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"Let me state clearly that there are no free lunches here." -- N. Gregory Mankiw, chairman of the Council of Economic Advisers, warning that Social Security overhaul must include changes in benefits for future generations

Nike co-founder Phil Knight, 66, surprised employees and investors when he disclosed on Nov. 18 that S.C. Johnson & Son Chief Executive William Perez, 57, would take over as CEO of the Beaverton (Ore.) sneaker and apparel goliath. In an interview with correspondent Stanley Holmes, Knight, who remains chairman, talks about stepping down and why Perez, who ran a household products company, has the right skills.

On giving up the CEO post after 40 years:

The timing came together. It has been on my mind, and the board has been on me to find a successor. We looked inside and outside the company. Over the course of three years, the [search firm] served up 75 reacute;sumeacute;s.

On choosing outsider Perez:

His performance by every measure was first-rate. He ran a smaller company than Nike, but it was more complicated. He was doing multiple brands in multiple countries. Nike's other brands are growing and are going to be a much more complicated piece of the puzzle. He integrated three acquisitions. And he did that very well. At the same time, it was not only his accomplishments: He is a well-beloved figure on [the S.C. Johnson] campus.

On Perez' being able to mesh with Nike's insular culture:

I was very concerned about any candidate from the outside. It's a very different culture. The most difficult time will be his first six months. There will be a little bit of a bumpy period, but I think it will work out. I'm committed to making it work. He's a fast study. He's acutely aware of the [cultural] difference. He has the capacity to listen and the ability to subdue his ego. Most CEOs don't.

On Perez' first task when he joins Nike on Dec. 28:

His charge near-term is to do nothing. He is coming when business is good. The pressure on him is to do nothing but learn.

John Kerry may have come up short, but liberal radio network Air America Radio is trying not to go the way of the Massachusetts senator. Despite a rocky 2004 in which AAR lost its Los Angeles and Chicago affiliates and saw nationwide Republican election wins, the network now has 40 stations in 23 states -- six of them "red states" -- and channels on XM and Sirius Satellite Radio (SIRI). Five new affiliates joined after Nov. 2.

More welcome news: On Dec. 8 the fledgling network announced $13 million in new financing and said that Rob Glaser, the RealNetworks (RNWK) chairman who's a longtime investor, would be AAR chairman, too. Ad revenues in November, after the election letdown. were the best yet, says President Jon Sinton (he won't provide numbers). But the proof in AAR's staying power comes in January, when Arbitron (ARB) posts quarterly ratings.

Overall, AAR hosts still trail far behind conservatives such as Rush Limbaugh. But Glaser says liberal talk radio can work: "Al Franken crushes Bill O'Reilly head-to-head." Of course, Franken's in a fraction of O'Reilly's markets. Franken, on for three hours a day, has re-upped for a multiyear deal. It looks as if he'll have the chance to honor the whole contract.

Here's another reason to choose a doctor carefully. Thanks to an increasingly popular system known as tiering, you could have a higher co-payment if your insurance company decides you have passed over other, more efficient health-care providers in favor of your doctor. As they have done with generic and name-brand drugs, employers and insurers have begun to rate doctors and hospitals according to "efficiency" (read: high quality at a low cost) and offer an associated sliding scale of co-pays. The higher the efficiency rating, the lower the co-pay.

Such plans are on the rise. Already, Tufts Associated Health Plans offers tiered plans to 70,000 Massachusetts state workers, and PacifiCare Health Systems (PHS) in Southern California offers them to 19 employers. Leapfrog Group, a coalition of large health-care buyers, counts seven others that offer the plans, and CEO Suzanne Delbanco says as many as 20 insurers are developing them. Rick Siegrist, CEO of consultancy HealthShare Technology, says two major national insurers will offer tiered plans in 2005, but he won't disclose which ones.

Under the Tufts plan, patients are charged co-payments of $200 per hospital admission if the hospital ranks in the top tier in quality of care and cost-efficiency for the particular service -- and $400 if the hospital is in the lower tier.

Physicians and hospitals fear the practice could unfairly penalize practitioners and say there's no way to benchmark quality accurately. "We're in favor of dimin-ishing costs, but we think this is the wrong approach," says Dr. John C. Nelson, president of the American Medical Assn. Whether they will improve quality or lower costs is up for debate, but as long as health-care costs are soaring, tiered health plans will increase.

The Da Vinci Code is selling so well in hardcover that publisher Doubleday is in no hurry to bring out a paperback edition in the U.S. Softback versions often take up to a year, but it has been an even longer wait for the best-selling religious mystery, which made its debut in March, 2003, and has sold 9.3 million copies. Doubleday says it still has no plans for a U.S. paperback. But impatient book-worms can get an English copy, which appeared overseas earlier this year. It's printed in the U.S. but sold only abroad. No plans for foreign travel? Then hit British site amazon.co.uk, where it sells for pound;4.89 -- about $9.50.

Rudolph Giuliani may have grabbed headlines for his new investment bank. But the guy who'll be running it maintains a considerably lower profile. Giuliani has tapped Steven Oesterle, former Ernst & Young vice-chairman, as CEO of Giuliani Capital Advisors.

The boutique bank -- which focuses on restructurings and mergers and acquisitions -- was created by consultants Giuliani Partners' acquiring E&Y's banking unit. The move broadens Giuliani Partners' scope: Now it can not only advise clients on M&A but also carry it out. The former mayor won't be involved in the day-to-day doings, but Oesterle will use the Giuliani stardust to land business. "Rudy's image and role will be important," he says.

Oesterle, 51, joined E&Y in 1975 as an auditor, eventually rising to vice-chairman. There he met Giuliani, who got a fin-ancial and logistical lift from E&Y in starting his consulting business. Quite a turn for Oesterle: a banker working for a former client who first made his name prosecuting Michael Milken.

For Europe, it's the Year of the Chinese Traveler. Some 900,000 mainland Chinese have poured into the Old World in 2004. Until recently only Chinese businesspeople and students were granted European visas. But last year, Germany made it onto Beijing's list of approved tourist destinations, and on Sept. 1, China added 26 other European countries.

The first stop is often Paris, where hoteliers, retailers, and purveyors of luxury goods are set to welcome 40% more mainland Chinese next year. "They are now our No. 1 foreign customers -- ahead of the Japanese," says Jean-Michel Hallez, head of prestigious Galeries Lafayette department store on Boulevard Haussmann. Jeweler and watchmaker Cartier recently began hosting private soir?es for groups of Chinese clients at its main Paris store, while hotel chain Accor is proving popular by offering Chinese-speaking reception staff, congee (rice porridge), and Chinese TV channel Phoenix.

Since nearly all Chinese tourists travel in organized groups, some European companies are hiring sales staff in China to market to tour agencies. In exchange for a promise that the groups will swing by its Paris outlet, French department store Printemps, for example, helps the agencies book restaurant tables and boat tours in the City of Light.

Germany is also pitching to be on Chinese itineraries. Bavaria's tourist board persuaded a Shanghai TV station to film a documentary on the state that aired in April. And in July the board launched a Chinese-language Web site. The result: 120,000 Chinese tourists this year, up 64% from 2003. Say, what's the Chinese word for bratwurst?

A fund-raising auction mounted by office-supply chain Staples (SPLS) raised more than $50,000 -- but could wind up puncturing egos.

Staples auctioned off 146 staplers signed by the famous to benefit the charity of the signer's choice. The online auction, which ended on Dec. 6, shows who's hot -- and who's not -- among autograph hounds.

The stapler that snared the highest bid -- $4,101 -- belonged to Paris Hilton of home-sex video and reality TV fame. Actress Jennifer Love Hewitt shared second place with Bill Gates: Each of theirs garnered $3,005.

Other business luminaries shone a bit less brightly. A stapler that was signed by Ben Cohen, co-founder of ice cream maker Ben & Jerry's, sold for a mere $75. (The company notes it was a late addition.) And Staples Chairman Thomas Stemberg's entry fetched just $505. Perhaps they should pitch the networks to cast them on a reality show.


Race, Class, and the Future of Ferguson
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