<nettime> Lou Dobbs on Bush Speech

[Jonathan Prince <jonathan@killyourtv.com>]

http://www.cnn.com/TRANSCRIPTS/0207/09/lt.13.html


LOU DOBBS, CNN ANCHOR: John, the president's caught in something of a 
bind here. This as you say a non-regulation, anti-regulation 
president, yet he is now presiding over what will be an enormous 
expansion and a number of regulations.

He has also been a president preaching small government. He is 
presiding over the largest expansion in government in more than a 
decade. He talks about free trade, yet he's the first to raise 
tariffs on steel imports. The president has a number of issues here. 
The administration looks a little off balance in point of fact.


[....]

DOBBS: Yet, for the first time, Aaron, on July 3, the Pew Research 
Poll showed for the first time more than 60 percent of those surveyed 
think the president should be doing, and must be doing more to 
improve the economy. Yet, our own poll yesterday, the CNN-USA Today 
Gallup Poll, showed that more people blame President Clinton for the 
malaise, the level of corruption in corporate American, than do 
President Bush.


[....]

DOBBS: Because it is fundamentally, as Patricia said, it is 
fundamental to the level of compensation that CEOs have become used 
to receiving over the course, particularly of the last five or six 
years, emanating in large measure from the technology sector. But the 
fact is, companies not charging their income statements, writing up 
hundreds of millions of dollars.

You have a situation in which Larry Ellison, a founder, could receive 
$700 million in compensation. Jerry Levin the former CEO of AOL Time 
Warner, to put this in total context, receiving $160 million the 
previous year in compensation for a company whose stock is now in the 
mid-teens, and these examples go on and on.


[....]

DOBBS: Well, typically, not lower than it's trading at. Typically, 
where it is, the strike price as it's called, but for a future 
exercise, the presumption being and the assumption being that the 
price will be higher at that time. The real issue for the stock 
option for the CEO who receives these, and other top corporate 
officers and others in the company, is that there's no downside. 
There is no risk whatsoever. And, Patricia, I don't know whether you 
would agree with this or not, but I see that as a major issue. It has 
also deluded of shareholders, and typically the shareholder has no 
right in voting...


[....]

DOBBS: And it becomes blatantly, and Patricia again, I will invite 
you to comment on this, to corroborate or argue with me, but to me 
the stock option focus the CEO, the senior management team, indeed 
the company on short-term results. Drive the stock price. Forget 
about the assets that are built. Forget about the quality of the 
business, the fundamentals of the business drive for that short-term 
focus and in some cases, the temptations. The incentives were just 
overwhelming to the point that we have seen things like WorldCom. 
We've seen Enron, the most egregious example of that. Do you agree, 
Patricia?

[....]

DOBBS: The fact is that there was -- 20 years ago, there was a 
requirement, an expectation, a fundamental precept in corporate 
America that the CEO, the top management team, would be invested in 
their company. They would have ownership to whatever measure they 
could, given their financial condition.

Today, options are handed out like confetti, many of them worth 
precisely the same as confetti, but it has really been a change. And, 
the idea of aligning CEOs, management, with shareholder interest is 
an interesting concept, because in point of fact, CEOs and management 
are the hired help, just like you and me, Aaron, and they have a job 
to do.

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