Michael: It is not that I think the BOD don't care about shareholders. I think the company's culture is such that shareholder value is not one of its top priorities. It is hard enough to be competitive when a company is highly focussed on profit, but when it is not - as in COMPAQ's case - the "softness on profit" has far-reaching effects.
I think the COMPAQ culture has developed as a result of its achieving near dominance of aspects of its industry about three years ago and then the acquisition of DEC. Many factors are responsible for the softness on profit and the taste for size and prestige. But if I had to choose the single most important factor as of now I would chose Rosen.
Despite all the arguments to the contrary, and despite the fact that Capellas was an EP appointment - albeit to a second tier job - I think Capellas is a Rosen puppet. At the very least Caepllas is highly attuned to Rosen's priorities and, by his own admission, he turns often to Rosen in times of stress and difficulty.
Capallas made it quite clear in his first mission statement that shareholders were down his list of priorities. In a tecnical sense the CEO is responsible to the BOD - not to shareholders - so his mission statement is defensible. But he has done little to change the initial impression that he is not focussed on the sharehodler value. (I know this remark will elicit the usual response that people are glad the CEO is not short-term, building value etc etc - I don't believe all that - I think the same people would defend Capellas if he was a bit more short-term and got the share price up).
To answer the main point of your question - I think a tracking stock, trust, or some other way of giving shareholders a direct stake in the investment holdings would not only give them the return on investment they deserve, I think it would also enliven the main CPQ share price. I have made the argument several times before. But since I believe that Rosen-Capellas have other priorities it has not happened.
The arrival of the new CFO does keep hope alive.
Personally, I think articulate shareholders should spend a lot more time and energy lobbying the company to take measure to increase shareholder value than talking to each other or patting the company on the back for its long-term plans. |
