Re: Think tank stuff and reality

[Mbindnerdc@aol.com]

Joseph,

I would grant that the employees should be able to dump the stock if the 
executives have that right.

The point I was making is that the Enron debacle came from the degree to which 
executives were over-compensated with stock.  I would instead give stock grants 
rather than stock options and give each employee the same grant - with possible 
additional grants for based on actions which will lead to long term profits - 
such as the invention of a device or product or the securing of a long-term 
client.

Instead of allowing the employees the same right to cut and run as management, 
I would limit the stock compensation of management so that they no longer have 
the incentive to play fast and loose with the rules.

Mike


In a message dated Wed, 16 Jan 2002  6:49:44 PM Eastern Standard Time, "Joseph 
Doggett" <joseph.doggett@worldnet.att.net> writes:

> 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
> > > >
> >
> >