Corporate Governance

100 Best Corporate Citizens? What a CROck!

March 23, 2010

google_logoGoogle challenges Internet censorship in China. It invests in solar power, electric cars, geothermal energy and the smart grid, and runs an array of programs to help its employees become more “green.” It’s consistently voted one of the best places to work. And it has an inspiring mission: to organize all of the world’s information.

Yet Google doesn’t even come close to making the 2010 list of 100 Best Corporate Citizens put together by CRO Magazine, now known as Corporate Responsibility Magazine.

Nor does Timberland, a pioneer in corporate responsibility, which monitors its global supply chain, provides employees with generous benefits including time off to volunteer and experiments with labels on its shoes and boots that disclose their social and environmental impact. General Electric, meanwhile, has won praise from environmental groups like the World Resources Council and Environmental Defense for its EcoMagination campaign, and it has led the battle for climate change legislation in Washington. But GE, too, didn’t make the cut.

Who did?

2597643759_083ac733b9Oil companies Hess Corp. (No. 10 on the list) , ExxonMobil (No. 51, which for years sought to delay action to deal with climate change, says Greenpeace), Occidental Petroleum (No. 26, accused of contaminating the Amazon) and Chevron (No. 56, targeted in a landmark class action suit for creating en environmental catastrophe in Ecuador).

The Southern Co. (No. 71), a coal-burning utility which led the fight against the administration’s climate change bill.

And the Newmont Mining Corp (No. 16)., whose gold mines in Nevada have been major sources of mercury pollution.

One last example. Whole Foods Market, which has done more to promote organic agriculture than any company in America, doesn’t make the list but Yum! Brands (No. 62) does. Yum!’s contributions to corporate responsibility include KFC, Pizza Hut and Taco Bell.

If nothing else, all this proves that it’s not easy to make a list of the 100 Best Corporate Citizens. In fact, it’s really hard. How do you compare HP (No. 1 on the list) with Kimberly-Clark (5), Wal-Mart (21), Nike (23), Green Mountain Coffee Roasters (39),  Duke Energy (43), Citigroup (57) and Ford (88). They’re in disparate businesses, with different issues.

Simply deciding whether a single company is “good” or “bad”or somewhere in the middle involves a slew of value judgments. If you think nuclear energy will help solve the climate crisis, you’ll applaud the Southern Co. which is pushing new plants; if not, you’ll feel differently. Coca Cola (No. 8) has a great track record on water and packaging issues but the company’s core product is a sugary soft drink. Newmont Mining has an ugly history, but it’s working hard to clean up its act–how far should we look back when ranking citizenship?  Merck (17) has evidently been forgiven for the Vioxx scandal, while Pfizer is in the penalty box after paying a record fine for illegal drug marketing last fall.

Still, while some debate is inevitable, this list strikes me as way off base. [click to continue…]

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Shareholders of the world, unite!

January 17, 2010

Several questions for those of you who own shares of stock:

When’s the last time you voted a proxy?

When’s the last time you opened a proxy?

Do you even know what a proxy is?

Don’t be embarrassed. Roughly 80% of individual investors–let’s call them share owners, because that’s what they are–don’t vote their proxies. This is one reason why CEO salaries are too high, boards of directors are complacent and executives fail to recognize that owners want companies to behave responsibly, as well as deliver returns.

A startup company called Moxy Vote aims to change that, by awakening share owners to their nascent power.

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“It’s an interesting challenge–to put passion into proxy voting,” said Doug Gates, a Moxy Vote vice president, when we talked the other day.

Doug, 41, is one of three Gates brothers involved in the venture–his twin brothers Kevin and Rich are three years younger. The startup was hatched at a West Chester, Pa., investment company called TFS Capital, where Kevin and Rich work and which put $2 million into the business.

By enlisting the help of shareholder advocacy groups, the Moxy Vote founders think there’s an opportunity to organize individual share owners so that their voices can be heard in the boardroom. About 30% of shares in public companies are owned by individuals, as opposed to institutions like mutual funds, pension funds and insurance companies (most of which, of course, represent the savings of individuals). [click to continue…]

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My five New Year’s wishes

January 3, 2010

HAPPY NEW YEAR 189Corporate America: Making the world a better place…or not.

That used to be the tagline of this blog, and it remains the standard I use to judge companies.

Are the jobs they create enabling their employees to flourish? Are their products and services improving lives? Are their shareholders earning good returns? Are they making their communities better?

Put simply, how well are they serving workers, customers, shareholders and communities?

Most companies, it seems to me, would like to serve better. To do so, they need better incentives. These incentives can take the form of government regulations (sometimes needed, but rarely optimal, because regulators often become captives of the industries they are supposed to oversee), industry standards (like sustainable forestry standards or Hollywood movie ratings, which general work well) or social expectations (like the growing desire of customers to patronize “good” businesses or avoid “bad” ones).

That brings me to my 2010 wish list. Each creates an incentive for companies to do business better.

Climate change regulation: Until Congress passes a law making it more expensive to burn fossil fuels, there’s no hope of solving the global climate crisis. This could be a simple carbon tax, the complex and pork-laden Waxman-Markey cap-and-trade bill passed by the House or the promising cap-and-dividend proposal from Senators Cantwell and Collins. Each approach has benefits and flaws, which we’ll get into some other day, but the best thing that could happen to business (and the planet) in the 12 months ahead is for the U.S., at long last, to stop allowing companies and the rest of us to pollute the atmosphere at will.

Corporate governance reform: What will it take for Congress, the SEC and America’s shareholders to recognize that so many boards of directors are failing at their job? You would think the near-collapse of the banking system would do it. Or the yawning gap between CEO pay and performance. Or the fact that so many corporate mergers end badly. The breakdown of corporate governance isn’t an easy problem to solve, but there are plenty of good ideas out there, ranging from requiring directors to win a majority of shareholder votes to finding ways to give activist shareholders more power to recall underperforming boards. The best boards will encourage companies to take a long-term and expansive view of their role in society. My friends Nell Minow (of The Corporate Library) and Bob Monks have been working heroically on these issues for decades. Reform is long overdue.

Sustainability ratings: How do the cleaning products of Seventh Generation, Method, Clorox and Tide compare? What’s the carbon footprint of a plastic bottle of Dasani, versus Aquafina or Poland Spring? Measuring the environmental impact of consumer products is a gargantuan task, and assessing the social impact is even harder. These aren’t jobs for the government. But a consortium of academics pulled together by Wal-Mart is trying to develop a sustainability index, as is a division of Underwriters Laboratory (which I wrote about here). It will take years to finish the job, but I’m hoping that Wal-Mart and UL they make real progress in the year ahead.

Human rights in China: As the economies of China and the U.S. become more intertwined, it’s incumbent on global corporations to use what clout they have to make clear that they disapprove of the way basic human rights are routinely violated in China. Companies that fear speaking out on their own should organize their peers to do so as a group. They could voice their support for political dissidents and environmental advocates, provide funding to human rights organizations and aggressively monitor the workplace and environmental practices of their suppliers. China shouldn’t be too big to fault.

Electric cars: Lots of forces have to come together for the electric car business to take off this year—a price on carbon would help, as would tax incentives for buyers and support for an infrastructure of charging stations. Most of all, consumers need to embrace electric cars—neither the automakers nor the government can force them on people, needless to say. But the environmental and national-security benefits of electric cars are so compelling that it’s my wish that 2010 become the year when electric cars move from talk to reality.

Happy New Year, blogreaders! Let’s hope 2010 is a good one for business, and for the rest of us.

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America’s worst CEO

November 18, 2009

The Motley Fool does a great series of podcasts–I’ve listened in recent months to interviews with James Fallows, John Mackey and Simon Johnson–and the other day I heard my friend Nell Minow of The Corporate Library talking about executive pay, boards of directors and her second life as Beliefnet’s Movie Mom.

Nell was asked who she would choose to dismiss as a CEO, if she had the power to do so. Her surprising answer: Tom Donahue, the CEO of the U.S. Chamber of Commerce.

tom-donahue12“He’s a terrible CEO,” she said, with her typical bluntness. “I think he is a virulent force in the field of business and corporations. I think he has hijacked capitalism on behalf of executives rather than investors.”

Why? It turns out that Donahue has served as a director of three public companies, all of which have had problems.

He’s a director of Sunrise Senior Living, which suffered from series of accounting problems, a plummeting stock price and a decision to settle shareholder litigation. Two well-respected governance groups, Risk Metrics and Proxy Governance, recommended that Donahue be voted off the board for “failing in is oversight duties,” according to Bloomberg News. [click to continue…]

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A historic win for green investors

August 24, 2009

ceres_logoSometimes, history is made quietly.

For decades, shareholder activists have filed dozens, if not hundreds, of resolutions with public companies asking them to improve their environmental policies and practices. Not one passed—until this year.

The breakthrough vote came in May at IdaCorp.,  a $988-million a year utility company and independent power producer based in Boise, Idaho. Despite the usual opposition from management, the owners of 51.2 percent of IdaCorp.’s shares voted to ask the company to adopt greenhouse gas reduction goals.

Hardly anyone noticed at the time because, well, it was Idaho and not even the shareholder activists expected a victory. “I expected a vote of about 25%,” said Michael Passoff of As You Sow, a nonprofit group that organized the investor vote.

Since then, the company responded. Legally, it didn’t have to act because, as you may know, most shareholder votes are “precatory,” a fancy legal term meaning that management can ignore even a majority of the company’s owners. In any event, IdaCorp. agreed to adopt goals for curbing the heat-trapping gases that cause global warming, issued its first request for a proposal for a wind farm and submitted a “smart grid” proposal, hoping to tap into the federal government’s stimulus money to upgrade the grid. [click to continue…]

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Fidelity, Vanguard and the genocide in Darfur

June 18, 2009

Recently, I voted in a contested election with repercussions for a big Islamic nation. (No, not Iran.) As a shareholder in mutual funds run by Vanguard and Fidelity, I voted to ask both mutual fund companies to sell their holdings in companies doing substantial business with Sudan, and thereby helping to finance the genocide in the Darfur region.

If you own stocks or mutual funds, this is the time of year when shareholder proxy ballots arrive in the mail, usually accompanied by pages of small print asking you to change the corporate bylaws or “elect” a slate of directors who have already been chosen. They’re boring and easy to ignore.

This year, however, shareholders of Vanguard, Fidelity and other mutual fund groups should keep an eye out for the important shareholder proposals about genocide on the ballot. These proposals don’t mentions Sudan because they are broader in scope. They ask but the funds to refrain from investing in companies that “substantially contribute to genocide or crimes against humanity.”
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Perhaps surprisingly, Vanguard and Fidelity both recommend a “no” vote on the proposals.

“They don’t want to have limits on where they invest,” says Eric Cohen, the co-founder of Investors Against Genocide, a volunteer organization that got both proposals on the ballot.

Cohen, a retired tech executive, is a soft-spoken and usually understated guy but he says this of Vanguard and Fidelity: “Their lack of due diligence connects their customers to the very worst companies in the world.”

The Investors Against Genocide website puts it this way:

Looking back, who would support the idea of investing in firms that sought to make a profit by selling Zyklon-B gas to the Nazis or machetes for the genocide in Rwanda? Looking forward, who wants their personal savings and pension funds invested in companies that help fund genocide?

Investors Against Genocide was formed in January, 2007. (I wrote one of the first stories about the group, under the headline Fidelity’s Sudan Problem, for CNNmoney.com.) By then, campus activists had persuaded the endowment managers at Harvard, Yale and Stanford to sell stocks of companies that were doing business with the government of Sudan, which is responsible for the genocide that has now taken the lives of an estimated 300,000 people in the Darfur region. (Another 2.7 million have been forced out of their homes.) Pension funds in half a dozen states, including California, had also agreed to divest.
[click to continue…]

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It’s the directors, stupid

March 22, 2009

Do you care who in the government knew about the AIG bonuses, and when they knew it? Do you think the AIG executives who collected bonuses deserve opprobrium? I don’t. Although the $165 (or $218) million in bonuses have become a symbol of executive compensation gone wild, pointing fingers at Tim Geithner or Chris Dodd or some AIG executive who may or may not have done a good job misses the point. It’s a distraction from a more fundamental question, namely: What have the directors of companies like AIG, Citigroup and Merrill Lynch been doing and how can they be held accountable?

Can you name a director of AIG? I didn’t think so. (Hint: one former director has a prominent role in the Obama administration.) The Citi board has gotten a more attention, and thankfully several board members will be replaced. But, as shareholder advocate Nell Minow points out in this excellent column for CNN’s website, the directors of these companies have gotten off easy. They did a dismal job of managing risk and overseeing executive compensation.

Again, though, let’s be clear on the problem. Although I happen to think that most FORTUNE 500 CEOs are overpaid, the real issue is not the absolute size of their paychecks. It’s the way in which compensation has become disconnected from performance, the way in which pay practices create perverse, short-term incentives and, most of all, the fact that board of directors cannot be reigned in by share owners in a meaningful way.

To be clear: Rich people aren’t the problem. Capitalism can’t thrive without them. We don’t and shouldn’t begrudge people who have created great companies—the Bill Gates and Michael Dells of the world—their wealth because they have made a whole lot of money for other people, including their shareholders. They created jobs and products people want. (Why people would want Dell computers or Windows is a different question…) Nor, for the most part, should we be troubled by the vast sums of money paid to movie stars or athletes or musicians who put fannies in the seats or on front of TVs. The problem arises when CEOs get paid well for failure. Here the names of Carly Fiorina (Hewlett-Packard), Chuck Prince (Citi) and Dick Parsons (former CEO of Time Warner and lead director of Citi) spring to mind.

Here’s what’s worse: On Wall Street, compensation practices promoted dangerous risk taking. As best as I can tell, the people who packaged CDOs and MBSs got bonuses each year that were tied to the number of deals that they made and the amounts of dollars involved. (Just as mortgage brokers got paid when they wrote mortgages.) It didn’t matter whether those deals made money in the long run, or whether the mortgage loans would be paid. If you pay people to make deals, they will make deals, for better or worse. As Robert Weissman of CorpWatch wrote last fall:

Wall Street players knew they were speculating in a bubble economy. But the riches to be made while the bubble was growing were extraordinary. No one could know for sure when the bubble would pop. And Wall Street bonuses are paid on a yearly basis. If your firm does well, and you did well for the firm, you get an extravagant bonus. This is not an extra few thousand dollars to buy fancy Christmas gifts. Wall Street bonuses can be 10 or 20 times base salary, and commonly represent as much as four fifths of employees’ pay. In this context, it makes sense to take huge risks. The payoffs from benefiting from a bubble are dramatic, and there’s no reward for staying out.

So what is to be done? It’s unlikely that the Obama administration will be find a way to regulate executive compensation that doesn’t lead to unanticipated and unwelcome consequences. I favor a simple solution—giving shareholders access to proxy statements, so they can nominate candidates for the board and thereby seek to replace directors who have failed on the job. By giving shareholders proxy access, the SEC can end the self-perpetuating system that permits CEOs and incumbent boards to hand-pick director candidates. Here’s an AFL-CIO website devoted to proxy access.

As for the AIG board, the director alluded to above was Richard Holbrooke, who is the state department’s special envoy to Pakistan and Afghanistan and Friend of Hillary and Bill. Holbrooke served on the AIG board from February 2001 until last July and, according to Huffington Post, he “may have earned as much as $800,000 in cash and company stock.” (The stock’s not worth much now.) From 2001 to 2005, Holbrooke was on the board’s compensation committee.

It gets worse. Holbrooke was not only on the AIG board, he was one of the “friends of Angelo” who got special treatment from Countrywide Financial and its CEO, Angelo Mozillo. (Chris Dodd was another.) Holbrooke, his wife Kati Marton and his son David  got sweetheart deals from Countrywide, which is now out of business, as Portfolio reported last year:

Holbrooke’s wife, author Kati Marton, received loans totalling $1.4 million to refinance two properties in 2002. “Look for these,” one Countrywide manager wrote in a September 27, 2002, email, alluding to Marton’s loan applications. “These loans are incredibly important to Angelo and as such they are incredibly important to us.”

The next year, Holbrooke borrowed $1.2 million to refinance a vacation home in Telluride, Colorado. Countrywide waived at least 1.25 points, or $15,000. “Per Angelo, this loan is to be at zero points,” a Countrywide manager wrote in a February 20, 2003, email. Also in 2003, Holbrooke’s son, David, and daughter-in-law Sarah received a half-point discount on a $559,500 loan, or about $2,800, when they refinanced their Brooklyn high-rise co-op, and five-eighths of a point discount on a $428,000 loan, or about $2,600, when they bought the floor above it. Neither Holbrooke nor his wife and son returned messages.

Director of AIG? Borrower from Countrywide? If we have to point fingers, let’s point them at people like Mr. Holbrooke.

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High-flying Dov

March 16, 2009

Since leaving FORTUNE at the end of last year, I’ve thought a lot about how to spend my most precious asset—my time. Happily, I’ve had choices, and so as I sift through them, I’m looking for work that will (1) make a difference in the world (2) enable me to keep learning (3) be fun and (4) pay the bills and, ideally, replenish my downsized 401-k. I also want to work with people whose values I share. Yes, I know, that’s a lot to ask, especially in these dismal economic times.

Yet that’s what led me to Dov Seidman. Until recently, I’d never met Dov and I was only vaguely aware of his company, LRN. Tom Friedman writes about Dov in The World is Flat and he has devoted a couple of columns to Dov’s 2007 book, HOW: Why How We Do Anything Means Everything…In Business (And in Life). This Friedman column, Why How Matters, explains why HOW is relevant to the financial meltdown:

Seidman basically argues that in our hyperconnected and transparent world, how you do things matters more than ever, because so many more people can now see how you do things, be affected by how you do things and tell others how you do things on the Internet anytime, for no cost and without restraint.

“In a connected world,” Seidman said to me, “countries, governments and companies also have character, and their character — how they do what they do, how they keep promises, how they make decisions, how things really happen inside, how they connect and collaborate, how they engender trust, how they relate to their customers, to the environment and to the communities in which they operate — is now their fate.”

Last year, LRN acquired the sustainability consulting firm, Green Order, whose CEO, Andrew Shapiro, is a friend. At Andrew’s suggestion, I met Dov last month in New York.

We hit it off right away. We share some fundamental beliefs—essentially, the idea that the most principled businesses are also the most profitable in the long term. That’s been at the core of my writing for nearly a decade. For his part, Dov, who is 44, started LRN in 1994 and turned it into a successful company that has helped millions of employees, managers and leaders do the right thing in the workplace. Privately-held LRN has 350 employees, with headquarters in Westwood, Ca., and offices in New York, London and Mumbai.

LRN’s core business today is online courses—750 of them in 50 languages—that help companies make responsible business conduct a part of their everyday practice. “At LRN, we apply philosophy, especially ethics, to the rough and tumble world of business,” Dov says. “In so doing, we help workers do the right thing.”

Philosophy? That’s not a word you hear a lot in corporate America. But the study of philosophy helped shape Dov, whose personal story is unusual. Dov was raised by a single mom in a bunch of places–San Francisco, Tel Aviv, Jerusalem, and Los Angeles—and for years he struggled in school.

“My high school transcript boasted A’s: two of them, in Phys Ed and auto shop,” he joked, when he gave the commencement address at the UCLA in 2002. His SAT scores never topped 1000. Only later did he realize that he was dyslexic.

But he wangled his way into UCLA, and then stumbled into a philosophy class because other courses were full. It was a good fit for a kid who didn’t like reading. “By rewarding me for the careful consideration of one idea instead of reading hundreds of pages of text, philosophy helped me conquer dyslexia,” he says.
Philosophy and ethics became his passion, and he went on to earn a B.A. and an M.A. in philosophy from UCLA, a B.A. in philosophy, politics and economics from Oxford (where he captained the Balliol college crew team) and a law degree from Harvard. Not too shabby.

Soon after leaving Harvard, Dov started LRN as a way to make legal research more widely (and democratically) available, to explode some of the mystique created by the guild of lawyers who like to overcomplicate what they do. LRN—the initials stood for Legal Research Network—began as a subscription business, offering legal research to companies for less than it would cost them to hire their own counsel. This was a disruptive idea. An article about LRN in The Wall Street Journal ran under the headline: “Law Firm Fat Threatened by a Lean Network.”

LRN has evolved since then, from helping companies solve legal problems to helping companies prevent them through better ethics and compliance. Now Dov wants to take LRN to the next level, by helping companies “inspire principled performance.” He’s passionate and energetic about achieving that goal because he knows that companies with a sense of purpose and a great culture don’t have to worry about compliance because their people will be inspired to do the right thing.

I’m helping Dov and LRN with a variety of projects. Today, I’ll participate in LRN’s Knowledge Forum, a meeting of the company’s clients where they will talk about business, values and performance. I’m hoping to find ways to turn my knowledge of corporate responsibility and sustainability into online courses. I may lend a hand at Green Order.

Over time, Dov, LRN and I plan to develop a website about business, values and sustainability. Building off the title of Dov’s book, we’ll try to explore HOW to lead a great business, inspire people, make money and make the world a better place. My hope is to make HOW online a place where people will come to read relevant news stories, be exposed to fresh ideas and connect with others. We’re obviously going to need lots of help, so I will be calling on people I know in the corporate and NGO worlds to solicit advice, ideas and contributions. I’m going to try to make it easy and worthwhile for thoughtful, caring business people to contribute to the website and collaborate with us.

LRN is not a full-time commitment for me. I’m going to keep blogging, writing, speaking and consulting, all of which I’m enjoying. But it’s a big commitment. And I am fully committed to making it a big success.

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Barack, Paul Newman and me

January 25, 2009

Magazines love lists. FORTUNE has its 500 biggest companies, Forbes has its 400 richest people, Cosmopolitan has 75 Crazy-Hot Sex Moves and Ethisphere has the 100 Most Influential People in Business Ethics in 2008. President Obama (No. 14), the late Paul Newman (No. 91) and I (No. 39) all made the Ethisphere list because we were judged by the magazine to have “greatly influenced the business ethics realm over the past year.”

Others on the list included CEOs Lee Scott of Wal-Mart (6), Dave Steiner of Waste Management (11), Jeff Immelt of GE (16), Anne Mulcahy of Xerox (22), Neville Isdell (40) who’s just stepped down at Coca-Cola, Eric Schmidt of Google (41) and Howard Schultz of Starbucks (63). Tom Friedman (20) and Paul Krugman (31) of The Times made the list, as did social-investment leaders Peter Kinder of KLD Research (67), Joe Keefe of Pax World (69), Barbara Krumsiek of Calvert (92) and Amy Domini of the Domini Social Invements (93). Of course I’m flattered to be in such good company.

The name to watch on the list is, of course, Obama. He will have more influence on business than anyone in the year ahead, and he seems likely to use it. He has been in office for less a week and has already made two decisions that will have significant impact.

On his first day in office, Obama issued a presidential memorandum on transparency that directs federal agencies to be more open and to invite participation from citizens. It says, among other things:

Information maintained by the Federal Government is a national asset. My Administration will take appropriate action, consistent with law and policy, to disclose information rapidly in forms that the public can readily find and use. Executive departments and agencies should harness new technologies to put information about their operations and decisions online and readily available to the public.

This won’t affect business directly, but it sets an example that big companies will feel pressure to follow. Right now, I’m working on a story about lobbying by a big Washington trade association and finding that companies won’t tell their own shareholders what they spend on the association and its lobbying. That’s not right, and it probably won’t last.

Second, Obama is going to direct federal regulators today to let California and 13 other states set stricter fuel economy and emissions standards for cars, according to The Times. This is a big deal, and it comes over the opposition of the auto industry. I’m not persuaded that higher CAFÉ standards are the best way to raise the fuel efficiency of the U.S automobile fleet—I’d prefer a revenue-neutral gasoline tax, with the monies raised used to lower payroll taxes—but Obama’s decision is a strong and swift signal to business that companies had better get ready for tougher environmental rules.

The most important thing Obama and the new SEC can do to improve business ethics is to force reforms in corporate governance, giving shareholders the right to nominate directors for boards and giving them more influence over executive pay.

As Carl Icahn wrote last week in The Wall Street Journal:

Faltering companies are now soaking up hundreds of billions of tax dollars, and they are not substantially changing their management structures as a price for taking this money.

How does it serve the economy when we subsidize managements that got their companies into trouble? Where is the accountability? More importantly, where are the results?

The CEOs on Ethisphere’s list, or at least the ones I know, run their businesses for the benefit of shareholders, as well as for the good of the broader society. But many other do not, and right now there is no way shareholders can get rid of overpaid, self-aggrandizing CEOs.

I’m thinking in particular of Merill Lynche’s former CEO, John Thain, who even as he was preparing to lay off thousands of people, spent $1.22 million of company money to refurbish his office. As CNBC’s Charles Gasparino reported:

Big ticket items Thain purchased include: $87,000 for an area rug in Thain’s conference room and another area rug for $44,000; a “mahogany pedestal table” for $25,000; a “19th Century Credenza” in Thain’s office for $68,000; a sofa for $15,000; four pairs of curtains for $28,000; a pair of guest chairs for $87,000; a “George IV Desk” for $18,000; six wall sconces for $2,700; six chairs in his private dining room for $37,000; a mirror in his private dining room for $5,000; a chandelier in the private dining room for $13,000; fabric for a “Roman Shade” for $11,000; a “custom coffee table” for $16,000; something called a “commode on legs” for $35,000; a “Regency Chairs” for $24,000; “40 yards of fabric for wall panels,” for $5,000 and a “parchment waste can” for $1,400.

I would have put Thain on the Ethisphere list. If we’re lucky, his behavior will influence business ethics—for the better—in 2009.

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2008: Goodbye to all that

December 30, 2008

No, Robert Graves fans, I don’t mean to suggest that 2008 was as bad as trench warfare during WWI. But it was an undeniably dismal year in the world of business and sustainability. We had the financial crisis, the depressing recession, plummeting stock prices, shrinking 401-k’s, Wall Street shenanigans (to put it mildly), the train wreck known as Bernie Madoff, auto companies on the brink, the worst year ever for journalism, an average gasoline price of $1.61, and mass layoffs (including my own) that made “job security” into the newest oxymoron.

2009, bring it on!

Being a chronic optimistic, I’m going to bid 2008 goodbye by finding a few silver linings in the events of recent months, beginning with the obvious and moving on to the not-so:

1. Barack Obama. Still hard to believe that America elected an African-American president, who also happens to be really smart, thoughtful, a good listener and a problem solver. I’m really impressed by his enviro team and by the new education secretary, Arne Duncan. And did you know that Obama is an exercise nut? My favorite post-election Obama story is this one from the Washington Post, reporting that he has worked out for at least 90 minutes a day for 48 days in a row. Next time someone you know says he or she doesn’t have time for a workout, send them the link. At least when it comes to exercise, my plan for 2009 is to be like Barack.

2. The recession. Because it will lead to a stimulus package which, if we are smart as a country, will provide long-lasting and long-overdue benefits. If we spend money on energy efficiency (see my friend Matt Wald’s New York Times article on weatherization), renewable energy, rebuilding the electricity grid and mass transportation, we’ll be investing in a more sustainable future for America.

3. The Wall Street meltdown. But only if it leads to corporate governance reform, probably the single biggest problem that cries out for fixing in corporate America. One of the very big questions raised by the failures of Bear Stearns, Lehman Brothers and AIG, as well as the woes of Citi, Merrill Lynch and others is this: Where were the directors? The WSJ editorial page  got this issue exactly right in an editorial on Citi:

“Citi never sleeps,” says the bank’s advertising slogan. But its directors apparently do. While CEO Vikram Pandit can argue that many of Citi’s problems were created before he arrived in 2007, most board members have no such excuse. Former Treasury Secretary Robert Rubin has served on the Citi board for a decade. For much of that time he was chairman of the executive committee, collecting tens of millions to massage the Beltway crowd, though apparently not for asking tough questions about risk management….

Chairman Sir Win Bischoff has held senior positions at Citi since 2000. Six other directors have served for more than 10 years — including former CIA Director John Deutch, Time Warner Chairman Richard Parsons, foundation executive Franklin Thomas, former AT&T CEO C. Michael Armstrong, Alcoa Chairman Alain Belda, and former Chevron Chairman Kenneth Derr.

When taxpayers are being asked to provide the equivalent of $1,000 each in guarantees on Citi’s dubious investments, how can these men possibly say they deserve to remain on the board?

How, indeed? The single best thing the new SEC can do is allow shareholders to directly nominate directors of the companies they own. Until then, “shareholder democracy” will remain a joke.

4. Bernie Madoff. What on earth were people thinking when they entrusted this guy with their money? Here, too, there is a lesson that can be learned: It’s long past time for nonprofits and foundations (not to mention the rest of us) to align their investing with their mission. Here’s an interesting albeit lengthy report on the topic from the Rockefeller Philanthropy Advisors, complete with case studies on how some foundations have pursued what the report calls “missing-related investing.”

5. Cheap gas. I fear this will lead to a resurgence in SUV sales but I hope it provides a political opening for one of the simplest and most effective responses to the problem of climate change and the quest for more energy security: a gasoline tax. The other day in The Times, Tom Friedman argued for a gas tax in a column headlined Win, Win, Win, Win, Win. So did Arthur Laffer, in an op-ed touting An Emissions Plan Conservatives Could Warm To. Laffer put it simply:

We need to impose a tax on the thing we want less of (carbon dioxide) and reduce taxes on the things we want more of (income and jobs).

Charles Krauthammer has a long, thoughtful piece, making the arguments in more detail, in The Weekly Standard.

On a personal note, I’ve learned in the four weeks since losing my job at FORTUNE that I have a lot of friends and even a few fans—and that as one door closes, others will open.

I’m genuinely excited about 2009. Happy new year, everyone!

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