The ‘Big’ News Stories That Weren’t
These stories are the sizzle that fizzeled. These stories are about things that didn’t happen. A blabber blogger CEO escapes punishment, Knicks’management gets a pass on sexual harassment, Robert Nardelli isn’t punished for failing at Home Depot and Michael Moore doesn’t generate controversy.
By Jeremy Smerd
Sicko succumbs
For a moment in June, it seemed that filmmaker Michael Moore just might have an
impact on health care in the United States. The well-coordinated media campaign
surrounding the release of his movie Sicko made it appear as if Moore were
running for office on the platform of providing a single-payer health care
system in the model of the U.K., Canada and Cuba. His movie was the ultimate
campaign commercial.
Moore professed sympathy with employers hard hit by rising health care costs,
but no employers accompanied him in late May on the steps outside the Sacramento
Capitol, where, after testifying at a legislative briefing for a bill that would
create a single-payer system in California, he was flanked by members of the
California Nurses Association. The ensuing rally promoted single-payer health
care and was followed by a screening of Sicko. The publicity tour was enough to
elicit sharp condemnations from the pharmaceutical and insurance industries,
which were skewered in the movie. All of this was before the movie opened.
Then Sicko hit 3,000 screens nationwide. The movie grossed $24 million at the
box office. No small accomplishment, but nonetheless far short of the $120
million his preceding effort, Fahrenheit 9/11, earned in 2004. Moore tapped into
American angst over the state of the U.S. health care system, which consistently
polls as the No. 1 domestic issue in the 2008 presidential election. But his
support of a single-payer health care system failed to find a similarly
receptive audience. Moore's moment seems to have passed—for now.
Privacy has its privileges
Former Home Depot CEO Robert Nardelli may be emblematic of executive-pay excess,
but his resurrection with privately held Chrysler may be the real impact from
the executive compensation disclosure rules that went into effect this year.
In January, after an underwhelming tenure during which Home Depot's stock
performed poorly, Nardelli packed up his things and left with a golden parachute
worth $210 million. His departure, just as new disclosure rules went into
effect, became a lighting rod in the debate over the role that reason—and
performance—plays in designing executive compensation.
The new rules were supposed to increase the public relations cost of awarding
payouts to executives who did not perform. But in 2007, at least, that was not
the case. Disclosure merely showed how big the perk pool really is.
"All we saw this year was that more people were eligible for the things that
only a few were eligible for [previously]," says Paul Hodgson, senior research
associate for executive compensation at the Corporate Library, a watchdog group.
The group said executive benefits and perks increased 130 percent over the
previous year. Half of the CEOs in the S&P 500 had amassed $2.6 billion in
retirement packages. "What we didn't realize was that so many other people were
getting them because they weren't disclosed," Hodgson says.
And if having to disclose compensation is the question, Nardelli found his
answer this summer by emerging as the man in charge of Chrysler's revival under
private equity firm Cerberus Capital Management. Having become a private
company, Chrysler had no obligation to report Nardelli's compensation.
The secret sharer is unscathed
On June 27, Whole Foods Market CEO John Mackey wrote in his company's blog that
some people "are thrilled to find an open, honest, candid communication by a
company's CEO instead of the usual legal/PR sterilized sound bites that they
usually see."
A month later, Mackey was outed as a secret blogger who liked to disparage the
management of Wild Oats, which Whole Foods was hoping to acquire. The discovery
was supposed to be a lesson in executive hubris. Just because Mackey founded the
company didn't mean he could run it—and his mouth—just as he pleased. Mackey,
whose secret postings were discovered in court documents filed by the Federal
Trade Commission in its effort to block the merger with Wild Oats, quickly
apologized on his CEO blog for making his veiled comments. Then the company
hired an outside law firm to launch an internal investigation—just as the
Securities and Exchange Commission launched one of its own.
Most CEOs in similar circumstances would have faced censure or been asked to
resign. Not so for Mackey. In August, the courts cleared the company's
acquisition of Wild Oats in a $565 million deal that was announced later that
month. In November, Mackey signed off on a new code of conduct published by the
company that forbids blogging on non-company Web sites for all employees, not
just himself.
In this case, it seems, John Mackey will probably laugh last, even if this
unusually candid CEO does so in private.
N.Y. Knicks management gets a pass
The men who run the New York Knicks dragged their company through the mud when
they publicly denounced Anucha Browne Sanders, a former marketing executive who
nevertheless won an $11.6 million judgment in a sexual harassment case against
the NBA franchise in October. The jury verdict was vindication for Browne
Sanders. But it did little to chasten Knicks head coach Isiah Thomas, who, a
jury found, had sexually and verbally harassed Browne Sanders, or Madison Square
Garden chairman James Dolan, who promptly fired her after she filed a formal
complaint.
After the verdict, Dolan vowed to appeal, even though a pretrial settlement or
quiet post-trial negotiation would have been the most economically and
politically prudent course for the company. James Dolan's father, Charles, is
the chairman of Cablevision, Madison Square Garden's corporate parent, so few
expected much in the way of discipline for the son. Thomas, meanwhile, remains
the Knicks' coach, despite the jury verdict, a losing season and his statement
during a taped deposition that was shown during the trial. In it, Thomas said he
would not be as upset if a black man called a black woman a "bitch" than if a
white man did.
"Not as much, I'm sorry to say," he said during the deposition. "I do make a
distinction."
In late October, NBA commissioner David Stern, who has not ruled out sanctions
against the team, offered a brilliant understatement, saying the Knicks
organization was "not a model of intelligent management."
Still, it seems that the Browne Sanders verdict may yet have repercussions in
the world of professional basketball, even if not within the Knicks
organization. Breshetta Clark, a former administrative assistant with the
Memphis Grizzlies, has filed a sexual harassment case against the team.
Workforce Management, December 10, 2007, p. 30
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Jeremy Smerd is a Workforce Management staff writer based in New York. E-mail editors@workforce.com to comment.
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