Obama's missed mandate

Government meddling with business ranks as the worst idea of the Great Recession (GR), according to a unscientific poll taken this month by the TGR. More specifically -- what the Obama administration has done and has proposed to do. And yes, that includes health care reform despite widespread agreement that something has to be done.

At the top of the worst list was the government's takeover of GM and Chrysler. A close second was anything to do with executive pay, ranging from restrictions to the appointment of a compensation czar.

On the side of best ideas, respondents seem to think the recession was having a positive impact on families and friends re-discovering what's important in their lives. That's a highly personal barometer, however, and not an easy one to quantify.

Here's where the TGR comes down on the best and worst of the GR. While we tend to side with advocates who believe government can't fix everything, what's more disheartening is watching a new administration flub its leadership mandate.

Obama was elected to reverse course on the Bush era and to change government so it can work more effectively without bankrupting the country. He was not elected to lay regulation upon more regulation or to hand-off major challenges to a Congress filled with mostly selfish special interest morons who think reading their own legislative bills is unnecessary. See the following exhibit if you haven't already: http://www.youtube.com/watch?v=ACbwND52rrw

Anyone who says Obama was forced to do things this way or this is what he intended to do all along doesn't grasp leadership. Let's go back and trace a couple key inflection points that help explain the current situation.

When the Obama administration started filling its ranks late last year with the "best and brightest" who have already served in government, that's when the mandate began to be missed. Not now when the going has gotten tough.

Way back before the current debate on health care was TARP, which now represents a Bush holdover. Then came the stimulus package, which no one who lives outside the bubble can defend as short-term financial stimulus. Much needed aid for the unemployed, yes. But help to small business, no. Fact: Only 10 percent of the approved funding will be spent this year.

By nearly every measure it was politics as usual during a time when something different was desperately needed. It's impossible now to ask for shared sacrifice, especially when major corporate CEOs perceive they can get what they want without having to pay a dime. Don't even bother on Cap and Trade, another legislative special interest boondoggle that appeared on the worst side of the GR ledger more than once.

Why didn't Obama and his capable insider hand, Treasury Sec. Tim Geithner, move more aggressively to end special favors emanating from TARP? Why are we continuing to handout public money to AIG? Why haven't the major banks been forced to disclose how much toxic asset remains on their balance sheets?

These are the tough questions that one seems to be asking -- much less answering from within the complex. Which isn't all that surprising seeing that it's occupied with revolving door members of previous administrations. Here's our view from last November when the crisis was in full force: http://povblogger.blogspot.com/2008/11/sailing-against-headwinds.html.

This is not a partisan message, nor is it an anti-Obama crusade. We want the guy to succeed in every way possible. Until more elected leaders share an interest in reforming government and its system and processes, then we're going to keep getting the same thing.

To those whom elected Barack Obama in droves, what do you think about how he's doing? Do you find that the same guy who ran for office is now serving as President? Trace those lines and feel free to comment when you get a chance.

The parallel in the corporate world is how CEOs jockey all their professional lives for the top job only to find that what they aspired to is far different than what they understood coming into the job.

Good news is there's still plenty of time to get the mandate right. Great leaders learn and adjust. We'll be watching Pennsylvania Ave. for signs that the nation's chief is making changes. And for those who say, "give the guy a break, it's only been six months," we say...You're right, but time is relative. When the mandate is misunderstood or missed, then everything else tends to follow suit.

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Weather Channel picks non-TVer as CEO

So one of Atlanta's hottest brands, okay, formerly hot media properties, The Weather Channel, has settled on a TV industry outsider as their new CEO.

According to the New York Times, http://www.nytimes.com/2009/07/21/business/media/21weather.html?_r=1&ref=business, former venture capital advisor and publisher Michael J. Kelly will now serve in the company's top leadership role.

Interesting choice for several reasons:
1.) Kelly has no real network or cable TV experience, which strongly suggests that The Weather Channel will now fully embrace status as an on-line brand vs. TV channel. How that impacts their advertiser-based business model will be worth watching. It's a lot harder to make money on-line than it is charging ad rates the old fashioned way.
2.) The split in partnership between two private equity firms and NBC Universal means everything from this decision to how the channel operates likely will be done via watered down consensus. This is a far cry from independent status when the brand became an icon for "weather weenies" far and wide.
3.) Speaking of watered down, the perception of Kelly as a back-up selection to their primary choice means the new CEO will have to move quickly with a new stamp on what's already under way. The company has had several rounds of official and unofficial layoffs, the first in their history. How new leadership manages to inject life into this brand will make or break its future. Oh, and an economic turnaround to boost ad sales might help, too.

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Ketchup kings and CEO comp.

You have to hand it to Goldman Sachs. They made "money the old fashioned way" and the new way. Good for them.

Standard corporations, however, continue to offer a different shade to the much maligned public issue otherwise known as CEO pay. Latest example that has a personal twist (shareholder since 2005): Heinz Chairman, President and CEO W.R. Johnson.

By all standard measures, Heinz has become a well oiled consumer products machine, thanks in part to accountability from outside investors. Mainly the hedge fund trader, Nelson Peltz, who currently serves on the company's board of directors and led a charge to shake things up a couple years ago. Revenues have been steady and net income has shown small incremental increases over the past several years. Both marks are commendable during a worldwide consumer recession.

The picture gets a little murkier when CEO pay enters the frame. Granted it takes digging a little to see the hues. According to the company's annual proxy statement, the board of directors raised total CEO compensation by $10 million between 2007 and 2008. Salary and bonus amounts increased only slightly. The bump was more in the deferred and long-term performance awards category (latter is a new column as of 2008.) Total value of CEO compensation was nearly $15 million in 2007. By 2009, the total comp. number had grown to approximately $24,398,056.

Money is money these days, and the large increase begs a few questions. Mainly is Johnson worth more than the next highest ranking executive by a 5:1 ratio? The CFO receives a little more than $4 million a year. For a company that lists "make talent an advantage" as a core corporate goal in 2009, such imbalance in compensation in the executive suite does not bode well for attracting other top performers.

Defenders of large pay packages love to wax about "peer-to-peer performance," but all that does is put CEOs in a higher class than other company officers, most of whom are more actively involved in the day-to-day operations of the company.

The more obvious Great Recessionary question: If you're a CEO of a major company and oversee an operation that stays out of the red, does that mean you should get a significant bump in total comp. simply for survival? Is not losing money the new success incentive measure?

Next thing you know boards and CEOs will be arguing for Darwinian clauses. In Heinz' case, if you can't sell more ketchup in the current dollar menu business environment, then when will you be able to?

It seems like a new set of pay incentive rules are being drawn every day. Here's hoping the set won't include more imbalances such as what the Heinz exhibit shows.

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