1. Return to SpenderHere at the Five Dumbest Things Research Laboratory, we like to make fun of rich people. Yes, we know, it's childish and immature. But it is an inexpensive form of entertainment. That is why we were so happy to read that May 22 story in The Wall Street Journal about Edgar Bronfman Jr., the one that assessed the chances of his possible bid for Vivendi Universal's ( V) U.S. entertainment assets. What we most enjoyed were the efforts of Bronfman's camp to portray him as a hard-hitting player in the entertainment biz -- a guy who can make things happen. Which may be true, except for the nagging perception that Bronfman is little more than a patsy, a guy whose prior attempts to be a hard-hitting player in the entertainment business helped blow much of his family's fortune. Thus, we were treated to the spectacle of a Bronfman spokesman defending his boss' record at the helm of beverages giant Seagram -- his management, that is, until just before he made the unwise decision to team up with Jean-Marie Messier, the financial hole noir of Vivendi Universal.
|Seagram's Lite |
Bronfman's Watered-Down Returns
As the spokesman explained to the Journal, "Seagram's market capitalization more than doubled between 1994, when Mr. Bronfman became CEO, and 2000, when he sold the company." To which we say, big whup. After all, market-cap growth is a meaningless measure of stewardship. Shareholders hold shares, not market caps. And as market caps grow, individual shares don't necessarily come along for the ride. Let's say, to use a simplified example, you own 50% of Company X, which has a market cap of $10. Company X merges with Company Y, worth $90, to form Company Z. Gosh, you think to yourself, my company's market cap is 10 times what it used to be! But don't get too excited: Your stake is still worth just 5 bucks. And if you paid a premium for Company Y, your shares are worth even less.
2. A Man's White House Is His White CastleThe IPO market appears to be making a comeback. That's good. Until, that is, you take a close look at the companies behind the IPOs. Of the companies that have filed for initial public offerings of common stock in recent weeks, the one that's got us scratching a deep crevice in our head is a retail clothing chain called The White House.
|White House Tour |
In black and white
And what do they sell at The White House? Why, clothes that are white. And black. Plus some "related shades," whatever they are. Yup. That's it. White clothes. Black clothes. You want your white clothes or your black clothes, you just head on over to The White House. They'll have the white clothes and the black clothes you're looking for. Now, we're awful partial to white and black here at the lab. We've got our black socks. Our black ties. And our white lab coats, which look especially spiffy when we wear them to Lab Technicians' Night at Yankee Stadium.
3. Mommy DearestMeanwhile, over at The First Years ( KIDD), Mom has a few years left to go on the board of directors. We're referring to the proxy battle at the Massachusetts-based baby and toddler product company, of course. See, back in April, a shareholder of The First Years, an investment manager named Phillip Goldstein, raised several objections ahead of this year's annual meeting -- notably, what was Evelyn Sidman, the 89-year-old mother of CEO Ronald Sidman, doing on the company's board?
|Golden Years |
"I don't think anyone can expect the CEO's mom to critically monitor his performance," Goldstein wrote in his proxy statement. (Any of you in the audience who believe that your mother would gleefully criticize your performance as a CEO, please join the line forming in the aisle.)
Anyhoo, we noticed that the only news to come out of the May 15 shareholder meeting was that it had been adjourned to this Thursday. So we called up The First Years to see whether Mom had been re-elected to the board.
Neither a company senior VP nor its outside counsel got back to us. So we called Goldstein to see what happened.
Well, apparently the meeting wasn't adjourned to May 29 after all. Following "some misunderstanding," says Goldstein, all sides have agreed there was a quorum at the May 15 shareholder meeting. Though he believes Evelyn Sidman was re-elected to the board, and though he wasn't able to get The First Years' antitakeover provision dismantled, Goldstein says the votes indicate there's strong support for dismantling the poison pill. "We made a good showing," he says. Goldstein also says the problem isn't just Sidman's mother. Also on the nine-member board are his brother and his brother-in-law. "One family member," he says, "is enough."