Posted on 02/11/2002 8:00:28 AM PST by Liz
In early 2000, when Global Crossing was still flying high, Nell Minow posted a negative report about the company on her Corporate Library Web site.
It was the debut of the site (www.thecorporatelibrary.org), which evaluates corporate governance issues. As her first subject, she chose executive contracts, the reports often ignored by investors and buried under hundreds of other documents. But after sifting through dozens of mundane contracts, the contract for Global Crossing's chief executive, Robert Annunziata, appalled her.
"Global Crossing had agreed to give him two million stock options with a strike price below where the stock was trading," she recalled. "It had also agreed to pay for his family and his mother to fly first class to Los Angeles while he was relocating, and it pledge to buy him a new Mercedes: a 1999 SL500 was spelled out in the contract."
"I thought it was the worst employment contract in the history of the world," Ms. Minow recalled. "If the board can't say no to such outrageous demands, then what can they say no to? Anybody who would ask for that kind of a contract is a problem. Any board that would give in to those demands is a problem too."
Ms. Minow was one of the first to call attention to what turned out to be serious problems at Global Crossing, the fiber optic network operator that recently filed for bankruptcy protection.
At the time, no one paid much attention. Indeed the reaction from the company, employees, investors and chief executives was mostly negative. Ms. Minow recalled in a telephone interview yesterday from her home in Washington that when she asked Global Crossing for a list of its board, the "first response was that they didn't have to give it to me because the company was incorporated in Bermuda." Why would a company based in Los Angeles, need to be based in Bermuda, she wondered.
Even investors and employees did not think she was doing them a favor. "I got a lot of hostile e- mails that said I didn't understand the company," she said.
And when she presented her findings to institutional shareholders and chief executives, the chief executives were equally dismissive. Their view was: "what do you care that he his mother gets a plane ticket," she said. "He is making a fortune for the shareholders."
As it turned out, Global Crossing's chairman, Gary Winnick, had trouble retaining chief executives: there were five in five years. If investors had focused on the weakness of the board under its chairman, they might have been more critical of management instability and its poor financial results earlier, Ms. Minow believes.
Over the long term, Ms. Minow has developed a reputation as a savvy analyst of corporate governance issues. She may well have inherited her critical bent from her father, Newton N. Minow, a former chairman of the Federal Communications Commission, who called television a "vast wasteland" in a famous 1961 speech.
Initially, Ms. Minow thought she might become a lawyer. Instead, after law school she went to work for the Environmental Protection Agency. In 1986, she joined the shareholder rights activist Robert A. G. Monks at Institutional Shareholder Services, the proxy advisory firm that was sold to Thomson Financial in 1995. They then started a fund to invest in badly managed companies with the hope of improving them.
She and Mr. Monks spun out the Corporate Library, where Ms. Minow now spends her time.
Films are Ms. Minow's other passion and she reviews family- oriented films for on her Web site, www.moviemom.com. In her corporate criticism, she is fond of citing films to make a point. After Sears shrunk its board to rebuff Mr. Monks' efforts to gain a seat, she wrote a critical article: "Honey, I Shrunk the Board."
Is that about it?
Guess he saw the handwriting on the wall......or, rather, on the fiber optic.....LOL
OK. Anytime........
Think he 'translated the handwriting' for his 'koffee klatch' friends before leaving?
Not if he knew what was good for him......
In early 2000, when Global Crossing was still flying high, Nell Minow posted a negative report about the company on her Corporate Library Web site.See also, from:It was the debut of the site (www.thecorporatelibrary.org), which evaluates corporate governance issues.
EXCERPT, TCL 1999 COMPANY RESPONSE REPORT:
Introduction by Nell Minow, Shareholder Activist and Co-Founder of The Corporate Library
"...And none is worse than the contract of Robert Annunziata of Global Crossing, whose tenure as CEO ended on March 3, 2000, after just a year on the job. Mr. Annunziata created tremendous shareholder value. But the contracts pay/performance link was weak. As the company's performance leveled off, Mr. Annunziatas compensation did not diminish commensurately. According to Forbes, Global Crossing is an Internet play with all the potential and risks that that entails. The company needs a CEO whose contract is tied to those potentials and risks.
Instead, the contract included pay guarantees and perks that indicate a lack of oversight by the board. Just for showing up, he got a $10 million signing bonus and two million stock options at $10 a share below market. He got our favorite oxymoron the guaranteed bonus of not less than half a million dollars a year. The make and model of the Mercedes the company would buy for him and his wife is spelled out in the contract. He got the use of the corporate jet for commuting until such time as he might find it appropriate to move. And to keep him from getting homesick, his family got first class airfare to come see him once a month. Including his mother." [view entire report...]
Oh come on, there are many companies incorporated in Bermuda just as there are corporations incorporated in Nevada, and before that, Delaware. Nothing sinister in avoiding tax if you don't have to pay it.
And it doesn't wash that a supposedly savvy corporate analyst wouldn't know that, therefore her "wondering aloud" is pure innuendo.
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