Archive for the ‘In the News’ Category
Could a baseball team function without a manager? Could an orchestra play without the conductor?
I thought of these scenarios after reading a recent article, “Managers? Who Needs Those?: At Some Tech Firms, Disdain for Hierarchy Collides With Need for Oversight,” that appeared in the Wall Street Journal. The article covers startup tech firms that have an apparent “disdain for management” and view managers as “archaic, or worse, dead weight.”
Watch out Harvard Business School — a new paradigm is here! The only problem is that without management in place it was reported that decisions “were sometimes left hanging for weeks or months.” Does the elimination of traditional management titles or the formality of a hierarchy foster greater growth potential or opportunity for advancement? Doesn’t someone(s) have to “steer the boat”? It will be interesting to see how long startups can survive in the anti-management mode. Certainly, tech firms that are now listed on the NYSE had to abandon that model and adopt some traditional corporate structures while maintaining unique cultures on their paths to success.
As today’s Wall Street Journal article, “Fund’s Employees Face Uncertainty” indicates: “No major financial firm has survived a criminal indictment.” With the criminal indictment of SAC Capital Advisors, many of its current employees are confronted with a difficult decision. The choices are limited – stay or go.
A recent Wall Street Journal article New Job, New Steppingstones (page B7) discusses how many companies “have centralized more functions,” thus altering the traditional path to the CFO’s office for many finance executives. An explanation lies in the trend to outsource many financial functions. Those seeking the CFO spot are now required to offer skills in a broader range of areas. In fact, those seeking a seat in the C-suite, not limited to the CFO, are now required to wear far more hats and provide experience beyond the traditional roles. Training requirements have broadened as job descriptions have expanded. It will be interesting to see how companies continue to modify the structure of their C-suite. Stay tuned.
Whether promoted from within or from the outside, the new boss will need help to succeed. By “getting on board” as a “team player” and becoming a strategic asset, you should create personal career enhancement, rather than a premature termination. See great article in The Wall Street Journal (March 6, page B8) by Joann S. Lublin, “How to Prove Your Worth to the New CEO.”
Hard to believe that the CFO of a public company felt the need to use social media to vent his frustrations about his employer, a public company. Not only did the CFO of Francesca’s Holdings Corp. use his Twitter account to vent about the company’s Board but he maintained a blog and a publicly viewable profile on Facebook. There is one word for this type of activity reminiscent of a recurring segment of the Weekend Update skit on SNL: REALLY!?
How is it possible that Yahoo hired its CEO Scott Thompson, missing the fact that he misrepresented his credentials – to wit, he claimed to have a degree in computer science when he did not?
How is it possible that one of the nation’s leading top executive search firms did not uncover this fact during its due diligence on behalf of Yahoo?
What should we make of Greg Smith’s Op-Ed piece in today’s New York Times, “Why I Am Leaving Goldman Sachs“? Is it the musing of a former leader who laments the changes which have occurred at a great financial institution or a parting shot from a disgruntled employee at his former employer?
The compensation package of Eugene Isenberg, former CEO and now chairman of Nabors Industries, Ltd., including a proposed $100 million termination payment, illustrates the far extreme of executive compensation. While institutional shareholders brought suit to challenge his compensation, wasn’t there due diligence before investments were made?
Credit Suisse and Bank of America both recently announced changes in their annual bonus arrangements. Given the state of the economy and the cash crunch that many business are facing, companies are becoming more creative in the funding of these bonus arrangements – with a greater portion of annual bonuses are being funded in restricted stock or other investment vehicles. While these arrangements can sometimes provide a potential benefits to their recipients, knowing the details is critical. Credit Suisse’s arrangement, for example, offers no upside to the executives and could theoretically (according to the Wall Street Journal) result in lower payouts. Stock grants provide both potential increases and decreases in value, but often such shares are “restricted,” meaning that executives cannot sell these shares if things go bad and deferred stock arrangements can have unintended income tax liabilities associated with them. As bonus arrangements become more complex and creative, executives will need to engage in more planning – financial, cash flow, and income tax – to properly manage their incentive compensation.
David Harmon co-authored this post with Charles Bruder.
IN THE NEWS: What’s the Impact of Compliance with Post-Employment Obligations on Severance Agreements?
What does the dispute between MacAndrews & Forbes and Donald Drapkin, its former Vice Chairman, indicate to other executives who sign severance agreements? That company property should be returned and confirmation of such return should be obtained by the executive, that companies should have solid procedures in place to monitor the possession of confidential information by employees, and that post-employment obligations are enforceable — depending on how they are drafted and the particular facts of the case. This case should be interesting as it presents specific contract clauses and evaluates the conduct of the former executive. We will see what the jury finds regarding whether the company was justified in withholding payment under Drapkin’s severance agreement due to its claim that he failed to comply with his post-employment obligations, including returning company property and soliciting an employee.