I had a fun time reading the Wall Street Journal yesterday. That isn't always the case. I don't know about you, but a lot of the time I find the nuts and guts of business kind of boring. Yeah, yeah. I know it's important. Wake me when it's over.
Not yesterday, though. We had three, count 'em, three juicy pen and ink drawings on the front page, and each featured an executive whose fate seems attractive to me in one way or another.
First there's Warren Spector. He used to be one of the ultra-senior players in charge of Bear Stearns (BSC), which was hit very hard recently during the subprime mortgage rate bust. I like this story because here we have a guy who deferred his appropriately generous compensation so persistently that he ended up making only about two million dollars less than the almost $34 million his boss did last year. That can make a senior officer a little testy. They tend to like a ten million dollar gap or so between them and their closest subordinate.
Bear Stearns stock has lost 27% this year. Still, this summer the CEO who fired Mr. Spector, James Cayne, continued to spend his Fridays off the grid in Jersey. Many CEOs do, of course, if not in Jersey. At the same time, you have to wonder what was going on in the corporate offices during July, when Mr. Spector also took his leave for a while to play in a big bridge tournament. You have to like a guy who doesn't let business pressures spoil his priorities. It's hard to be fired, of course, particularly when it comes as a surprise, as it reportedly did in this case. But I have to think that after a period of deep mourning, this accomplished executive will hit the ground, fold up his platinum parachute, and be off to his next super-luctrative assignment. Doesn't that sound nice?
This brings us neatly to Robert Nardelli. He's just been picked by enormous, slightly ominous, all-powerful and mysterious Cerberus to run its newly acquired Chrysler operation. He brings with him years of experience in making incredible sums of money, although he hasn't done much with cars. That's all right. I'm sure he'll do very well, depending on your metrics.
This one is a huge no-brainer for me. Here's a guy who ran Home Depot (NYSE: HD) for a few years, walked away with more than $200 million dollars. Do that a couple of times and you're talking about real money. His record at Home Depot was somewhat inconsistent. On the upside, he grew the business in scope and reach. People liked him for that. On the other hand, if you talk to other observers, they point out that in 2003, a bit more than two years into his reign, the company posted its first decline in sales in its history. The company's stock fell 8% during his time at the helm, while that of his closest competitor grew double digits and he earned $124 million, not counting what the Journal refers to as "certain equity awards." Lord knows what those were, but they sound tasty, don't they?
Like many a top dude, when revenue faltered Mr. Nardelli went out and bought it. He acquired Hughes Supply to build a wholesale supply operation. Today, that's for sale. Stuff happens, you know? Not every deal works out. But at the same time, there was his controversial and imperious behavior at the company's annual meeting, where he informed the shareholders that he wasn't taking any questions and ended the meeting after only thirty minutes. I liked his reply to one query about the independence of his Board. "This is not the forum in which we would address your comment," he said. That's good grammar.
It's said that this time around, Mr. Nardelli will receive not one penny unless he achieves a turnaround at the big car maker. Those who are concerned about him may contribute to a fund for his support during this transitional period. I'm looking for the website now. When I find it, I'll let you know.
And finally, there's Bert Fingerhut. He manipulated the relationship between the IPO market and mutual banks that went public. He got the idea from a book by Peter Lynch and over some years made $11 million at the game, which is not $210 million or even $124 million but is still not chopped liver. I'll have to work until six years after I drop dead from exhaustion to make that kind of money. Now the Feds got after him and he has to spend two years in jail after being forced to apologize. "This was purely an act of selfishness and a crime of greed," he told the court. I'm sure he's sorry, and he probably has to give up at least some of what he scammed, although I didn't see anything about that in the writeups.
But even if he does? I'll be honest with you. A couple of years of peace and quiet in a nice, white-collar penal institution doesn't sound horrible to me. It would be sort of a think-tank experience, like teaching somewhere off the beaten track. After he gets out, I have no doubt that Mr. Fingerhut will do fine. I'm sure there are several business schools who might be interested in what he could teach young entrepreneurs about the rewards of creative thinking, and the unpleasantness of getting caught.