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"They can hear our...unambiguous and clear message that we sell a dangerous product." -- Theodore Wells, Philip Morris USA lawyer, on tobacco's new attitude, during a $280 billion racketeering case against the industry

Steven Wallman, who had a reputation as an iconoclast when he served on the Securities & Exchange Commission in the 1990s, is now taking on the proxy-advice business. In January, Wallman will launch Proxy Governance to advise institutions and investment managers on how to vote their shares on corporate governance issues.

The timing looks good for challenging market leader Institutional Shareholder Services (ISS). Demand is taking off, thanks to new SEC rules. And some investors welcome Proxy Governance's plan to evaluate issues company by company -- in contrast to ISS, which applies common guidelines to all companies. "We don't subscribe to the view that it's always good to [eliminate] poison pills or separate the role of the chairman and CEO," says Wallman.

But rivals are already blasting Proxy Governance for potential conflicts in its marketing deals and approach. The Business Roundtable, an association of big-company CEOs, has purchased a bulk subscription for its member companies, whose pension plans vote thousands of proxies. Critics carp that this amounts to an equity stake by companies that the firm will judge.

Nonsense, says Wallman, who argues that the Roundtable is merely a subscriber. ISS execs, meanwhile, say Proxy Governance's plan to use different yardsticks for different companies will invite charges that its analysis is unfair. Corporate governance advice is turning into a cutthroat field of its own.

Defense contractors and technology companies are banding together to bring their vision of a network-centric military closer to reality. BusinessWeek has learned that on Sept. 28 industry titans Boeing (BA), Cisco Systems (CSCO), General Dynamics (GD), Microsoft (MSFT), IBM, and 23 others will announce the creation of a consortium aimed at creating common standards for a single network that could weave all three military branches into a seamless, digital whole. Says Kevin G. Coleman, a senior fellow at Technolytics Institute, a think tank that specializes in network technology: "This could substantially change the way we wage war."

If it works, that is. The project faces daunting odds -- from the technical difficulties of building a secure, reliable network to the political headache of getting the competing branches of the military to agree to one standard and share information.

Military planners say an open system like the Web would let contractors focus more on perfecting weapons and less on designing the software they run on. Standards would cut costs for the government and boost company margins -- an incentive for cooperation if ever there was one.

For the first time in more than seven years, Microsoft (MSFT) is losing Web-browser market share. According to the Web-site analysis service WebSideStory, Microsoft's share of browser users who visited top sites shrank from 95.6% in June to 93.7% in September. Meanwhile, people using free browsers made by the Mozilla open-source software group grew from 3.5% to 5.3%.

There's no mystery why the Mozilla Web browsers are suddenly growing. On Sept. 19, security software maker Symantec (SWMC) reported that the number of new viruses aimed at Windows -- which includes Microsoft's Internet Explorer (IE) browser -- rose to 5,000 in the first half of the year, up from 1,000 in the same period last year. In June, the government's Computer Emergency Readiness Team warned Web surfers to stop using IE, after Microsoft disclosed a bug that allowed spyware to be downloaded to people's computers without their involvement.

The Mozilla people hope to increase momentum with the release this fall of a new version of their browser, called Firefox 1.0. It's a superfast browser with few virus problems. Consumers have downloaded 1.3 million copies of the most recent preview version of the browser since it became available on Sept. 14.

Of course, Microsoft is in little danger of being toppled from the top spot -- at least, not anytime soon. The software giant insists that fixes for Windows XP released in August substantially reduce its vulnerability to attacks. But unless consumers notice a dramatic change for the better, Firefox could really begin to catch fire -- and outfox IE.

Drugmakers may be tapping the brakes on price hikes. Drug distributors McKesson (MCK) and Cardinal Health (CAH) recently warned of weaker-than-expected earnings, in part because drug company suppliers are putting through fewer price increases on prescription drugs. Why the slowdown? Pharmaceutical players may not want to draw fire as new Medicare rules are crafted and as the election nears. And even if Big Pharma resumes aggressive pricing after Nov. 2, it will become more difficult to play that game in the years ahead because of crowded markets, weak pipelines, and the launch of the new Medicare drug benefit.

After 40 years in the mosh pit that is the music business, Universal Music Group (UMG) Chairman Doug Morris says he's still having a blast. His popular hip-hop artist, Nelly, has two new albums, Suit and Sweat, hitting the Billboard charts at No. 1 and No. 2. The last act with that kind of one-two punch was Guns N' Roses 13 years ago. Says Morris with a chuckle: "This is just fun, isn't it?"

There's more good news. BusinessWeek has learned that UMG's parent, Paris' Vivendi Universal, is prepared to sign Morris, 65, to a new five-year contract by mid-October. The new pact, say sources close to UMG and Vivendi, could be worth more than $70 million if Morris hits certain targets. Morris declined comment -- but said he wouldn't be retiring anytime soon. Vivendi officials were mum. The $5 billion-a-year UMG's future was hazy after Vivendi sold most of its U.S. entertainment properties to NBC (GE) in May. But Vivendi execs say they are committed, especially with a 7% uptick in album sales in the first half of 2004, the first gain in years.

There's still plenty of work for Morris to do: finishing up a $300 million cost-cutting initiative, increasing an emphasis on digital sales, and overseeing a strategy to cut CD prices to boost store sales. Some observers think Morris may one day orchestrate a management buyback if the French ever bail on UMG. He discusses this scenario now and then with Apple's Steve Jobs, a pal. No deal appears necessary, at least as long Morris and his Paris bosses stay in sync.

The homeland security business is still smokin'. BusinessWeek has learned that former NATO commander and Democratic Presidential wannabe General Wesley Clark has joined Witt Associates, a Washington consultancy headed by James Lee Witt, Clinton-era head of the Federal Emergency Management Agency.

Rodney Slater, Clinton's Transportation Secretary, also has joined Witt's company, which specializes in homeland security and public safety. Slater and Clark will be vice-chairmen. The three-year-old firm recently evaluated evacuation plans at New York's Indian Point nuclear power plant. Of course, Clark's new gig could be short-lived if Kerry wins the election and taps him for a Cabinet post.

For manyans the golf season ended with a thud -- the U.S. team's lopsided loss to the Europeansin the Ryder Cup on Sept. 19. Still, it has been another good year for PGA Tour Commissioner Tim Finchem. In his 10th year at the helm, the 57-year-old Finchem presides over a tourthat's richer than ever.Prize money for 48 tournaments climbed toa record of nearly $240 millionthis year. And this season 64 PGA Tour players, close to arecord, have earned$1 million or more knocking the ball in the hole.

Butdays ofescalating prize money may be ending.The tour's four-year, nearly $900 million network TV contactexpires in 2006. With the frenzy around Tiger Woodscooling off, Finchem acknowledges thatthe next TV deal won't come close to matching increases of previous contracts. Network talks are expected to begin in late summer or early fall next year.

On Sept. 21, Finchem spoke about the upcoming negotiations and the state of thePGATour with Mark Hyman, BusinessWeek's contributing editor for sports. Following are edited excerpts of their conversation. This is an extended version of the interview that was featured in BusinessWeek's Oct. 4 edition.

Q: You've said thetour is in a good position to negotiate the nextnetwork TV deal. Yet over the past two years ratings for the four major championships have dropped significantly. Fourth-round ratings for the U.S. Open are off 38%. How's that a good position?

A: The majors don'thave specific relevance to our television package. Because [as non PGA Tour events] we don't negotiate them.

Q: But they're a barometer.

A: But not a barometer of how our television package is performing.We had had one stretch this year of nine straight weekswhen [viewership]was up from last year. Our ratings have been nicely consistent the last three years.

Q: Tiger Woods isn't the dominant player he was the last time the Tour negotiated a TV deal. Is the tour suffering financially from the declineof Tiger mania?

A: For the past three years I've been asked the question: What happens when Tiger doesn't play a tournament? Not much. We have good tournaments and getreasonably good [TV] ratings. Now I'm getting the question: What happens when Tiger isn't winning? Tiger still is the biggest thing in golf. When he comes to a tournament he sells a lot of tickets.If he's not in the hunt, you don't get that spike [in TV ratings] that historically he has produced.

Q: The tour's network deal has soared in the past decade,and so has prize money, increasing five-fold since 1994.Do you expect growth near that?

A: No. If you just look at the dollars, it will be much flatter.I'd like to think there will be some growth.But it will be much flatter than it has been the last10 years.

Q: Jack Nicklaus has blamedtheU.S. drubbing in the Ryder Cup, in part, on increased prize money on the PGA Tour. Is itpossible that more financialsecurity has led toa declining work ethic among today's players?

A: I'm not getting into a public debate with Jack Nicklaus. But the work ethic at the very top of our sport is significant. If you go down to Vijay Singh's house on the ocean[in Ponte Vedra Beach,Fla.], Vijay lives quite well. Yet Vijay works his behind off. I would argue Vijay works as hard as any player who has played the game, maybe other than [Ben] Hogan.

Q: Do you see any connection between the affluence of today's top playersand the recent downturn for the U.S. Team -- four losses in the lastfive matches -- in theRyder Cup?

A: Not at all. It's the typical American response.If you have an Enron, there must be something wrong with the system, so let's pass Sarbanes-Oxley and change the system. We overreact.We lose the Ryder Cup, and we're not supposed to lose the Ryder Cup. So there must be something wrong.

Q: You've been PGA Tour commissioner for 10 years. Do you see yourself in the job 10 years from now?

A: Not 10. I'd like to stay as long as my energy level is good and the players like what I'm doing.There areanother couple of notches for us to go, as far as positioning our sport.I'd like to see us through that. It'll take another five years or so. Then we'll see.

Q: An election-year question: Former baseball and basketball players have served in the U.S. Senate. Several retired football players and coaches have been elected to the House of Representatives. Why are there nopro golfers in Congress?

A: To be a former PGA Tour player typically means you're about 75 years old. They just don't stop. The ones who do gravitate into golf-course design or TV.A politician's lifestyle can't compete with that.


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