Executive Times

Volume 4, Issue 10

October, 2002


ã 2002 Hopkins and Company, LLC

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Life at the Top

Some top executives seem to crave attention, while others prefer to stay out of the limelight. Either approach can be successful and productive for the executives and for their organizations. In recent weeks, certain executives may have had an overdose of unwanted publicity. The business press produced an avalanche of stories in the past month about behavior at the top of companies. From this cornucopia of content, we chose a few select items to call to the attention of readers of Executive Times. As always, we encourage readers to reflect on the experience of others and answer questions about how to emulate or avoid what others have done.


Fifteen new books are rated in this issue, beginning on page 5, two of which receive a highly recommended four-star rating. Turn ahead to check those out. You can also visit our 2002 bookshelf at http://www.hopkinsandcompany.com/bookshelf.html and see the rating table explained as well as explore links to all 2002 book reviews.

Tip of the Iceberg
If there’s an award for the most outrageous corporate vulgarity, it may well be awarded to L. Dennis Kozlowski, former CEO of Tyco International. In a SEC filing on 9/17/02 (http://www.sec.gov/Archives/edgar/data/833444/000091205702035700/0000912057-02-035700.txt), new management of the company stated, “During at least the five years prior to June 3, 2002, Tyco's three top corporate officers - its CEO, its CFO, and its Chief Corporate Counsel – engaged in a pattern of improper and illegal conduct by which they enriched themselves at the expense of the Company with no colorable benefit to the Company and concealed their conduct from the Board and its relevant committees. The nature of such conduct to the extent it is now known by Tyco is described in this filing and its exhibits.” New management followed the money and found a pattern of self-dealing which showed no distinction between the personal lives of senior executives and their corporate roles. The filing details the company’s purchase of residences and furnishings, the forgiveness of debt, and the payment of personal charitable contributions by corporate check. Event planner Beth Pacitti sent this memo about the $2.1 million birthday bash on the island of Sardinia for Karen Kozlowski, wife of the former Tyco chief, and featuring an ice replica of a famous Michelangelo statue:
 “Guests arrive at the club starting at 7:15 p.m. The van pulls up to the main entrance. Two gladiators are standing next to the door, one opens the door, the other helps the guests. We have a lion or horse with a chariot for the shock value. The guests proceed through the two rooms. We have gladiators standing guard every couple feet and they are lining the way. The guests come into the pool area, the band is playing, they are dressed in elegant chic. Big ice sculpture of David, lots of shellfish and caviar at his feet. A waiter is pouring Stoli vodka into his back so it comes out his penis into a crystal glass. Waiters are passing cocktails in chalices. They are dressed in linen togas with fig wreath on head. A full bar with fabulous linens. The pool has floating candles and flowers. We have rented fig trees with tiny lights everywhere to fill some space, 8:30 the waiters instruct that dinner is served. We all walk up to the loggia. The tables are all family style with the main table in front. The tables have incredible linens with chalices as wineglasses. The food is brought out course by course, family style, lots of wine, and it's starting to get dark. Everyone is nicely buzzed, LDK gets up and has a toast for K.
Everyone is jumping from table to table. E Cliff has continued to play light music through dinner. They kick it up a bit. We start the show of pictures on the screen, great background music in sync with the slides. At the end Elvis is on the screen wishing K a Happy Birthday and apologizing that he could not make it. It starts to fade and Elvis is on stage and starts singing happy birthday with the Swingdogs. A huge cake is brought out with the waiters in togas singing and holding the cake up for all to see. The tits explode, Elvis kicks it in full throttle. Waiters are passing wine, after dinner drinks, and there is dancing. 11:30 light show starts. HBK is displayed on mountain, fireworks coming from both ends of the golf course in sync with music. Swingdogs start up and the night is young.”
According to The Wall Street Journal (9/17/02) (http://online.wsj.com/article/0,,SB1032221540245980755.djm,00.html), “Mr. Kozlowski says he didn't see the e-mail from the event planners and warned them, ‘Don't do anything that I would be afraid to read about on the front page of The Wall Street Journal.’” Tyco picked up the tab for company employees, totaling about $1 million. The SEC filing contains lots of other details, including CFO Mark Belnick not being able to retrieve the Quicken® personal file that remained on his office computer after he was fired. Every media outlet seemed to have picked one tidbit or another from the SEC filing to report on executive behavior.

Do you create and maintain boundaries between your personal life and your corporate role? When a social activity benefits both you and your organization, how do you decide who pays for what? Since you represent your organization wherever you go, what standards do you use to differentiate yourself from your organization? Do you expect that because your company-provided personal computer is used only by you, that personal data such as in a Quicken file remain yours? When you give direction like “don’t do anything you wouldn’t want to read about in the paper,” do people know what that means? If you were giving a party, would you serve Stoli, or something better?


Six Quiet Leaders
We can thank the editors of Business Week for taking a pause in all the executive bashing to present a positive cover story (9/23/02) about six executives titled, “The Good CEO” (http://www.businessweek.com/magazine/content/02_38/b3800001.htm.) Here’s how they approached it: “Despite the ugly headlines, there are still many such executives out there. Our search for those who embodied the best in management excellence began with a simple premise: Where we saw superior corporate performance over many years, we would find a superior leader. We focused on companies that had exemplary earnings and sales growth both over time and against their peers. The companies of each of the CEOs we selected have outperformed the broader market, some by huge percentages. We also included measures of management skill, such as return on invested capital. Most important, perhaps, we drew on our own analysis of how well these leaders met the challenges facing their companies.” Jim Collins, author of Good to Great, (our four-star review appears at http://www.hopkinsandcompany.com/Books/Good to Great.htm) helped the Business Week writers find these six CEO’s: Harold “Max” Messmer of Robert Half International Inc.; James Keyes of Johnson Controls Inc.; Reuben Mark of Colgate-Palmolive Co.; James D. Sinegal, of Costco Wholesale Corp.; James C. Morgan of Applied Materials Inc.; and Joseph Neubauer of Aramark. What do these executives seem to have in common? They put their companies ahead of their egos. Reuben Mark wouldn’t even bother commenting for the story, “citing his belief that talking to the press does nothing to improve his operations.”

Does your organization reward superior leadership? What are the key elements of performance that prove to others that you are a superior leader? Who do you consider your executive peers and how does your performance compare with theirs? 


Jack Sprat
The reputation of a heroic super-CEO of the 1990s took a fall in recent weeks when a divorce filing led to the disclosure of corporate perks given by General Electric Company to former CEO Jack Welch. All media outlets had a field day with selecting one perk or another as an example of the imperial lifestyle of certain top executives, during and after their tenure at the top. Deciding that he needed to eat no corporate fat, Jack Welch asked GE to take back the perks, which they did. He used the op-ed pulpit of The Wall Street Journal (9/16/02) (http://online.wsj.com/article/0,,SB1032130853752348115.djm,00.html) to describe a dilemma he faced over his employment contract, made public through the divorce proceedings, and how he resolved it. Here’s an excerpt: “I spent 41 years at GE, the last 21 as chairman. My respect for the company and my fondness for its employees make me hate the fact that my private life has brought unwelcome and inaccurate attention to the company. … So here's my dilemma: Do I keep the contract and look like someone who's out of touch in today's post-Enron world? Or do I modify a legal contract and take the hit of being perceived as having done something improper? … One thing I learned during my years as CEO is that perception matters. And in these times when public confidence and trust have been shaken, I've learned the hard way that perception matters more than ever. In this environment, I don't want a great company with the highest integrity dragged into a public fight because of my divorce proceedings. I care too much for GE and its people.”  Several observers have noted that in the same way that Welch’s management direction influenced other executives to follow his example, there may be a turnabout in perks following what’s happened with Welch and GE.

What perceptions are most important to you? If something not well known about you or your organization came to light, how would perceptions about you or your organization change? How accurate are current perceptions of your reputation? In light of current attitudes, are there old agreements or contracts that could be revised to reduce the risk of a damaged reputation?


Friends of Frank
The perks of being a CEO are usually set by the compensation committee of a board of directors. Some special treatment of significant value fell outside the purview of those committees, as we read in a page one story in The Wall Street Journal (9/23/02) (http://online.wsj.com/article/0,,SB1032746110747543113.djm,00.html). The friends of Frank Quattrone, Credit Suisse First Boston’s technology group head were the executives at companies that used CSFB for underwriting new stock issues. These friends were allocated shares of hot IPO issues from other CSFB clients, and benefited handsomely (estimated at an aggregate $80 million) from the price rise on those shares during several days and weeks following each IPO. Most executives involved thought there was nothing improper about CSFB setting up personal brokerage accounts for them and allocating IPO shares to those accounts. One executive who was a friend of Frank commented, “There was no quid pro quo.”

Should corporate decisions lead to personal perks? When is a kickback not a kickback? When does relationship management become smarmy and inappropriate? What’s material?

Left or Right?
The October issue of Fast Company leads with, “The Secret Life of the CEO: Do they even know right from wrong?” (http://www.fastcompany.com/online/63/secretlife.html). The answer: it depends. Often lonely and under pressure, CEO’s make clear decisions, with nuances.

In what direction is your moral compass pointed? Under pressure, how do you act? Do you turn right on red without stopping?



Here are selected updates on stories covered in prior issues of Executive Times:

Ø      We advised readers of the August 2001 issue of Executive Times, that, “In his new book, Free Flight: From Airline Hell to a New Age of Travel, James Fallows describes changes in general aviation that will make personal air transportation available in your community very soon.” According to an article in Business Week, (8/28/02)  (http://www.businessweek.com/technology/content/aug2002/tc20020828_9391.htm), “On Aug. 26, at 9:18 a.m. in Albuquerque, Eclipse Aviation's innovative twin-jet plane, the Eclipse 500, took to the air. The maiden flight of the six-seat mini-jet lasted about an hour -- and passed all of its scheduled tests with flying colors…” Eclipse Aviation has been taking orders since 2000 for their new plane, which costs $837,500, and hopes to make air taxis available soon at a fraction of the cost of charters.

Ø      In the July 2000 and August 2000 issues of Executive Times we mentioned bias lawsuits against various insurance companies. We read in several places in recent weeks, including The Wall Street Journal (8/30/02) (http://online.wsj.com/article/0,,SB1030657497912071555.djm,00.html) that Met Life settled its bias suit, for what may be up to $160 million, on policies written as far back as 1901. The company admitted no wrongdoing, called attention to practices that ended decades ago, and confirmed that the reserve set aside for this suit is adequate to pay the settlement.

Ø      The lead story in the February 2000 issues of Executive Times was “Waging Talent Wars.” An Executive Times reader called to our attention ExecuNet’s 10th annual Executive Job Market Intelligence Report that highlights employment trends. Interested readers can access the report at http://www.execunet.com/annual_survey.cfm?welcome=1363.


Positive Thinking
All he wanted to do was change the world. He did. By the time he died in early September at age 100, W. Clement Stone was as famous for giving away money as he was for making it, through his success system that never failed, positive thinking. Stone founded Combined Insurance Company with $100, and turned it into a multi-billion dollar enterprise. Stone may also have been one of the most prominent corporate chiefs to make his political spending produce clout and lead to campaign finance reform. He was the largest contributor to Richard Nixon’s presidential campaigns, in an amount that totaled $8 million.

According to one obituary, “He once said the Depression was the ‘best thing that happened’ to him because ‘it forced me to develop good work habits.’” One of Stone’s favorite charities was the Boys and Girls Clubs around the country, which he supported for fifty years. Through those organizations, Stone’s millions of dollars helped kids finish high school, go to college, and become productive members of society. Countless other non-profit organizations received his quiet and large donations. Another obit reflected, “He had a simple explanation for his giving. ‘I have a magnificent obsession,’ he once said. ‘All I want to do is change the world, make it a better place for this and future generations. … ‘What's a few million dollars?’ he once asked. ‘Everything's relative.’” Stone’s characteristic pencil-thin mustache, his Havana cigar, and his smile will all be missed. His approach to life will be remembered.

Latest Books Read and Reviewed:

 (Note: readers of the web version of Executive Times can click on the book covers to order copies directly from amazon.com.  When you order through these links, Hopkins & Company receives a small payment from amazon.com.  Click on the title to read the review or visit our 2002 bookshelf at http://www.hopkinsandcompany.com/bookshelf.html).


Title (Link to Review)



Review Summary


A Good Hard Kick in the Ass: Basic Training for Entrepreneurs

Adams, Rob

Swagger. Austin-based Adams presents drill sergeant attitude and practical advice, especially to those starting or expanding a business.

The Years of Lyndon Johnson: Master of the Senate

Caro, Robert A.

Hands On. At 4 pounds and 1,040 pages of text, there are ample stories and examples in this well written presentation of how Lyndon Johnson transformed the use of power in the United States Senate.

The Emperor of Ocean Park

Carter, Stephen L.

No Clothes. Narrator Talcott Garland takes readers into a 650 page legal thriller trying to unravel various mysteries following the death of The Emperor, Tal’s father. Interesting structure, but too wordy and plodding, especially in the first half.

Red Rabbit

Clancy, Tom

Tame Retro Stew. Clancy reprises Jack Ryan who escorts a Soviet defector, a “rabbit,” to the West. The rabbit became disillusioned with Russian leadership when he learned of a plot to kill the Pope. Few plot twists, and a slow and repetitious pace over twice as many pages as needed.

Citizen McCain

Drew, Elizabeth

Chronicle. Drew follows McCain from 1/01 through 3/02 as he shepherds campaign finance reform bill through Congress. Drew takes us inside politics and into the life of a Senator who leads with courage and skill.

Cicero: The Life and Times of Rome’s Greatest Politician

Everitt, Anthony

Eloquent. Everitt’s prose brings Cicero to life, and readers interested in ancient Rome, philosophy, lawyers or politics, will find this book informative.

Lucky Man: A Memoir

Fox, Michael J.

Becoming Oneself. Finding meaning in life through Parkinson’s disease, Fox takes readers through a story of his perspective on his life and what’s important.

Blood of Victory

Furst, Alan

Dripping. Furst brings readers to the atmosphere of 1940, and presents images of intrigue, complicated characters, and high suspense as a spy tries to disrupt Germany’s oil supply, known as the blood of victory.

The Bishop in the West Wing

Greeley, Andrew M.

Unnecessarily Gracious. Feel-good mystery in which Bishop Blackie Ryan helps newly elected Democratic and populist President Jack McGurn get off to a good start.

A Love of My Own

Harris, E. Lynn

Looking for Love in All the Wrong Places. Poorly written romance with alternating narrators, cardboard characters and odd relationships among unlikable upper class Black Americans.

Soros: The Life and Times of a Messianic Billionaire

Kaufman, Michael T.

Applied Philosophy. All his life, George Soros tried to apply a philosophy that he was also refining and defining. Kaufman takes readers on a journey that observes and explores this complicated man, and creates the image of a brilliant and complex character.

The Heart of Change: Real-Life Stories of How People Change Their Organizations

Kotter, John P. and Dan S. Cohen

Pumping. Kotter proposes more feeling and less thinking to accomplish large-scale change. Lots of brief and memorable stories from real workers and managers to show how each proposed step could be carried out.

Fragrant Harbor

Lanchester, John

Refuge. Well-written novel that captures the atmosphere, culture, power, and contradictions of Hong Kong from the 1930s to the present.

The Five Dysfunctions of a Team: A Leadership Fable

Lencioni, Patrick

Who Put the Fun in Dysfunctional? Find yourself and your team in this easy-to-read book about how executives interact. Short descriptions of each dysfunction, how to recognize it, and how to overcome it.

I’ll Be Short: Essentials for a Decent Working Society

Reich, Robert B.

His Long Suit. Former Labor Secretary Reich presents his straightforward, unabashed, liberal opinions in a lively way, and with great passion.


ã 2002 Hopkins and Company, LLC.  Executive Times is published monthly by Hopkins and Company, LLC at the company’s office at 723 North Kenilworth Avenue, Oak Park, Illinois 60302. Subscription rate for first class mail delivery of the print version is $60.00 per year (12 issues). Web version subscriptions are $30.00 per year. Single issues: $10.00 print; $5.00 web. To subscribe, sign up at www.hopkinsandcompany.com/subscribe.html, send an e-mail to executivetimes@hopkinsandcompany.com, call (708) 466-4650, or fax to (708) 386-8687. For permission to photocopy or e-mail Executive Times, call (708) 466-4650 or e-mail to reprints@hopkinsandcompany.com. We will send sample copies if requested. The company’s website at http://www.hopkinsandcompany.com/archives.html contains the archives of back issues beginning in the month after the issue date. 

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