Re: Think tank stuff and reality

["Joseph Doggett" <joseph.doggett@worldnet.att.net>]

I am not sure, Mike, if you responded to my message or wrote your message
and attached mine to it.

I thought that perhaps we could have more of a discussion on this issue.

Some of the points where I wanted to go were presented in a Wall Street
Journal article today, 16 January.  Two leading California mutual funds, one
of which is Calpers, is trying to thwart the effects of another Enron fall.
One of the proposed requirements offerred is, "Within the bounds of federal
rules and regulations, employees who choose to invest in company stock
through a defined contribution program will always have the ability to
liquidate that stock."

I think that employees who invest in company stock, and we can argue if they
are owners or not under another thread, need to have the same rights and
abilities to make rational transactions.  According to Mark Shields, during
his appearance on the Jim Lehrer show Friday, he said that employees were
prohibited from making sales of their stock.  Alan Murray, of the Wall
Street Journal, said, when he appeared on Washington Week Friday, that
employees could not sell stocks and management could.

I think that someone should argue that employees, all employees of a firm,
need to have the same rights.  In the case of Enron, employees should have
had the rights to sell their stock--just as management did.  A two-tiered
system always falters.



----- Original Message -----
From: <Mbindnerdc@aol.com>
To: <orglabor@cog.kent.edu>
Cc: <homestead@cog.kent.edu>; <ownership@cog.kent.edu>;
<EOsubnat@cog.kent.edu>
Sent: Tuesday, January 15, 2002 2:46 PM
Subject: Re: Think tank stuff and reality


> What likely happened in the Enron situation will most likely be considered
insider trading.  What led the Enron executives down this dark path was the
implicit signal given to them in their compensation package that they are
above the law and above the other employees.
>
> You know the golden rule - he who has the gold makes the rules.
>
> It has a corollary - he who makes the rules gets the gold.
>
> More employee-ownership, not less, which will lead to the abolition of
obscene stock options to executives (as opposed to legislating such a
prohibition) will prevent future Enrons.
>
> Mike Bindner
>
>
> In a message dated Mon, 14 Jan 2002  6:27:09 PM Eastern Standard Time,
"Joseph Doggett" <joseph.doggett@worldnet.att.net> writes:
>
> > A thought that I had was how something is implemented and administered.
> > Enron executives had the ability to liquidate their stock and take the
> > proceeds.  Did non-executive employees have the same rights?  I doubt
that
> > they did.  Executives were able to maneuver with greater freedom.  They
> > could work to ensure that the price of the stock was high, and then they
> > could compensate themselves for their efforts.  When the facade faded or
was
> > exposed, then the executives simply moved to another scheme.  However,
the
> > employees, who trusted their financial stability to the stock, probably,
in
> > a 401-K, were/are unable to "move on."  Rather, they have to leave with
> > nothing and begin anew.
> >     Perhaps a discussion about how an employee-ownership plan is
> > administered, what the rights of the shareholders are (all
shareholders),
> > who can do what, and if someone can not perform some action that another
> > can, then the disparity between ability needs to be investigated.
> >
> >
> > ----- Original Message -----
> > From: <Mbindnerdc@aol.com>
> > To: <orglabor@cog.kent.edu>
> > Sent: Monday, January 14, 2002 3:22 PM
> > Subject: Re: Think tank stuff and reality
> >
> >
> > > Enron is an interesting situation.  Yesterday morning ABC's This Week
> > featured it.  I fear that many in the policy community are drawing the
wrong
> > lesson, however.
> > >
> > > Many are now calling for legislation to limit the exposure of employee
> > stock ownership in 401(k) plans.  They ignore the real reason for the
Enrol
> > debacle.
> > >
> > > For decades many have been decrying the size of executive
compensation,
> > which include large stock option awards and stock grants to executives.
> > Enron points to why these are not only unfair but a bad idea.  Such
> > excessive awards in effect reinforce the mindset of  executives that
they
> > are set apart from the other employees of the firm.  By giving
executives
> > more than their share firms reward them for cheating lesser employees
out of
> > their fair share.  They provide executives a direct financial incentive
to
> > look out for their own interests at the expense of the employees and
even
> > the share holders.  There is not much moral distance from taking more
than
> > you are entitled to cooking the books and making deals from
self-interest
> > rather than the interest of the firm.
> > >
> > > In the case of Enron, does anyone doubt that the books would not have
been
> > cooked had the executives been the servants of their fellow employees
rather
> > than their masters?  Would the fraud at Enron have occurred absent the
> > overcapitalization of the executives?  Hardly.  There would have been no
> > incentive to cook the books or to hide liabilities.
> > >
> > > The answer then, is more employee-ownership, not less.  This is why I
> > favor equal stock grants (rather than stock options) to each employee,
> > regardless of salary, on a monthly basis (with the reinvestment of
dividends
> > to reward longevity).  Broad based employee ownership with factional
> > representation on the board (professionals, unions, management, outside
> > investors each represented in proportion to their holdings) would
prevent
> > the excess executive compensation now awarded in many firms - and
without
> > specific government regulation of executive pay (which the conservatives
> > would never allow).
> > >
> > > Michael Bindner
> > > Virginia
> > >
>
>