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Guerrillas In Our Midst

WHO’S IN CHARGE? CEOs AND BOARDS SHUFFLE POWER By Richard M. Clurman, The Chief Executive Press, $1 3.95, 87 pp.There …

WHO’S IN CHARGE? CEOs AND BOARDS SHUFFLE POWER By Richard M. Clurman, The Chief Executive Press, $1 3.95, 87 pp.

There are several ways to look at the photo of the brooding gorilla on the cover of Richard Clurman’s latest book, which recounts the recent rash of CEO firings and their implications for corporate governance. It might be considered a snide comment on competence in the corner office-or on the increasingly aggressive tendencies of shareholder groups driving the recent turnover. CEOs, directors, and large institutional investors also may experience a moment of shock, thinking, “Is this guy after me?” In any case, if Clurman has suggested the photograph as an icon for the text, then he might have gone all the way and entitled it “Gorillas in Our Midst.”

This 87-page book is far too brief to cover fully the governance revolution, though it does a fair job recounting executive upheaval during the last seven days of January 1993, when three Brahmins bit the dust-James Robinson of American Express, John Akers of IBM, and Paul Lego of Westinghouse Electric. Nor does it match in approach- or critical analysis Clurman’s previous book, “To the End of Time,” in which he wrote as a participant, emotionally involved in the “takeover” of his company, Time Inc., by Steve Ross. (Clurman was chief of correspondents for the Time-Life News Service.) In “Who’s In Charge,” the author simply lines up his three-by-five cards, quoting Ira Millstein, Marty Lipton, Dale Hanson, and Rawleigh Warner, while offering little insight.

Certainly, the topic is timely. The author tells us that since 1990, the computerized information bank, Nexis, has recorded 3,338 governance entries. But all too many CEOs go bananas when they hear the word “governance.”

Clurman seeks a positive spin, suggesting that executive upheaval should be viewed as an opportunity to rebalance the corporate “governing triangle” (management-directors-shareholders). He also maintains that such change must be driven by enlightened CEOs-and he holds up as examples those leading the charge. Kenneth Macke of Dayton Hudson gets a performance review each year, just as employees do from their superiors. Donald Perkins, formerly of Jewel Cos., has a 10-question test to check CEO/board relations (which, I fear, many CEOs would flunk or skip).

In trying to provide an overview, Clurman fails to explore in sufficient detail such critical governance issues as interlocking directorships and director selection and retention. In addition, he misses on the matter of outside CEO directorships. “For a CEO in office, two, or at most, three other boards can be a broadening experience,” Clurman says. But he also correctly observes that a major directorship takes work-up to four weeks a year. Let’s do some simple math: Three boards times four weeks per year added to four weeks vacation totals 16 weeks a year, or roughly 31 percent of a CEO’s time. That time might be better spent walking the factory floor or talking to customers.

For institutional investors, who now own over 60 percent of the largest public companies, Clurman offers a wise reminder that they must be aware not only of their power, but also of their responsibilities. They do not have an ethical claim on corporate behavior, even though they deserve credit for their work on such issues as excesses in corporate pay by pushing for, and getting, fuller disclosure. But investors must be willing to ride for the longer-term if they are to be taken seriously by corporate -management.

Though it is already short, I wish Clurman’s work had come out in a size and style comparable to Harvey Penick’s “Little Red Book”-that marvelous pocket book of aphorisms and simple truths on improving your golf game. Such a work on governance with dozen-line entries such as “Do You Need Help?” would be better able to attract a CEO’s attention.

As it is, the book likely will be consigned to the magazine racks in corporate jets. If you put it there, however, make sure the gorilla’s eyes peer out toward the backgammon table, a reminder that the ape could be ready to open its arms for a warm embrace. The brute could even be a Rawleigh Warner or a Dale Hanson in a gorilla suit. This may he exactly what Clurman has in mind.

Robert J. Callander is former vice chairman of Chemical Bank and an executive-in-residence at Columbia Business School.

PATTERNS OF CORPORATE PHILANTHROPY: THE PROGRESSIVE DECEPTION By Marvin Olasky, Daniel T. Oliver, and Stuart Nolan, Capital Research Center, $50, 391 pp.

Attention AT&T, J.P. Morgan & Co., and General Mills: Fire your corporate contributions officers. They are throwing money at so-called public affairs groups that undermine the interests of your employees, your customers, and your stockholders.

Unfortunately, according to the Capital Research Center, these three companies are far from alone. Three CRC staffers dissected the corporate dole-at least that of the Forbes 250-in “Patterns of Corporate Philanthropy: The Progressive Deception.” The trio, headed by author Marvin Olasky, a CRC senior fellow, found that more than two-thirds of public-affairs donations go to organizations that tend to favor greater government regulation of business, higher corporate and personal taxes, and increased welfare spending.

For example, the National Audubon Society boasts that in 1991 its lobbyists successfully fought oil companies’ efforts to explore inside the Arctic National Wildlife Refuge. Ironically, they did so with some assistance from Big Oil. Audubon received grants from Amoco ($4,000) and Mobil ($1,500). Phillips Petroleum backed another opponent to the opening, the National Wildlife Federation, with $2,500. Are these contributions chicken feed? As Olasky correctly observes, “budgets in the thousands can bring about the reallocation of billions in resources.”

It is a sad truth that many of the charitable foundations established by America‘s great industrialists list sharply to the left. The Ford, Rockefeller, and Carnegie Foundations are among that number. Olasky cites a 1991 study of 2,705 politically identifiable foundation public-affairs grants which showed that 2,094 (77 percent) of the awards went to liberal organizations and 611 (23 percent) went to conservative groups. In dollar terms, the tilt was even worse-$170 million (80 percent) went to liberal and $43 million (20 percent) to conservative recipients.

As might be expected, corporate donations are similarly skewed. “Patterns” discloses that 68 percent goes to left-of-center groups. In 1990, 117 such groups sipped from the corporate ladle, while only 68 right-of-center groups received support. In dollar terms, $16.5 million (80 percent) went to liberal organizations and $7.9 million (20 percent) to conservative recipients.

Of course, lining liberal pockets can benefit some businesses. Take the peculiar case of Oak Brook, IL-based WMX Technologies, formerly Waste Management. As “Patterns” reveals, WMX found few environmental groups it didn’t like. With many of them, in fact, the company has developed a symbiotic policy relationship. Activists lobby for more onerous regulation, which many of the company’s competitors can’t afford. Effectively, the new rules enable WMX to charge a premium for its services.

Even outside environmental services, however, the litany of transgressions is endless. Do Exxon, Westinghouse Electric, and Sara Lee really want to support the “comparable worth” and “pay equity” agenda of the strongly leftist Ms. Foundation for Women? Is it in the best interests of the stockholders of Ameritech, Baxter International, and Primerica to fund the League of Women Voters calls for higher marginal tax rates, increased EPA regulation, and national health insurance?

What’s a chief executive to do? Direct his contributions officer to find and fund pro-business, pro-market public policy groups. Need more information on where to find such groups? Try the recipient profiles section of “Patterns,” which lists scores of them.

American business faces a plethora of political challenges from the activist left, including cries for more regulation, increased corporate taxes, higher minimum wages, and health-care mandates. As William Simon, president of the Olin Foundation, writes in the book’s preface: “Corporations should spend every dollar of every contribution with the same care they devote to decisions about corporate strategy and investment, employee compensation, and new equipment. Companies should give as though their futures depend on it, for in a very real sense, they do.”

In other words, stop feeding your enemies while starving your friends.

Ronald Bailey is the author of “ECO-SCAM: The False Prophets of Ecological Apocalypse,” which will be issued in paperback by St. Martin‘s Press this spring.

About robert j. callander and ronald bailey