KCSA PUBLIC RELATIONS, INVESTOR RELATIONS BLOG

And The Song Remains the Same…

Posted by on May 17th, 2012

The last time I checked one of the most important, fundamental jobs of a CEO and the board of directors was to serve as stewards of the companies they oversee and to act in the best interest of all shareholders.  I had assumed that the days of CEO malfeasance and inadequate oversight on the part of directors were a thing of the past.
But as the saying goes, ‘when you assume, you make an ass out of u and me.’
Boy do I feel like an Ass!
In the past few weeks, we have witnessed numerous examples of utter disregard for rules and regulations, from the leaders of some very high profile companies.
I submit the following:
Yahoo! (NASADQ:  YHOO) – Once the darling of Wall Street and Main Street, Yahoo! bloodied its image once again when renowned institutional investor Daniel Loeb unearthed evidence that the academic credentials listed for its CEO, Scott Thompson, were false.
Chesapeake Energy (NYSE:  CHK) – Similarly, once considered a leader in the energy industry, its CEO, Aubrey McClendon, and board of directors are once again embroiled in controversy.  It wasn’t bad enough that the board OK’d the Company’s repurchase of Mr. McClendon’s personal collection of maps for $12 million in 2008; it is now dealing with the fallout from Mr. McClendon’s sweetheart arrangement that allowed him to invest personally alongside corporate transactions.
Green Mountain Coffee Roasters (NASDAQ: GMCR) – From humble beginnings, founder Robert Stiller grew Green Mountain Coffee into a powerhouse, eventually amassing a personal fortune estimated at approximately $1.3 billion.  Flash-forward to earlier last week when it was revealed that GMCR stock related margin calls used as collateral to back some struggling personal investments caused Mr. Stiller to intentionally sell $123 million worth of stock during a blackout period imposed on stock sales by its officials.
Under normal circumstances, my comments would be limited to discussions with friends and business associates; but as the ruler of this King-blog-dom, I have the authority to bestow the following titles on this sorry cast of characters:
Mr. Thompson, I dub thee, Knight of Oversight, for stating that he never proofread his resume.  The fact that he falsely claimed to have a degree in computer science very well may have helped him get his first job out of college but later on in life tripped him up and sullied his reputation at a time in his life when his job aspirations no longer hinged on the degree that hung in a frame behind his desk.  Incidentally, Mr. Thompson just stepped down from his post, after less than 5 months on the job.
Mr. McClendon, I dub thee, Knight of Misdirection, for his utter disregard for shareholder value and inability to know which end is up.  $12 million worth of maps!?!  Who needs that; for $349.00, I purchased a perfectly good Garmin GPS.  At those prices, the $6,000 Dennis Kozlowski (former CEO of Tyco) paid for a shower curtain seems like a bargain.
Mr. Stiller, I dub thee, Knight of the American Dream Turned Nightmare, for his ability to tarnish what was otherwise deemed an exemplary record in business and philanthropy by his desire to keep up the Jones.  No one needs a $17.5 million apartment in New York City.  And when asked about his spending habits, all he could say for himself was, “Lavish is all relative.”

The last time I checked one of the most important, fundamental jobs of a CEO and the board of directors was to serve as stewards of the companies they oversee and to act in the best interest of all shareholders.  I had assumed that the days of CEO malfeasance and inadequate oversight on the part of directors were a thing of the past.

But as the saying goes, ‘when you assume, you make an ass out of u and me.’

Boy do I feel like an Ass!

In the past few weeks, we have witnessed numerous examples of utter disregard for rules and regulations, from the leaders of some very high profile companies.

I submit the following:

· Yahoo! (NASADQ:  YHOO) – Once the darling of Wall Street and Main Street, Yahoo! bloodied its image once again when renowned institutional investor Daniel Loeb unearthed evidence that the academic credentials listed for its CEO, Scott Thompson, were false.

· Chesapeake Energy (NYSE:  CHK) – Similarly, once considered a leader in the energy industry, its CEO, Aubrey McClendon, and board of directors are once again embroiled in controversy.  It wasn’t bad enough that the board OK’d the Company’s repurchase of Mr. McClendon’s personal collection of maps for $12 million in 2008; it is now dealing with the fallout from Mr. McClendon’s sweetheart arrangement that allowed him to invest personally alongside corporate transactions.

  • Green Mountain Coffee Roasters (NASDAQ: GMCR) – From humble beginnings, founder Robert Stiller grew Green Mountain Coffee into a powerhouse, eventually amassing a personal fortune estimated at approximately $1.3 billion.  Flash-forward to earlier last week when it was revealed that GMCR stock related margin calls used as collateral to back some struggling personal investments caused Mr. Stiller to intentionally sell $123 million worth of stock during a blackout period imposed on stock sales by its officials.

Under normal circumstances, my comments would be limited to discussions with friends and business associates; but as the ruler of this King-blog-dom, I have the authority to bestow the following titles on this sorry cast of characters:

Mr. Thompson, I dub thee, Knight of Oversight, for stating that he never proofread his resume.  The fact that he falsely claimed to have a degree in computer science very well may have helped him get his first job out of college but later on in life tripped him up and sullied his reputation at a time in his life when his job aspirations no longer hinged on the degree that hung in a frame behind his desk.  Incidentally, Mr. Thompson just stepped down from his post, after less than 5 months on the job.

Mr. McClendon, I dub thee, Knight of Misdirection, for his utter disregard for shareholder value and inability to know which end is up.  $12 million worth of maps!?!  Who needs that; for $349.00, I purchased a perfectly good Garmin GPS.  At those prices, the $6,000 Dennis Kozlowski (former CEO of Tyco) paid for a shower curtain seems like a bargain.

Mr. Stiller, I dub thee, Knight of the American Dream Turned Nightmare, for his ability to tarnish what was otherwise deemed an exemplary record in business and philanthropy by his desire to keep up the Jones.  No one needs a $17.5 million apartment in New York City.  And when asked about his spending habits, all he could say for himself was, “Lavish is all relative.”

And while it’s easy to target these titans of corporate America, I would be remiss if I didn’t bequeath a special, group knighthood for the board of directors of Chesapeake Energy.

While most Americans struggle to support themselves and their families, Chesapeake board members were rewarded for the ineptitude and lack of corporate oversight.  In 2011, board members enjoyed compensation well in excess of the average American paycheck: Richard Davidson ($590,000), Burns Hargis ($565,000), Kathleen Eisbrenner ($562,000), Frank Keating ($559,000), Merrill Miller, Jr. ($573,000), Don Nickles ($569,000) and Louis Simpson ($648,000).  I call out Mr. Charles Maxwell for his relative modest take home of $386,000 in 2011; thank you for your restraint!

For the Chesapeake Board of Directors, I dub thee, Knights of Hear No Evil, See No Evil, Speak No Evil, for their collective inability to know right from wrong as well as their utter lack of interest in protecting shareholders.

I wish that I could end this blog with words of wisdom or a viable solution, but alas, I simply join the masses in scratching my head and hoping for more from our corporate leaders.