Thinking Ethics

More on executive pay

There seems to be increasing shareholder activism on the subject of tying executive compensation to performance. The motion to vote against the election of the directors who participated in Pfizer's compensation committee gathered 22% of the votes. A clear signal to the management I would say. The obligation to tie executive pay to performance passed by 54% at Lucent (second try, they did not quite get the needed amount of votes last year). More afoot at Merrill Lynch & Co, Black and Decker Corp., and Morgan Stanley. This does not seem to be a fad, but a groundswell - the shareholders feel that management is overpaid. More in this article in the Washington Post by Brooke A. Masters entitled: "A Campaign to Tighten Executive Pay".

Lobbying stronger than reform

I know I need to get off this subject, but here is another editorial from the New York Times on the pathetic (some might say cosmetic) reform measures proposed by the US Congress....

Outsized executive pay

Or investors/shareholders versus management/board... Another battle between owners and managers will be happening during the Annual Shareholder Meeting of the Pfizer pharmaceutical company. The CEO and Chairman, Hank McKinnell, has apparently been paid $ 65 million since 2001, and will benefit from a $ 83 million pension fund when he retires. Meanwhile, the share price has declined 46% since he was appointed. The shareholders are threatening to withhold votes for several board members. Normally, this would not have too much impact on their reelection, but Pfizer changed the guidelines last year, so that any director who receives more negative votes will not be elected. A grassroots group of businesspeople, Investors for Director Accountability, say that pay increases unrelated to performance, is not justified, and the directors should not allow it. They believe shareholders should withhold their votes for the four nominees to Pfizer's Board who are members of the Board's compensation committee. More on pay for failure in the corporate library study.

Jack who ?

After all the noises and posturing to clean up the US governement regarding interactions with lobbyists and other flow of goodies after the Jack Abramoff debacle, the House is about to take up the Lobbying Accountability and Transparency Act of 2006. The editorial in the Washington Post is entitled "Sham Lobbying Reform". Need I add more ?

Chocolate in the news

Big debate in Switzerland about the new packaging that Nestlé has come out with for the chocolate brand CAILLER. The new look relies on the PET packaging, and  is someone different and avant-garde; so is the new advertising. Traditionally, chocolate is wrapped in paper, with old fashioned pictures. Consumer groups are grumbling, because only PET bottles can be recycled in Switzerland, and the plastic packaging must be thrown away. It is heavier than the prior packaging, and not bio-degradable, so not very eco-friendly.  One of the supermarket chains, Denner, has announced that it will no longer carry the product line. The Swiss obviously take everything about their chocolate seriously.

Increasing social responsibility of organizations

There is a growing trend in society towards the reduction of individual responsibility, and the expectation of increasing social responsibility of institutions. A case in point: somebody gets burned by hot coffee - it is not their responsibility, but the responsibility of the place that sold the coffee.  And now we are looking to corporations not only for cultural sponsorship, but for support of humanitarian efforts. It is going beyond a matching contribution to employees donations for disaster relief, into the creation of their own charity foundations. Here is a good example: UBS (the Swiss bank) is launching the UBS Optimus Foundation Charity Card: to help help. They will give to the foundation part of the annual fee of this credit card, as well as match 0.5% of your purchases. They intend to cover all of the administrative costs of the UBS Optimus Foundation, so all the money goes to help. More...

For or against animal testing ?

The UK seems to be the place where the debate on using animals in medical research raises the most passions. A new online campaign is being launched called The People's Petition to allow scientists using animals to be allowed to continue their research without fear of intimidation or attack. They hope to give the silent majority a voice...  animal rights activists have already said it will not amount to much. Great background articles on the whole subject  on BBC Online, and on The Guardian Unlimited

Limits to Sarbanes-Oxley

The advisory committee created by the SEC and composed of 21 members has made several recommendations. One of which is to limit Sarbanes-Oxley by exempting small and medium sized public companies from section 404, the requirement of reviewing internal controls. The comittee claims the costs of regulation far outweighs the benefits, and wants to exempt companies with market capitalizationof less than 128 M$, and limit exemption for companies between a market capitalization of 128 and 787 M$.  Senator Paul S Sarbanes, a Maryland democrat and the main author of the Sarbanes-Oxley law, claims the advisory committee is captive to industry interests and does not reflect the broader interest of investors. The decision will come from the SEC next month. More from Stephen Labaton in the New York Times.

Green is in !

After green buildings, now we have greentech ! A lot of interest is being generated by alternative energy sources, and some high flyers are now investing in green technology. Article in the Washington Post by Anya Shin entitled "Internet visionaries betting on green technology boom". Where they lead - others might follow.

Also, article in today's IHT by Suzy Menkes entitled "Eco-friendly: Why green is the new black" is showing how activism is becoming sexy with truly great design. Bono is supporting his wife, Ali Hewson, in her Edun venture and green web sites are sprouting. Check out:

www.antiapathy.org (worn-again sneakers), www.craftscouncil.org.uk (current eco-exhibition), www.duchyoriginals.com (from the estate of Prince Charles: bodycare products infused with organic essential oils), www.edun.ie (socially conscious line - trade not aid), www.enamore.co.uk (environmentally aware clothing), www.greenknickers.org (organic underwear), www.katharinehamnett.com (ethical and environmental fashion), www.loomstate.org (organic collection made in cotton free of pesticides, herbicides and synthetic fertilizers), www.peopletree.co.uk (fair prices), www.terraplana.com (vegetable tanned shoes with wooden heels), www.veja.fr (organic cotton sneakers with natural rubber soles).

Now - green architecture !

Green architecture has arrived, and can now be certified ! The idea of rating "environmentally aware buildings" is to judge the effect of the health of the occupants and on the environment. The certifications by LEED (Leadership in Energy and Environmental Design) grades buildings by energy and water consumption, indoor air quality and use of renewable materials. The graduations go from certified (26-32 points) to platinum (52 to 69 points). 39 points will get the gold label, and two new office towers in New York have just gotten it - Seven World Trade Center (52-story replacement building) and the Hearst Tower (46-story building).

Sustainable design used to cost at least 20% more, but now with the new building materials, the cost is only a 2-5% increase. But there are other benefits - in New York green buildings bring big State credits and are also considered chic. More in the New York Times by Robin Pogrebin.