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« Jonzing: Drop | Main | (In)credible »

Jan 06, 2007

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RB

I have yet to hear of an instance in life in which shining light on an issue is a liablity, in and of itself. If problems are created one will find the problem is not the light itself, but some other aspect.

Discloure, in this day and age of propaganda of all sorts, is crucial.

Jim Caserta

One thing Gladwell ignores is intent. Enron's management intentionally presented their business operations in a confusing manner. I remember reading about how Skilling insulted some successful hedge fund managers who were confused about how Enron was making money (go down to 4/17/01). I can give you a very complicated description of what I do for a living, going into solid-state physics, or I could give a simple understandable (to those not skilled in the art) description, from which it is very easy to understand how my company makes money.

Skilling & Co. had a reason to mislead investors - their job security and bonuses were based on an ever increasing stock price. Ignoring the intent of their actions and drawing a war/intelligence gathering/mystery vs. puzzle analogy seems to be searching for some common theme that I couldn't find.

Too many investors forget what they are actually doing - giving someone money to start or continue running a business. The people I really feel bad for are the ones Gladwell mentions - the long-time employees that had a lot to all of their 401k in company stock. But Enron isn't the only company that had that happen (Lucent has lost ~95% of their stock value), and it goes against the whole diversification principle to put all your retirement on one bet.

There is a reason to avoid disclosure - it gives your competition an advantage. But once you get to the point you have to disclose information, when you create an SPE, or release a product, you should release the information in an understandable format.

jc

Ed, I just read where John Mack, CEO of Morgan Stanley, just recently got a record bonus of $40 million. It was topped just last week by Goldman Sachs Lloyd Blankfein's $53.4 million bonus. Unreal!

Bob Nardelli of Home Depot gets a $210 million severence while shareholders get shafted again.

With this kind of pay, its pretty tempting to do whatever is necessary to keep the stock prices going up.

Maybe John Edwards can tackle CEO pay if he's elected President.

Bubba

"Maybe John Edwards can tackle CEO pay if he's elected President."

Right after he tackles trial lawyers' pay, I'm sure.

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