Time to Take Care of Top Performers

Now may be the time — before the job market strengthens — to nip employee turnover in the bud.

Nearly half of middle managers in the United States are either currently looking for another job, or plan to do so, according to Accenture. In a survey of more than 500 middle managers, more than one-third (38 percent) said they are currently looking for another job; another 10 percent plan to do so when the economy improves and the job market strengthens. Of those currently looking, nearly two-thirds (64 percent) said they will intensify their searches when the market picks up.

"Given the early indicators of a possible U.S. recovery, companies need to identify their top performers, rethink their investments in them, and find ways to keep them happy and loyal," said Edward Jensen, a partner in Accenture's Human Performance service line.

When asked to identify the one factor most motivating them to seek different jobs, 56 percent cited better pay or benefits. Others factors included better conditions or job prospects (12 percent), better training and development opportunities (8 percent), lack of prospects or advancement at their current jobs (8 percent), dislike of their current jobs (7 percent), and dislike of their bosses (6 percent).

The findings also show, however that the respondents themselves are somewhat pessimistic about a quick rebound in the job market and the economy. Only 13 percent said they believe the job market will strengthen and the economy will improve within the next six months; 30 percent believe it will be two years or more before that happens. The majority said the economy will rebound either within 6 to 12 months (26 percent) or between one and two years (27 percent).

"Companies should recognize that people will leave, and, rather than trying to manage overall attrition, they should align their key managers and workforce programs with the company's overall strategy," said Jensen. "They should understand that the current talent war is more about access to talent than just owning it, and they should consider alternative resourcing strategies that include a mix of full time, flex-time, outsourcing, etc. Finally, they might take this opportunity to begin gearing up their recruiting efforts to attract talent that is — or may soon be — available."

Stockholders, Bondholders Differ on Amerco Bankruptcy
Amerco, the company that owns U-Haul, has seen its stock price more than triple in the short time since it sought Chapter 11 protection in June. The cause — an unusual investor relations campaign — may, ironically, hinder the company's efforts to emerge from bankruptcy.

Amerco chairman Edward J. Shoen, one of the children of founder Leonard S. Shoen, has taken his case on the road, meeting with potential and actual stockholders and talking up the company's shares, according to an article in The New York Times. "We've been in the U-Haul business for 58 years now, and we're pretty good at it," he was quoted as saying. "There is shareholder value here. I believe it and others believe it, too."

So far, it seems his message is getting across. The stock closed at $15.25 Tuesday, up from $4.08 at the time of the Chapter 11 filing and $1.36 in October.

Of course, maybe this is an easier trick to perform with a closely held company. According to the Times, 55 percent of the stock is controlled by Shoen's family and executives of the company, and a further 12 percent by other employees.

Holders of the nearly $600 million of Amerco bonds outstanding, however stand to lose plenty. Very likely, many of them expected to receive stock before they would allow a reorganization to proceed. As of Monday, Amerco's bonds were trading at 84 percent of their face value, said Robert Ryan, an analyst with Banc of America Securities who specializes in distressed securities — implying that bondholders fear they will not get all their money back.

All the same, Shoen has been traveling around the country and meeting with money managers to promote Amerco. Ian Gilson of Roth Capital, an investment bank in Newport Beach, California — the lone analyst who had been covering the company and who arranged the meetings for Shoen in Boston, Chicago, Milwaukee, New York, and San Francisco — defends the tactic, which is unusual in a bankruptcy situation. Gilson argues that he has recommended the stock since the bankruptcy filing because "the value of the company as an ongoing operation is well in excess of what it was trading at when it filed for bankruptcy."

Others disagree, according to the Times. "It does seem to me that flogging the company's stock is not the best use of his time," said Wilbur Ross, an investor in troubled companies who does not own Amerco debt. "Sooner or later, he will have to make a deal with the bondholders."

Shoen's history, however, suggests that he may be more of a fighter. In 1986 he and several of his 12 siblings ousted their father, who was then chief executive, and Shoen ultimately took control.

(After bankruptcy, companies often teeter between encore and final curtain call; read our June article "Second Acts.")

Restate with One Hand, Price an IPO with the Other
Monday was a busy time for Provident Service Corp., which provides counseling and foster-care staff for government social services, The company priced 4.3 million shares for $12 each, close to the range forecast last week when it delayed the anticipated filing, citing regulatory issues with the Securities and Exchange Commission, according to Dow Jones.

That same day, Provident informed the SEC in a filing that it booked revenue of $32.8 million last year, down from the previously stated $33.5 million. It also lowered its reported 2002 operating expenses to $31.2 million, down from $31.4 million, and its reported operating expenses for the first six months of this year to $24.9 million, down from $25.1 million.

Provident did not explain the cause of the adjustments, but since they apparently have little impact on the bottom line, the restatement may create little or no static.

Is It ''Feed a Worm, Starve a Virus''?
On July 31 the Department of Homeland Security issued its most dire pronouncement yet on the subject of computer viruses, warning that several major attempts to exploit a flaw in recent Windows releases "are now in widespread distribution on the Internet."

"We're seeing an Internet-wide increase in probing that could be a search for vulnerable computers," said David Wray, a department spokesman quoted by news services at the time. "It bears continued watching," he added; it "could lead to the distribution of destructive malicious code and it could cause considerable disruption."

The past week has seen at least four major Internet attacks. The latest, according to a Reuters article, is the Sobig.F worm (the etymology is anyone's guess), which attempts to download files from the Internet and leave computers vulnerable to further attacks. The worm arrives in email, introduced by a variety of subject lines, including ''Your details,'' ''Thank you!,'' ''Your application,'' and ''Wicked screensaver.'' It was spreading rapidly around the world as of Tuesday, according to experts cited in the article.

The worm is programmed to stop spreading on September 10 (whether that date can be trusted is also anyone's guess).

Short Takes

• The Labor Department has issued a rare exemption to federal pension rules, allowing Northwest Airlines Corp. to use the stock of a regional airline subsidiary to help cover the $1 billion shortfall in its employee pension plans. The action, approved by the department's Employee Benefits Security Administration, allows Northwest to contribute up to 100 percent of the stock of Pinnacle Airlines, based in Memphis, to its three plans to fund a $223 million pension obligation for 2002.
  
  

• The SEC has struck a deal with Sherry L. Gibson, an executive vice president for National Century Financial Enterprises (NCFE), settling charges in a suit brought against her for allegedly participating in a scheme that caused investor losses exceeding $1 billion. According to the commission, the private company collapsed suddenly in October 2002 after it was discovered that NCFE and its subsidiaries had been hiding massive amounts of cash and collateral shortfalls from both investors and auditors.
  
  

The complaint alleged that two wholly-owned subsidiaries of NCFE purchased medical accounts receivable from health-care providers and issued notes that securitized those receivables. Between 1999 and 2002, the subsidiaries offered and sold at least $3.25 billion in total notes through private placements to institutional investors. The complaint also charges that Gibson and other senior NCFE officials improperly "advanced" to health-care providers $1 billion or more of the capital raised from investors without receiving required medical accounts receivable in return.

Gibson consented to a permanent injunction barring her from ever again serving as an officer and director of a public company and faces fines to be determined later.

• Keven Leigh Lawrence, 37, pleaded guilty this week to 64 counts of securities fraud and mail fraud. According to the SEC, Lawrence admitted that over the course of about seven years he intentionally defrauded thousands of investors out of approximately $100 million through conspiracy and a scheme to defraud.
  
  

Lawrence's misdeeds involved false representations and failures to disclose accurate information in connection with the sale of the securities of Znetix Inc., Health Maintenance Centers Inc., Cascade Pointe LLC, and affiliated entities. He spent more than $14 million of the proceeds on homes, cars, boats, merchandise, and travel for himself and his co-conspirators. Lawrence, who agreed to forfeiture of his assets, will be sentenced on October 31; the prosecution has recommended that he serve 20 years.