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Digest

On The Stand

By TIMES WIRES
Published October 12, 2006

BIZ TIDBITS FROM AND ABOUT MAGAZINES

Biggest victim in HP scandal was truth

The snooping on directors and reporters by Hewlett-Packard to identify the source of boardroom leaks was unsavory and maybe illegal, but something else got lost in the uproar, says the New Yorker. The leaking was at least as bad as the snooping, finance writer James Surowiecki argues. To be effective, a board needs a certain amount of secrecy to foster candid conversations, Surowiecki says. "Successful boards require ... 'a culture of open dissent,' where members are free to criticize the CEO and each other, and where there is no artificial attempt to impose consensus on the group." He cites research showing that, paradoxically, the more people trust one another, the more willing they are to disagree with each other. "And this is why the leaks at HP were a problem: They undermined the sense of trust and solidarity that a board needs to be effective," Surowiecki says.

Saudi Arabia actually likes lower oil prices

It sounds unbelievable, but Saudi Arabia is practically applauding the 22 percent plunge in global oil prices since July, Business Week reports. On Sept. 19, Saudi Oil Minister Ali Naimi called a price of about $60 per barrel "reasonable." Some experts say they think the Saudis could live with even lower prices. "They are still happy at $50 per barrel," says David Kirsch, an analyst at PFC Energy in Washington. Why would the kingdom that boasts the world's largest oil reserves cheer a price slump? The Saudis never felt comfortable with $70 oil because they feared sky-high prices might kill off the global appetite for their single source of wealth. "There is concern that the volatility in the markets is so beyond anyone's control that it could cause severe damage to the world economy," says Sadad Al Husseini, the retired exploration and production chief of Saudi Aramco, the national oil company.

If you're a boss, careful what you say - always

Bosses, politicians and others in the public eye should never forget that they are always "on stage," Harvard Business Review says. "Employees are ever alert for signs of competence, vision and trustworthiness in their leaders. When they see these positive signs, they work harder, contribute better ideas and stay with the company longer. When they pick up unsettling signals, their performance and loyalty deteriorate." Authors Robert Galford and Anne Drapeau say even trivial things the boss says or does have an effect. "Even if your intentions are pure and your performance flawless, don't be surprised when your most innocuous statements are assigned deep, sinister meaning, or are assigned different meanings by different people," Galford and Drapeau say.

Shares more important than backdated options

Don't get too excited about backdated stock options, says Forbes. That's a mere distraction to what is really important about executive compensation: the number of shares awarded the executive. "You want your chief exec to be motivated, of course, but wouldn't $20-million or a $50-million jackpot be pretty good motivation?" Forbes asks. "In the late 1990s ... executives typically got whatever they wanted." As a result, the magazine says, scores of CEOs are sitting on vested option packages worth more than $100-million each.

[Last modified October 11, 2006, 23:38:49]