A Real Life Fubar and Other Musings

The real life Fubar was noted in several commentaries on Twitter's confidential (yes, you read that right) S-1 filing with the SEC.  The Fubar is the JOBS Act itself; it's sort of amazing (though perhaps not) that the one time in recent years that our Congress acts in a bipartisan manner it comes up with a real mess.  I know that some feel otherwise, but for my money I refer to the write-up by Steven Davidoff (AKA "The Deal Professor") in The New York Times "DealBook" column; you can find that here.  I wish I could have said it better, but I don't think I could.  I believe it was Justice Brandeis who said that sunlight (i.e., disclosure) is the best disinfectant; the JOBS Act manages to pull off a rather amazing feat by keeping sunlight in the darkness.  And it galls me that Congress decided set the revenue bar for an "emerging growth company" at $1 billion per year.  I suppose that when you deal in trillions most every day, a billion does begin to seem like chump change.

Shareholder Value (But Not So Much)

Another great item in the press was a recent article by Steven Pearlstein on how shareholder value has damaged (and continues to damage) American business.  The only exception to the short-termism that many shareholder value advocates have generated is the long-term damage some of them have created (such as the recent JC Penney debacle brought to you by Bill Ackman).  I understand why some shareholders (and not just "activists") want to shake up boards and managements a bit - some shaking up never hurts - but the perception that shareholders know better than boards and should have the right to second-guess everything a board does risks, at least in my view, destroying the separation between ownership and management that has been a cornerstone of the American corporation.  There's an article that makes a similar point in Bloomberg.

More on Director Term Limits
I've posted some musings on this topic before.  I'm not really an advocate of term limits, and I'm really not an advocate of age limits.  Here's an article indicating that most companies shun term limits.  Interesting.  More interesting (at least to me) were some comments I heard at a great conference this week (it was the Fall Conference of the Southeastern Chapter of the Society of Corporate Secretaries and Governance Professionals in Atlanta).  Specifically, the directors on one panel - including one gentleman who looked like he might be approaching retirement age (but was clearly as sharp as they come) - indicated that they were fine with age limits.  We didn't have an opportunity to go into their rationales in detail, but I wonder if they include that age limits provide a rather simple mechanic to get rid of dead wood, and if some great board members have to leave "prematurely" it's worth it.

There Oughtta Be a Law, A Rule, or Something

I read with some concern that the California Senate has passed a resolution urging companies to include more women on their boards.  Now anyone who knows me knows that I am a strong proponent of board diversity of all sorts, as well as of gender equality, so why am I concerned?

The answer is that laws and regulations mandating that companies do or disclose a particular thing are not always the best way of promoting or achieving social goals.  Sometimes they are, but I really wonder if that's the case here (and I understand that the California resolution merely "urges" and doesn't mandate anything).  As I see it, laws and rules have many infirmities, including the following:

• They invariably adopt a one-size-fits-all approach that doesn't work for many companies.
• Once adopted, they become engraved in stone; they are rarely reconsidered and almost never changed or repealed in response to changed circumstances.
• They exacerbate the real problem of disclosure overload - public companies' disclosures keep getting longer and longer - without any commensurate benefit to investors generally.
• Because the laws/rules generally require greater disclosure in "official" SEC filings, companies are justifiably concerned that the disclosures could result in liability.  As a result, the disclosures are often legalistic and not particularly helpful to the very constituencies that the laws/rules seek to benefit.

There are more reasons, but this quick list may suffice.  At any rate, there are a number of pending "pushes" for laws and/or rules requiring more corporate disclosure or substantive actions relating to corporate political contributions and sustainability and other so-called "ESG" (environmental, social and governance) matters, among other things.  I'm not opposed to more disclosure or corporate social responsibility - far from it - but why must the proponents always push for a law or a rule?  Why not push for voluntary disclosure or action?  Why not work with companies and the corporate community in general to find common ground?

Lamm's Literary Lyceum

I haven't paid sufficient attention to this "feature" over the last weeks, so here goes:

• And the Mountains Echoed by Khaled Hosseini: He's a great storyteller, but the stories in this book are pat and predictable.
• Southern Cross the Dog by Bill Cheng: I don't get all the fuss.  There is an occasional passage that's great, but not worth the price of admission.
• The President's Vampire by Christopher Farnsworth: The first book in this series was witty and fun.  This one, not so much; as can happen with success, the author may be taking himself a bit too seriously.  (And yes, I do enjoy this kind of thing from time to time.)
• Crazy Rich by Jerry Oppenheimer:  This purports to be a history of all the craziness in the Johnson (as in Johnson & Johnson) family.  I hated this book and regret that I enriched the author by paying for it and then impoverished my brain by reading it.  Frankly, I think the author may have some psychological issues, but if you insist upon reading it, take it out of the library and make sure there's a shower nearby once you finish it; you'll feel sullied.
• Bitter Brew by William Knoedelseder:  This is a history of the Busch family (as in Anheuser- Busch).  It is everything that Crazy Rich is not; well written, historical as well as biographical and interwoven with the company to which it relates, and a serious yet eminently readable book.  My thanks to Ann Yerger and Donna Anderson for (independently) recommending it to me.

Prima La Musica (or Lammusica)

I've also neglected this feature.  I've been listening a great deal to the operas of Richard Strauss lately, including two of my faves, Elektra and Der Rosenkavalier.  The former is well represented by an old recording, conducted by Karl Böhm; it's a great recording, with Inge Borkh, Dietrich Fischer-Dieskau (fabulous as Orest) and a phenomenal Jean Madeira (whom I've heard about but never focused on) as Klytemnestra.  Wow.  The latter is well represented by another old recording, conducted by Leonard Bernstein, with Christa Ludwig, Gwyneth Jones (as Octavian), Lucia Popp (Sophie) and Walter Berry.  Not my favorite recording, but beautifully acted and lovingly played.

My other recomendation - and it's as strong as they come - is for the complete Mozart piano concertos with Murray Perahia.  If you have any interest in Mozart or piano concertos (concerti?) at all, go online and order this set immediately if not sooner.

I've been reviewing books and music for a while on Amazon.com, so if you're interested in my opinions, you can find my reviews there.

Long Time, No Post

I apologize for not posting anything for a while; our grandchildren were visiting, I was traveling, and so on.  All that means is that I've got some catching up to do.

Lammbaste, Part II

After I posted my screed on how The Wall Street Journal seems to be confusing news with its editorial policy (see "Lammbaste...", posted on August 8) I learned something else that troubles me.  Not only did the Journal wrongly imply that the SEC has jurisdiction over disclosure of labor union political contributions, but it also failed to report that labor unions are required to give extensive disclosure (albeit not in SEC filings) about their political contributions and activities.  For example, my friend Bruce Freed of the Center for Political Accountability advises that, among other things, federal rules applicable to unions "specifically require individual reporting of each disbursement of $5,000 or more including the 'full names and business address of the individual to which the disbursement was made,' the 'type of business,' the 'purpose of the disbursement,' the date, and the amount.  (I'll note parenthetically that Bruce has been excoriated as a socialist - !!! - by various people who were troubled by the views he expressed at a recent program.  So much for freedom of speech.  Also, didn't criticizing someone for being a "socialist" sort of go out of fashion with Joe McCarthy?)

Bullying in the Board Room

It's probably too late to go after Bill Ackman for ruining, or at least hastening the ruin, of J.C. Penney; so many others have already done that.  However, with all the public discussion of bullying and its adverse consequences, it does surprise me a bit that no one has accused Ackmann of being a corporate bully.  I'm not going to defend Penney or its board; the company is clearly on the ropes, and I'm sure there's more than enough blame to go around. However, it's pretty clear that Ackman forced the company into hiring the wrong CEO and then went after his fellow directors for not replacing him fast enough.  (BTW - this also supports my theory that management succession is like what Mark Twain said about the weather: everybody talks about it but nobody does anything about it.  Or at least not enough.)  But back to Ackman.  His hubris seems unlimited, and he's also guilty of the sin of drinking his own Kool-Aid and trying to force it down other people's throats.  And, like a bully, the minute someone called him out, he took (or in this case, sold) his marbles and left the playground.  If that's not bullying I'm not sure what is.  If you want to read a great piece on this mess, here it is.

Enjoy the rest of your Labor Day weekend, and a Happy New Year to those celebrating Rosh Hashanah!