Abercrombie & Fitch Board Reckless Compensation. CEO’s Looking for Increase Pay Hire These Guys $ANF

Abercromie & Fitch (NYSE:ANF) seem  do over pay their CEO. Governance experts from GMIratings have noticed that “CEO and Chairman Michael S. Jeffries’ pay is so out of balance with the next four listed NEOs that it’s easy to imagine him being fed peeled grapes by young models in their underwear.”

Not be grudging the peeled grapes and young models in underwear. (I;m very reasonable with perks) the pay is astronomical in relation to other executives who surely must be valuable. So lets take a look at the board of directors who feels compelled to pay a 67-year-old to lead a fashion retailer with a fickle market.

James B Bachman 70 This youngster was previously employed by Ernst & Young and now sits on a number of hospital and community organization boards. What does a 70-year-old accountant know about Fashion. But he does sit on the compensation and governance committees. so he has his finger prints on the pay cheque.

Elizabeth M Lee 68 is a career pedagogue. You might say she knows the youth market. But really how many kids want to dress the way the principal wants them to dress.

Lauren J. Brisky 61 has a background in finance and admin for Vanderbilt University. So she should understand the value of a buck and perhaps has insights into the youth market. She too sits on compensation and governance committees.

John Kessler 77 sits on compensation board and has a background in various Ohio ventures such as airports and a real estate development company. You guessed it sits on compensation committee.

Kevin Huvane 53 partner and Managing Director of Creative Artists Agency. He toils in LA  representing many of the world’s leading actors, writers and directors in film, theatre and television. He sits on ANF compensation committee and probably has a perspective of big money deals for spoilt entertainers.

Craig Stapleton 67  has the coolest resume. Real Estate and being ambassador to the Czech Republic and then to France. He is a member of the Board of Directors of the George W. Bush Library and Foundation and was a  co-owner of the St. Louis Cardinals baseball team since July 2009 and was a co-owner of the Texas Rangers baseball team from 1989 until 1998. Which leads me to ask when was George W Bush trying to run that ball club. At ANF he sits on compensation as well as governance committees.

Archie M. Griffin 57 has held a lot of big cheese positions at Ohio State and Alumni Associations. Not sure what this has to do with the hyper competitive world of fashion but there you have it. Yup on compensation board as well.

Michael E. Greenlees 65 sitting on the compensation board has a background in marketing, advertising and other forms of media manipulation.

The board has a big Ohio bias which may ultimately explain why they do not want stars from Jersey Shore to wear their stuff. Republicans from Ohio do not mix well with aimless youths from New Jersey who if as and when they would vote would not be republican.

The board stinks and will roll over for Michael Jeffries whenever he wants. Right now he is cashing big pay cheques. When the iceberg hits these guys will not be on the bridge.

George Gutowski writes from a caveat emptor perspective. Follow him on twitter@financialskepti or maybe follow his evil twin who is writing a Wall Street Murder Thriller at twitter@georgegutowski

HSBC Gets It right. Well Maybe. Bullet Proof Resumes for Vulnerabilities. $HBC

HSBC (NYSE:HBC) has paid billions of dollars in fines for exceptionally bad governance. If accusations are true they launder money for drug dealers and terrorists. Protestations that they did not know those guys with suitcases of cash did not work.

So as they put in the fixes they assemble a board level group called the financial system vulnerabilities committee. Stuart T. Gulliver, the chief executive of HSBC, said in a statement. “The caliber, status and experience of the individuals reinforce once more how seriously we are taking this.”

Take a gander at the line up.

  1. David Hartnett, a former British permanent secretary for tax.
  2. William Hughes, former head of Britain’s Serious Organized Crime Agency from 2004 until 2010.
  3. Juan C. Zarate, former United States deputy national security adviser for combating terrorism.
  4. Nick Fishwick, former British counterterrorism official.
  5. Leonard H. Schrank, former chief executive of the global financial messaging system called Swift.

I`m impressed. So HSBC there are no more excuses because you are the Gold Standard against which all others will be measured. This could become a stong competitive advantage. If HSBC declines on something or takes a pass the deal will be tainted. It can pick and chose its customers and within reason will be able to exert pricing discipline.

Well that’s the way it should break. Lets watch. no excuses.

George Gutowski writes from a caveat emptor perspective. Follow him on twitter@financialskepti or maybe follow his evil twin who is writing a Wall Street Murder Thriller at twitter@georgegutowski

Research in Motion Virgins to Volcano or Money in Bank. Board of Director Leadership $RIMM

Big day for Research in Motion (Nasdaq:RIMM) BlackBerry 10 is coming out full frontal. What to think? Probably enough to keep Research in Motion in the game. No longer a smart phone leader but an important segment player. Value investors please note large corporate and government base pays its bills on time.

About two minutes after the launch the question will become whats next? How do we keep this rolling? So does the board have the leadership skills that are needed at the time. Lets take a look at the depth chart. But first remember that this board was packaged up in a crisis and not painstaking assembled over time.

Barbara Stymiest is the chair. Financial background. Economist by training. she headed up Toronto Stock exchange and was senior but not quite top dog at Royal Bank of Canada. A more than competent business women. But her pedigree is managing large dominant financial organizations. She is not a technology type like Marissa Mayer. However as smartphones become electronic wallets replacing cash, debit and credit cards she may be very uniquely suited in guiding Research in Motion. Otherwise in the interim she makes investors comfortable but eventually needs to go.

David Kerr is the wheeler-dealer who has become the elder statesman. Started with Touche Ross worked for the Bronfman Family at Edper and Brascan. holds a few board positions in some Canadian blue chips. Lots of seasoning that makes nervous investors in a crisis comfortable. But has nothing to offer a growing technology concern.

Roger Martin is primarily a very well-respected professor and dean at Rotman School of Business. Some think he is the heir to Peter Drucker as a management guru. Strategic thinking good. Specific thinking about technology, smart phones there is no game.

Prem Watsa some feel is the DNA equivalent to Warren Buffett. His continued support helped stabilize a lot of panicked investors. However Warren Buffett does not sit on the boards of all his investments. He is one step removed and can buy and sell as he wishes. Prem Watsa is really too close to the situation. Even recovering companies hit rough spots. can he always give an honest thumbs up about everything RIM does? We all know it just does not work that way.

John Richardson  has had a stellar career with several of Canada’s largest financial institutions. But at the age of 80 does he have the outlook the a growing tech company needs.

John Wetmore in addition to RIMM sits on the board of Loblaws and some philanthropic entities. He was the former President and Chairman of IBM Canada. But IBM Canada and RIMM are not exactly peas in a pod. Expertise and skills are not the best fit.

Timothy David Dattels seems to be very involved with Asian Affairs. He does not seem to have the big hook ups in Asia that could benefit RIMM. He was part of the fire brigade that responded to the crisis.

Claudia B. Kotchka has the only resume that I liked. She formerly was  Vice President-Design Innovation & Strategy by Procter & Gamble Co. But P&G is consumer oriented. I don`t think Research in Motion has a mass market orientation. at least not now.

Antonio Pedro de Carvalho Viana-Baptista has an extensive background with telephone companies in Latin America primarily. At this point I don`t see RIMM talking about any strengths in Latin America.

So basically the current board is the fire brigade that showed up in a rush and panic. This is not the board to lead to serious wealth maximization. Best of luck with the Blackberry 10 but you need to change out the board.

George Gutowski writes from a caveat emptor perspective. Follow him on twitter@financialskepti or maybe follow his evil twin who is writing a Wall Street Murder Thriller at twitter@georgegutowski

 

BHP Billiton Gets Mouthy with Everyone. This Board let it Happen. $BHP

BHP Billiton (NYSE:BHP) is in a number of public relations debacles. They have been held accountable for serious mining safety problems. People die working for these guys.

Supervisors at one of BHP’s coal mines in eastern Australia are planning to strike this week over an ongoing pay dispute involving base pay and overtime hours. This is the second strike in the past few months, after workers picketed for two weeks at BHP’s nearby Appin coal mine.

 BHP strongly criticizing the government of Papua New Guinea over an immigration ban and it has also publicly criticized its own Australian prime minister about newly adopted executive pay disclosure laws.

Sounds like they just take everyone on. This type of combative culture comes from board influence. So lets take a look at the board make-up.

Jacques Nasser is the former director, ceo, president of Ford. He also sits on the board of News Corp British Sky Broadcasting. He surely has signed off on the fisticuffs. Or he is defaulting into it without realizing which is even worse.

John Gordon St Clair Buchanan previously deputy chair of Vodafone, non executive director of AstraZeneca and Group CFO and Executive Director of BP PLC. Phone company, a drug company and one of the seven sisters. Surely he would have some insights into public fist fights and how not to get into them.

Carlos AS Cordeiro is a former managing director and partner of Goldman Sachs. Not an organization known for its public relations savvy.

David Alexander Crawford puts on his résumé the chairmanship of Australia Pacific Airports, Lendlease, National Foods, Fosters. non executive director of Westpac and national chair of KPMG. OK so we got public travel, food, beer and accounting. Engage the customer do not attack him usually works in these lines of work. The Senior KPMG guy rarely would counsel a war of words.

John Michael Schubert  chairs G2 Therapies and lists on his résumé independent non executive directorship Quantas, CEO and Managing Director of Pioneer, Chair of Commonwealth Bank, Chair and Managing director of Esso Australia.

Shriti Vadera is an independent non executive director of AstraZeneca.

Lawrence Patrick Adrian Davies is CEO of SASOL

Kieth Christopher Rumble was the CEO of RIOTinto Iron and Titanium as well as other mining companies. Surely he would understand how resource companies should portray themselves in the public eye.

Carolyn Judith Hewson is the Chairman of Westpac Foundation and former executive director of Schroeders Australia. From the investment world to a charitable organization she should know a thing or two about public and government relations.

Malcolm William Broomhead is the Chair of Asciano and formerly was CEO and Managing director of both Orica and North.

Lindsay Philip Maxsted former CEO of KPMG Australia and Westpac Banking.

So in reviwing the resumes of the board several things stand out.

  1. They all have had senior experience and should understand the public relations process. Somehow this ability is not translating into practical leadership from the board.
  2. No one has any substantive experience in safety culture. Dangerous business need to manage risks. Death is not acceptable. no one on the board seems to have his game.
  3. A lot of a accountants, investment and commercial bankers abound. This probably creates a hyper focus on numbers. Safety and public relations are not understood.
  4. A flavour of AstraZeneca manifests. Watch this hookup.

Regardless of individual expertise getting into a public war of words with the Prime Minister is just plain bad politics. Resource extraction needs to practice RealPolitik with a very heavy dose of Machiavelli. So far we get the opposite. Despite the value of the properties this may not be the correct leadership team at the board level to maximize shareholder wealth.

George Gutowski writes from a caveat emptor perspective. Follow him on twitter@financialskepti or maybe follow his evil twin who is writing a Wall Street Murder Thriller at twitter@georgegutowski

 

#NIRI sees new SEC Director as a Prosecutor #SEC #Governance

National Investors Relations Institute or NIRI.com as many know of it in their weekly newsletter commented on President Obama’s choice of Mary Jo White to the directorship of SEC. Here is the unabridged comment

Headlining the regulatory news last week was President Obama’s nomination of former prosecutor, Mary Jo White, as the new SEC Chair. I view the pick as somewhat surprising. White is known for prosecuting financial crime and aggressively pursuing terrorist suspects as the U.S. Attorney General for the Southern District of New York. Given the SEC has never been chaired by a former prosecutor, many view the move as a signal that Obama intends enforcement to be the SEC’s primary driver over the next few years. My main concern is how will this influence the SEC’s attention to the regulatory matters that impact NIRI members such as those related to capital markets, financial reporting and corporate governance? White’s husband is John White, former head of the SEC’s Division of Corporation Finance, so she obviously has a bit of a support network in these critical matters. I look forward to tracking the confirmation hearings closely and sharing more with you in the coming weeks.

…..

Jeff Morgan, FASAE, CAE
President & CEO
jmorgan@niri.org
www.twitter.com/jeffreydmorgan

My suspicion is we will see a more proactive sheriff on duty approach and less policy.

George Gutowski writes from a caveat emptor perspective. Follow him on twitter@financialskepti or maybe follow his evil twin who is writing a Wall Street Murder Thriller at twitter@georgegutowski

Jos A Banks Cowardly Friday Disclosure. Litigation Coming! Board of Director Failure $JOSB

Jos A Bank Clothiers (Nasdaq:JOSB) issued a guidance up date after market close on Friday. The news is dark, very dark. They attempted the classic Friday dump hoping that by Monday there would be other news they could hide behind. Well baring war, famine, pestilence there is nowhere to hide. Lets shine a bright light on this one.

The press release is laughable in its own right. The problem is severe margin compression for anyone who is modestly analytical. Management claims that the distraction of the fiscal cliff and the presidential elections were factors. Buddy your margins do not compress because elections are being held. No economist can find this correlation.

They also point to Hurricane Sandy. Well for your stores that are damaged you have insurance which should help you control inventory. In other stores that were close by you  would expect some emergency purchases as customers need to quickly replenish lost or damaged articles of clothing. So I guess in a clothing emergency Jos A Banks is not an option.

Lets look at the board. The earnings problem and the way they tried to shield it have some serious governance problems.

At the top of our list is William Herron CPA aged 67 and former partner with Arthur Anderson. I cannot comprehend how a career CPA auditor can take part in this nonsense but there he is.

The lead independent director is also the chairman-emeritus. Not a classic combination for transitional responsibilities. Andrew Giordano is 80 years of age and from his profile seems very involved in non-profit type activities.

James Ferstl aged 80 has a retail background. He is the only merchant on the board. I suspect his retail savvy is a little dated.

Robert Wildrick aged 68 Chairman spends much of his time with the Economic Alliance Of Greater Baltimore and the Palm Beach Town Council. Somehow these activities did nothing to protect the shareholder from wealth destruction.

Sidney Ritman aged 80 and Henry Holmes aged 64 seem to be relinquishing positions as they prepare for retirement.

None of the directors has any significant board responsibilities elsewhere. In fact the whole bunch seem to be a little on the light side.

Looking at comments made by Chief Executive R. Neal Black after Q3 results disappointed investors he had already been blaming Hurricane Sandy and the presidential elections. Investors will be excused if they feel they are in an echo chamber.

The USA is a democracy. There will be elections. You cannot have a business model that is incompatible with democracy. Just because Dem’s and GOP cannot get along does not mean men run naked. There are ways to compel them to buy clothes.

On occasion there is very bad weather. You need to be able to deal with it. not just cry about it.

George Gutowski writes from a caveat emptor perspective. Follow him on twitter@financialskepti or maybe follow his evil twin who is writing a Wall Street Murder Thriller at twitter@georgegutowski

Does Apple Meet Deep Value Criteria as per Warren Buffett. $AAPL

Apple (Nasdaq:AAPL) has dropped like a stone since it touched $700 per share just before the i5 launch. Recently they missed revenues. The investing world is appalled that this iconic stock would mis-behave on such a massive scale. Investors in Apple have forgotten there is risk in the market.

So taking a line from Rudyard Kipling “If you can keep your head while others…” is Apple providing the much sought after entry point that deep value investors prefer.

All deep value decisions are framed in a buy ugly sell pretty context.

If you look at the fundamentals Apple still has an enormous cash hoard which even hedge funds find hard to comprehend. They can weather many a storm and buy their way out of many a problem. Sounds good right.

Apple is still a dominant player in the smart phone market. Maybe Samsung and others have improving compelling offers, but Apple is not on its hands and knees. Still sounds good.

Where investor thinking must change is “Apple is no longer God” Apple has many competitors in many product lines. Valuations for Apple must be on the basis of competition within a cut throat global market place.

So the Apple Narrative has changed. It’s divine status has been lost. It is now a huge mega cap company which must earn its keep. behavioural investing problems will abound. Investors will need to change their perspective.

Many a hedge fund has been knee capped. They all rode over the cliff as a herd. So much for proprietary analysis and independent thinking. Do you really need to pay 2/20 to gain exposure to Apple. We all know what the answer is.

Deep value investors need that huge moat. Apple’s moat is no longer as intimidating. As a side comment most leading edge technologies usually lose their protective moat. So it’s not surprising that Apple lost theirs.

No Apple is not a deep value play. There is no turnaround or fix that comes to play. Basically Apple lost a star running back and cannot gain yards the way they used to. In Vegas the spread narrowed. Thats all.

George Gutowski writes from a caveat emptor perspective. Follow him on twitter@financialskepti or maybe follow his evil twin who is writing a Wall Street Murder Thriller at twitter@georgegutowski