technology group. Others agree. First International Computer, a Taiwanese manufacturer, is shipping 2,000 a month -- about half what it expected. One problem: Microsoft's operating system is 9% of the tablet's total cost, vs. 5% for a notebook PC. The touchpad and stylus are expensive too. So tablets cost from $1,500 to $3,000 -- usually $200 to $400 more than a notebook PC. Microsoft says the Tablet PC is on track, but won't disclose its sales targets. To make the machines more appealing, Asian computer makers such as Fujitsu have added faster units with longer battery life. Maybe that's the remedy for sluggish tablet sales. By Bruce Einhorn, with Jay Greene Search Tampering Type "miserable failure" into Google, and top results include President George W. Bush, filmmaker Michael Moore, and Senator Hillary Clinton. Why? Pranksters fool search engines by "Google bombing" -- repeatedly linking "miserable failure" to targets' sites. But not all remain failures. Google client AOL (TWX ) yanked Bush from its results in January. As other "failures" popped up, AOL declined to tinker. "It was not the best way to handle it," says a spokesman. AOL won't reinstate Bush or zap others, saying it'll work with Google to fix it. Google says it won't alter results, making the miserable gag a success. By Ben Elgin Here, Banker Banker Banker... Wanted: investment bankers. Thanks to more mergers and stock offerings, investment bankers are back in demand after three years of being treated like pariahs. On Jan. 27, Merrill Lynch (MER ) CEO Stan O'Neal said he wanted to hire as many as 25 senior bankers this year. Blackstone Group is looking to beef up its mergers and acquisitions group. And San Francisco boutique Seven Hills Group is on the prowl for 10 bankers in health care, tech, and business services. Small numbers, but consider: Senior bankers can cost $1.5 million each. By Emily Thornton Richard Saul Wurman: A Big Talent Targets Health Care  It's all about him. Richard Saul Wurman says he built his career by indulging his interests. His 81 books "come from the fact that I'm curious and I don't understand something." His latest, Understanding Healthcare, has sold 45,000 copies since its January release. He calls his TED (technology, entertainment, design) symposiums "a great egomaniacal gesture."Yet the voluble Wurman, 68, is as talented as he is egocentric. An architect who published his first book at 26, he has received grants from the Guggenheim Foundation and the National Endowment for the Arts. His specialty: making information under-standable. He uses graphics to answer questions such as "How do I find the best hospital for my needs?" Wurman sold TED in 2001 but will host TEDMED, a health-care confab, in October. He says the fusion of physics, biology, and chemistry is "quite an exciting moment." For Wurman, that's what it's all about. By Kimberly Weisul Vegas Likes The Odds On Britain By U.S. standards, Britain's 126 casinos are small, drab affairs. There is little entertainment, slot-machine payouts are capped, and casinos can't advertise. Still, U.S. gaming players are salivating over its prospects. Britain, with a stagnant casino industry and citizens who go elsewhere to gamble, is likely to liberalize its gambling laws by yearend. That would open the door to Las Vegas-style casinos in the world's fourth-largest economy. Gaming companies are anteing up. On Jan. 27, MGM Mirage (MGG ) announced a proposed $493 million purchase of Wembley (WMBYY ), an owner of dog tracks MGM thinks might be good casino sites. It also plans a $455 million casino in Sheffield, near Manchester. Las Vegas-based Harrah's (HET ) has teamed with Gala Group, Britain's largest bingo parlor operator, to open as many as eight properties once the laws are liberalized -- at a cost of up to $1 billion. And slot-machine makers such as WMS Gaming (WMS ) and Bally Gaming Systems are opening British offices. Britain looks game for the moves. While casino attendance is rising only gradually, spending is up from $5 billion five years ago to $7 billion in 2003. Says MGM Mirage CEO J. Terrence Lanni: "We've got to look for other markets." And you can't win the jackpot without taking risks. By Christopher Palmeri and Laura Cohn Marquis Jet's Prime-Time Infomercial The Apprentice, Donald Trump's new reality show, is a ratings hit -- and a marketing boon for Marquis Jet. The show gives two teams various challenges. Someone gets cut each week, and the winner gets a real-life job with Trump. In the second episode, each team had to deliver an ad campaign for Marquis Jet, which sells time on chartered planes. Marquis passed on the winning entry, saying it was too suggestive. But it gladly accepts all the attention the show has brought. Visitors to Marquis' Web site jumped from 1,500 on an average Thursday to 20,000 on Jan. 15, when the show aired. Now there are about 3,000 visitors a day. Marquis received 500 unsolicited ad campaigns, including one it's considering. The exposure also doubled the company's sales leads. Trump congratu-lated CEO William Allard on his good fortune: "It was the greatest infomer-cial of all time." So great Marquis will return for another episode. Stay tuned. By Brian Hindo 
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