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"Please delete the forbidden speech from this item." -- Response bloggers get when typing words like "freedom" or "democracy" on Microsoft's new MSN Spaces service in China; it flags them to avoid offending Beijing's censors

Now that annual report season has passed, it's time for the corporate citizenship reports. This year, General Electric (GE) joins a growing crowd of big companies, such as Hewlett-Packard (HPQ), Gap (GPS), and IBM (IBM), that issue comprehensive statements about their efforts in governance, the environment, and corporate responsibility. And in true GE fashion, its first report -- titled simply "Our Actions" -- is causing a stir. Unusually long at 77 pages, it is packed with the precise metrics and robust goals that define GE CEO Jeffrey Immelt's approach to quality control and staff evaluation. GE wouldn't say how much it spent on the yearlong project.

Investors applauded GE's candor on sensitive topics such as its health-and-safety record. We're told, for instance, that GE paid more than $1 million in air- and waste-emission penalties over the past two years. But analysts said GE could have been more forthcoming about its PCB contamination of the Hudson River and its fight against the federal Superfund law.

Given GE's status as a management trendsetter, its tome will likely up the ante for others. The proof lies in advance orders: GE says it already has requests for copies from rival companies looking to write their own big books of citizenship.

Scandals at American International Group (AIG) are costing it more than restated earnings and a tarnished reputation. Now the insurance giant is paying a stiff premium to unnamed underwriters to continue protecting nonexecutive directors and corporate officers against lawsuits. D&O policies normally shield those officials from footing the bill if they're sued by angry investors and wind up losing or settling. Last year, before AIG's troubles began, it paid a $9.4 million premium for a year of coverage. But starting in May, the bill shot up to $32.8 million, according to the company's annual report, as underwriters grew skittish about future legal risks. AIG, which also agreed in May to cover lawyer bills for non-executive directors, declined to comment on the policy. Like many D&O policies, AIG's plan excludes coverage for "prior events," says a broker familiar with it. That could spell danger if directors, legally unscathed so far, are linked to former CEO Hank Greenberg's alleged accounting machinations. "When you're five miles from a hurricane, you can't buy hurricane insurance," notes David Schiff, editor of Schiff's Insurance Observer newsletter.

Among the many items on General Motors' (GM) to-do list: conquer the coasts. GM has a paltry 14.7% share in major West Coast markets and does only slightly better in big cities in the East, at 18.4%, according to J.D. Power & Associates. That compares with GM's overall 25.5% U.S. market share.

Part of GM's problem is product mix. It gets a huge share of sales from pickup trucks and full-size SUVs, which are more popular in the Midwest and South. GM doesn't have a hybrid car like Toyota's (TM) Prius, which is hot in California. In Miami, Honda (HMC) and Nissan (NSANY) score well, and German luxury is the rage in the Northeast. What to do? Mark LaNeve, GM's vice-president of sales and marketing, is planning more Spanish-language ads to target Hispanic buyers. He'll sweeten lease deals, which Easterners love. And look for a heavy push in the West for Saturn's Sky roadster and Pontiac's Solstice two-seater. LaNeve successfully lured Californians to Cadillac's CTS a couple years back. But can he sell Pontiacs outside Peoria?

McDonald's (MCD) thinks it has an answer for America's ever-chubbier kids: a new line of toys to get the under-10 set off their duffs. Lawrence Light, global chief marketing officer, says McDonald's will show prototypes of McKids trikes, bikes, skates, and skateboards in New York on June 20. It hopes to have them in Wal-Mart (WMT), Target (TGT), and Sears (SHLD) by fall, 2006. McKids toys and apparel have had limited success since its 1987 launch; Wal-Mart dropped the clothing in 2003. McDonald's is betting these toys will draw new customers -- or at least burn some McCalories.

Starbucks (SBUX) HAS developed endless permutations of drink combinations -- 20,000 at last count. So maybe it was inevitable that high-concept Machiattos, Frappuccinos, and Chanticos would elbow aside a humble cup of dark, thick coffee. In late May, plain espresso quietly disappeared from menu boards. Customers who know to ask a barista can still get a single or double shot, but Starbucks made a decision to push its iced drinks in the summer, explains Michelle Gass, senior vice-president for category management.

Eli Broad has a career full of firsts. He was Michigan's youngest CPA at the age of 20 and three years later co-founded his first company, homebuilder Kaufman & Broad. (KBH) By age 30 he was a millionaire. Now Broad, 72, ranks sixth on BusinessWeek's (MHP) list of the Top 50 Philanthropists. His specialty: education reform.

So when actor Steve Martin, a friend, approached him with an idea for an academically oriented reality show, Broad jumped in. He'll fund a full-ride, four-year college scholarship worth up to $240,000 for the winner of ABC's (DIS) The Scholar. The competition pits 10 high school students in feats of intellectual acumen. Martin is one of the producers. With one home-schooled student, eight public school kids, and a competitor from a parochial school, the students are a diverse lot. "These are not rich white kids," Broad said of the show's high-octane players. "I hope the competition inspires a lot of young people to emulate them."

With Gillette (G) shareholders voting July 12 on its $57 billion merger with Procter & Gamble, (PG) Massachusetts Secretary of the Commonwealth William Galvin is turning up the heat. In early June he spent hours questioning Gillette CEO James Kilts and other senior execs about fairness opinions used to justify the deal. On June 13 he subpoenaed Goldman Sachs (GS) CEO Henry Paulson, whose firm provided one of the opinions, as well as current and former Gillette directors. Galvin, a caustic critic of the merger, claims Goldman and UBS Securities (UBS) have conflicts since Paulson helped restart talks with P&G, and the firms could earn up to $30 million each in fees.

Galvin isn't alone. Governance groups slam the $450 million that 17 Gillette execs stand to receive -- $165 million for Kilts alone. "It is obscene what Kilts is getting," fumes retired Gillette Vice-Chairman Joseph Mullaney. But unless Galvin produces evidence of fraudulent misconduct, he probably won't be able to stop a combination hailed as a "dream deal" by Warren Buffett, Gillette's largest shareholder. Gillette says it is cooperating with Galvin's probe. It defends Kilts' pay as "entirely appropriate" given Gillette's "top-tier" performance.

The crusade could aid reformers who argue that independent firms should write fairness opinions. And Galvin is reaping untold political benefits. He is flooded with calls from Gillette retirees worried that their health benefits will be cut, employees afraid of layoffs, and citizens concerned that Boston will lose a corporate icon.

Experts advise companies to tell customers right away about any product problems. But Subway has said nothing since 70,000-odd cases of sandwich bread were called back after broken glass was found in machinery in April at a plant that produces bread exclusively for the fast-food chain. Chef Solutions, which owns the North Haven (Conn.) factory, acknowledges it found a shattered beer bottle in a water cooling machine used to make the bread. Officials of the United Auto Workers, which is battling to form a union at the plant, say workers who found the glass think some must have gotten into the bread. Chef Solutions says that's unlikely but possible. In any case, Subway spokesman Kevin Kane says that because the bread was caught before it got to the public, there was no need to tell consumers.


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