"Denial is not a good investment philosophy." — Michael Farr, chief investment officer at money manager Farr Miller & Washington, on the danger of viewing the Dow's 157-point gain on Mar. 6 optimistically, as reported in USA Today
Rhetoric in the House of Representatives is often sweeping, but never so much as when a bill is square in the sights of two of the most powerful interests in Washington: Big Business and Big Labor.
The oratory was strident on Mar. 1 when the House passed the Employee Free Choice Act of 2007 in a largely party-line vote of 241-185. The measure aims to change labor law to allow employees to unionize by having a majority of workers sign petition cards. Opponents say it's an end run around the secret-ballot method called for under existing law and that it would permit unions to intimidate workers into signing.
Watching on C-SPAN or listening to liberal and conservative pundits sound off, you might think the bill could actually become law this year. But it can't. Even its Democratic supporters concede that getting it passed in the Senate would be an uphill battle. And if it should clear that hurdle somehow, President George Bush will, as promised, veto it.
Still, on the House floor, Representative Virginia Foxx (R-N.C.) dubbed the measure the "Employee Intimidation Act" and noted that it is favored by the Communist Party of the U.S. Democrats say it's an economic and social-justice issue, with Representative Bruce Braley (D-Iowa) promising that such legislation would help workers reach their "full potential as human beings."
Everyone involved knows the bill isn't going anywhere in this Congress. But it has been declared a top priority by unions that contribute heavily to Democratic candidates and worry about declining membership. It's also a concern of business lobbyists who back Republicans in races and fear increased labor costs.
Today's fight is about a future year, when a Democratic Congress might be working with a Democratic President to sign such a law. It's the initial battle of a larger war to come, says John Gay, a lobbyist at the National Restaurant Assn. who is working against the measure. "The harder you fight now, the easier it gets later."
In the debate over whether companies exert too much influence over patient care, the New York-based Cardiovascular Research Foundation and its founder, Dr. Martin Leon, are central figures. The foundation gets money from medical device makers and uses some of it to stage annual conferences that spotlight their products, including drug-eluting stents used to open clogged arteries (BW—Oct. 23, 2006).
Now the potential conflict of interest has caught the attention of Henry Waxman (D-Calif.), chairman of the House Committee on Oversight & Government Reform. On Feb. 28, Waxman sent letters to stent makers Boston Scientific (BSX) and Cordis, a unit of Johnson & Johnson (JNJ). Both donate to Leon's foundation. Worried that stents are being used off-label, Waxman requested reams of marketing data, including "all documents related to funding support for" the foundation. Leon's group says its conferences follow industry guidelines. Cordis and Boston Scientific, which say they'll cooperate, have until Mar. 21 to do so.
The new Securities & Exchange Commission rules requiring more disclosure about executive perks have yielded some long lists this proxy season: private jet usage, mega life insurance policies, country club dues. But energy pipeline giant Kinder Morgan (KMI) complied by declaring what it doesn't dole out: "Unlike many companies, we have no executive perquisites," it declares in its 10-K, in a paragraph brought to light by footnoted.org, which tracks sec filings.
The company notes that its management got no money for cars, jets, financial planning, or any other privileges in 2006. "We are currently below competitive levels for comparable companies in this area of our compensation package," Kinder writes slyly.
Kinder spokesman Larry Pierce says "that's the way we've done things since the beginning," adding that the company highlighted its no-perks policy in this year's filing precisely because of the new SEC rules. It may be the last year for such public bragging rights. In August, 2006, Kinder announced it is going private. Its $22 billion, management-led leveraged buyout awaits approval from the California Public Utilities Commission, expected later this year.
Behind Wal-Mart's recent announcement that it had fired two computer technicians and disciplined a manager for secretly recording and intercepting phone and text-message communications is one of the world's most legendary spy hunters: former CIA and FBI agent Kenneth Senser.
Senser headed the company's internal investigation into the affair. That led to the Mar. 5 revelation that phone conversations between Wal-Mart public-relations employees and New York Times business reporter Michael Barbaro had been taped and that a number of text messages sent from or around the company's Bentonville (Ark.) headquarters were also captured and stored.
Senser knows a thing or two about internal espionage. He was the man in charge of reinventing the FBI's internal security operations after the 2001 arrest of bureau agent Robert P. Hanssen, who was spying for the Russians.
Since 2003, Senser has been plying his trade as head of corporate security for Wal-Mart (WMT). Besides leading internal investigations, he has handled issues as varied as the company's preparations for the bird flu threat and its response to Hurricane Katrina in 2005. Senser did not return phone calls seeking comment. A Wal-Mart spokeswoman says Senser had no involvement in the spying incidents.
He began his intelligence career at the CIA in 1983 and was detailed to the FBI to work on security issues in 1999. In the wake of the Hanssen scandal, Senser, by then the fbi's assistant director for security, helped launch a new analytical unit to look for behavioral clues that would help identify spies inside the bureau. He was hunting, he told Time magazine in 2002, for "what makes the person tick—why these things are happening."
When Stanford University management professor Robert Sutton wrote in the Harvard Business Review in 2004 that companies should ban bullying personalities from their ranks, he was flooded with approving e-mails. Perhaps not surprisingly, his 2007 book, The No Asshole Rule: Building a Civilized Workplace and Surviving One That Isn't (Warner Business Books), is a big seller: In the business genre, it was recently at No. 2 on BarnesandNoble.com (BKS).
But couldn't Sutton have picked less inflammatory wording? "There's an emotional reaction to a dirty title," he says. "You have a choice between being offensive and being ignored." The indelicate appellation aside, the book reasonably argues against keeping arrogant or intimidating employees. And it lists companies—among them, Google (GOOG), Barclays Capital (BCS), and Men's Warehouse (MW)—that have policies aimed at preventing the recruitment of such characters. One rule Sutton recommends: "Keep your resident jerks out of the hiring process."
The author also cites corporate leaders who, he says, "lost their jobs...in part because of their demeaning ways," including former Sunbeam chief Al Dunlap and ex-Walt Disney (DIS) CEO Michael Eisner.
Sutton says he wants the book to spur workplace policies that reform or drive out the nasties and to persuade companies that such bad conduct is contagious. "This is poisonous behavior you catch from other people," he says. We have met the jerks, and they are us.
Health-food consumers want their bananas green, as in earth-friendly. But how can you check an organic banana's bona fides? In February, Dole Food began labeling its offerings with "farm codes." The stickers send consumers to doleorganic.com, where typing in the three-digit code identifies the plantation that grew the banana, along with organic certification details, worker photos, and satellite map images via Google Earth. Organic Valley, the U.S.'s biggest organic farmer cooperative, has offered a similar feature on its soy milk cartons since 2004. Entering the expiration date at organicvalley.coop/soy brings up bios of the farmers who grew the beans.
A high-powered team of new-media and old-media executives is behind the latest attempt to create TV-like networks for videos shown over the Internet. Next New Networks, or N3, was slated to be launched on Mar. 8 with six channels on subjects from sewing to comics. Within three years, it hopes to build a network of 100 super-niche Web channels.
What sets N3 apart from other Web-video efforts is its online take on the TV studio system: Some of the 3- to 11-minute daily or weekly shows combine hired hosts and video submissions from the audience. Others are mostly clips sent by viewers that N3 edits together. The company is also seeking out online talent—to hire them or license their shows.
N3 started with Fred Seibert (who helped create the notion of branding cable channels at MTV and turned around Hanna-Barbera) and Emil Rensing, an early America Online employee. Inspired by the popularity of early shows they assembled, such as VOD Cars, a video podcast for car fanatics, and Channel Frederator, a cartoon podcast, the two hit on the idea of a broad network and assembled a team that combined TV smarts with Web community knowhow. That includes Herb Scannell (who launched Dora The Explorer and SpongeBob SquarePants) and Jed Simmons, who ran the Sundance Group. N3 is funded with $8 million from venture funds and individuals, including MTV co-founder Bob Pittman.
To the list of those complaining about the environmental shortcomings of the recently announced private equity deal for the big Texas utility TXU, (TXU) add a formidable opponent: eco-conscious Dallas Mayor Laura Miller.
On Mar. 5 and 6, David Bonderman, a founder of Texas Pacific Group, one of the firms in the private-equity consortium, flew to Dallas to meet with Miller and business and citizen groups for a round of talks that may prove decisive to the TXU sale.
Miller, 48, is a force to be reckoned with. A former Dallas City Council member, community activist, and newspaper reporter, she's at ease in a fight. As mayor she has clashed publicly with city council members and is willing to wrangle with local businesspeople, some of whom are still bitter over her opposition to development tax incentives.
Last year, with the backing of oil billionaire Ed Bass, Miller created a coalition of cities that galvanized opposition to TXU's plans to build 11 coal-fired plants in Texas.
After looking at terms negotiated by Environmental Defense and the Natural Resources Defense Council in the Feb. 26 TXU sale, Miller and local groups decided that the utility-private equity consortium got the best part of the deal.
Environmental Defense and the NRDC disagree. The two groups gave the nod to TXU's $45 billion sale to Texas Pacific Group, Kohlberg Kravis Roberts, and Goldman Sachs Group (GS) after the buyers consented to a 10-point agreement that includes building only three plants. True, after the buyout was announced the utility said it had already been planning to build a smaller number of plants. But the nrdc and Environmental Defense point out that these cuts are now guaranteed.
Miller—who was not part of the negotiations—and her coalition and local groups want further concessions. At the Mar. 5 meeting with Bonderman, she demanded that TXU agree not to reapply for coal-plant permits in Texas, use less polluting technology for new plants, and clean up existing facilities. "It was a good first meeting, and we're going to continue talking with the mayor," said Jeff Eller, a spokesman for the private-equity consortium.
If TXU doesn't satisfy its critics, its new owners will face fierce resistance. These experienced activists intend to lobby Texas lawmakers on ways to rein in the utility and legally fight the building of proposed new coal plants. Miller, who crisscrossed the state last year to build opposition, isn't about to stop now.
TV footage of rats invading a New York City KFC/Taco Bell is all over the Web. What can Yum! Brands do to counter negative images in the era of YouTube?
"They can't turn off the shock appeal of the first video, but they can post their own—explaining measures they've taken—on YouTube, tagging it with the same keywords so it appears alongside the other clip." — Diana Brainerd, president, Brainerd Communicators
"You can only fight visuals with visuals. The company should release videos showing its sanitary programs in action. It's not as sexy as vermin running rampant, but it's the best of their limited options." — Eric Dezenhall, CEO, Dezenhall Resources
"The company needs to come up with a startling, blockbuster promotion. It needs to be more significant than a Super Bowl commercial because, frankly, the franchise is at risk all over the country." — Robert Dilenschneider, founder, The Dilenschneider Group