The Economy

Gracious Living

What makes the Hottentots so hot? Perks, apparently.
John GoffSeptember 13, 2002

Disclaimer: While the entries in GW/BW are based on actual news items, some of the people, persons, and events in this article are fictional. Other stuff I just made up.

Please, no lawsuits.

GOOD WEEK

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1. Jane Welch

While going through a very public divorce must rank right up there with oral surgery on the universal pain scale, Jane Welch extracted some measure of revenge this week. Welch, the soon-to-be-ex wife of the already ex-chairman of General Electric, filed court papers late last week detailing why she feels she’s entitled to a whole lot of alimony.

In her court documents, the distaff Welch claimed her husband had not publicly disclosed the full extent of his wealth. Specifically, she said the onetime GE CEO continues to receive a passel of perks from his former employer.

According to the court documents, the retired GE chairman continues to use a Manhattan apartment owned by GE. In addition, GE reportedly supplies Welch a box at the Metropolitan Opera, orchestra seats at the London Philharmonic, and season tickets to the Bolshoi Ballet. In addition, GE has negotiated an agreement allowing Welch to occasionally set up the pins on the Ladies Pro Bowlers Tour.

In a related story: worried that the “executive-perk” contagion might spread to other companies, General Motors put out a preemptive press release conceding that GM once bought Alfred Sloan a Nova.

2. Corporate IR Departments

Mercifully, companies took a low-profile approach to corporate announcements on Sept. 11. Most companies refrained from sending out press releases or holding press conferences. In fact, PRNewswire reportedly said there was a 90 percent decline in announcements from regular levels.

Robert Lehmont, chairman of the fictitious public relations firm The PRR Group, told a wire service: “We’ve told one of our clients, ‘You’re an absolute idiot if you put something out on September 11. A real idiot. Stupido. What are you, milky in the filberts?’ “

Also on Wednesday: The PRR Group reported revenues in the first half of the year dropped 4200 percent.

BAD WEEK

1. John Rigas

On Wednesday, bankrupt cable operator Adelphia Corp. announced it will not pay former chief executive officer John Rigas a $4.2 million cash severance package. This, according to Bloomberg, citing people familiar with the matter.

Reportedly, the company’s current management said it made the controversial decision after the Justice Department filed fraud charges against Rigas.

Rigas’s pay package includes a provision that terminates the agreement should he be convicted of a felony, according to a regulatory filing.

The emoluments for Adelphia’s former CEO were substantial. According to an SEC filing, Rigas was promised office equipment, a fulltime secretary, use of the company’s jets in an emergency, health-care coverage, and the rights to occasionally set up the pins on the Ladies Pro Bowlers Tour.

2. Employees

Downsizings and corporate cutbacks can take a toll on the stability of workers.

This week, we found out just how big a toll. According to a survey conducted by Watson Wyatt, shakeups at many companies — along with that Audi commercial — have left many employees confused about how their jobs tie in to corporate objectives. The consulting firm asserts that all this confusion could make it more difficult for companies to recover from protracted slumps in business.

Less than half of employees (49 percent) understand the steps their companies are taking to reach new business goals. The survey also found that most employees do not make the connection between job performance and pay.

In fact, only about a third of the respondents said they see a clear link between their work and the money they earn. Of that group, 42 percent conceded they they’re not sure if they get paid this Friday or next.

Other key findings:

  • Barely 35 percent of workers said they understand what they do for a living.
  • Two out of five respondents believe their company’s business strategy has something to do with horseys.
  • 40 percent of the surveyed said they still weren’t really sure how to forward a call.
  • 82 percent of the respondents said they weren’t sure what you call those little plastic things on the end of shoelaces (answer at end of article).

3. Al Dunlap

According to published reports this week, the Justice Department is said to be investigating Sunbeam Corp. for the period 1996 through 1998. During that time period, the appliance maker was headed by CEO Al “Chainsaw” Dunlap and CFO Russell Kersh.

“The U.S. attorney’s investigation focuses on the actions of former management and we don’t anticipate it will negatively impact our ability to reorganize by year’s end,” said George Davis, Sunbeam’s bankruptcy lawyer, according to wire service accounts.

Last week CFO.com reported that Dunlap and Kersh settled charges brought by the Securities and Exchange Commission. Those charges accused the two former Sunbeam executives of filing financial reports that were “materially false and misleading.”

The SEC seemed to be particularly incensed by Sunbeam’s 1998 annual report, which inexplicably included a pop-up of a barnyard and a scratch-and-sniff MD&A.

4. Pre-Paid Legal Services

Pre-Paid Legal Services Inc. has been reported to the SEC for not disclosing that it paid more than $30,000 to a magazine that subsequently recommended its stock, according to The New York Post.

Reportedly, Pre-Paid received a recommendation from Robert Flaherty, editor and publisher of Equities magazine, in an interview Flaherty did with Forbes.com on September 3.

Afterward, Pre-Paid issued a press release stating that journalist Flaherty had shared his tips on stock picks that he feels have good potential for investors.

“Flaherty likes to try and counteract what he calls ‘abusive short-sellers,’ when he makes his picks,” Pre-Paid’s management noted in the press release.

What the company did not note in the release is that it reportedly paid more than $30,000 to Flaherty’s publication.

The Post also reported Monday that New York State Attorney General Eliot Spitzer had complaints about Pre-Paid. Also, he’s not overly wild about the name Eliot.

(Quiz Answer: Aglets)

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