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To: MSI who wrote (4180)8/8/2002 12:34:18 PM
From: stockman_scott  Respond to of 89467
 
Warnaco’s ex-CEO Wachner seeks $25.1 million severance

msnbc.com

THE WALL STREET JOURNAL

Aug. 8 — Linda Wachner is seeing green — $25.1 million, to be precise.

THE OUSTED CHIEF EXECUTIVE of Warnaco Group Inc. is seeking severance pay from the embattled apparel maker, which has been operating under Chapter 11 bankruptcy-court protection since June of last year. And in keeping with her famously brash management style, the tough-minded Mrs. Wachner is demanding that her claim be considered ahead of those of other unsecured creditors.

In pleadings now ricocheting through U.S. Bankruptcy Court for the Southern District of New York, Mrs. Wachner says Warnaco is “contractually obligated for the payment of certain compensation and other benefits.” The amount is based on provisions from the ex-CEO’s employment contract that call for her to receive severance pay based on multiples of her highest base salary and recent bonuses.
More than money is at stake. At a time when battle-scarred executives are trying to save face amid corporate scandals, Mrs. Wachner — who built a mighty underwear empire and then was widely blamed for its downfall — wants to preserve what is left of her once blue-chip reputation.

For more than a decade, Mrs. Wachner was a highflier, known for her financial discipline, eye for fashion and take-no-prisoners people skills. She led a buyout of Warnaco in 1986 and presided over its initial public offering of stock in 1991. With a degree in economics and a dog named Ebit (accounting shorthand for “earnings before interest and taxes”), Mrs. Wachner led the sleepy company’s transformation into a global retail powerhouse, with brands such as Chaps, Calvin Klein underwear and Warner bras.
But saddled with heavy debt and massive restructuring charges, Warnaco couldn’t weather the retail downturn of recent years. The company’s shares were trading at an all-time low of $1.25 in early 2001, and in June 2001, Warnaco made its Chapter 11 filing. The board asked Mrs. Wachner to resign in November.
“It is important to Mrs. Wachner that her good reputation and her good name be preserved and that the record be straight on the value she has contributed to the company,” says Kenneth Eckstein, partner at Kramer Levin Naftalis & Frankel, New York, which represents Ms. Wachner. The client was unavailable for comment.

Once counted among the corporate world’s most highly compensated executives, Mrs. Wachner is no stranger to courtroom brawls. Two years ago, she was pitted in a nasty lawsuit against fashion designer Calvin Klein, who accused Warnaco of trademark violation and breach of fiduciary duty while publicly hurling mud at the CEO. The two parties eventually settled their differences, without money changing hands.
This time, Mrs. Wachner intends to emerge with a big payout — something she is accustomed to. In 1996, Mrs. Wachner received $9.8 million as Warnaco CEO and an additional $975,000 for overseeing Authentic Fitness Corp., a swimwear entity Warnaco had spun off (and would later buy back). In 1998, Mrs. Wachner realized $75.6 million from exercising stock options and received a $6 million bonus.
Mr. Eckstein has argued that his client is seeking severance, a term opposing counsel disputes. “This is a longstanding arrangement that existed,” says Mr. Eckstein. “This claim is fully consistent with long established applicable legal precedent.”

Warnaco doesn’t agree and has joined with its bankers and creditors to challenge Mrs. Wachner’s request. “We believe her claim is without merit,” a Warnaco spokesman says. After the board decided to remove her as CEO, it elected not to pay her severance. In January 2002, she filed a “proof of claim” with the bankruptcy court.
The immediate issue is whether the court will grant Mrs. Wachner’s claim administrative or pre-petition status. In order to earn the preferred administrative designation, a creditor must show a legitimate expense for administering the debtor’s estate. Generally, such claims are for attorney fees, payroll taxes or operating expenses and are high in the bankruptcy pecking order, trumping “pre-petition” claims.
Mrs. Wachner’s attorneys have argued that she did bring postbankruptcy value to the table and that because her termination occurred after the Chapter 11 filing, she is entitled to the preferred status anyway. In the most recent documents, dated Aug. 2, her attorneys point out that she stayed on as CEO for five months after the bankruptcy filing. “If anything, Mrs. Wachner intensified her efforts … traveling to the West Coast, Europe, and the Far East and maintaining a grueling schedule by any standard as she worked diligently to stabilize vendors, customers, and employees,” the papers say.
In court documents, Mrs. Wachner’s attorneys highlight her fiscal sacrifices, detailing how she “put her money where her mouth was by remaining heavily invested in Warnaco stock.” As a result of the filing, she “has seen a substantial portion of her net worth wiped out.”

Copyright © 2002 Dow Jones & Company, Inc.
All Rights Reserved.



To: MSI who wrote (4180)8/8/2002 12:59:27 PM
From: stockman_scott  Read Replies (1) | Respond to of 89467
 
Lies, Damned Lies, and White House Lies

By William Rivers Pitt
t r u t h o u t | Opinion
Wednesday, 7 August, 2002

Last week saw a push by the Bush administration and the FBI for the instigation of lie-detector tests for members of Congress. It seems a leak from the Senate Intelligence Committee, which informed the world of the NSA's interception of Al Qaeda communications pointing to September 11th as "zero hour," rankled Bush to such a degree that he would bulldoze the separation of powers to find the leaker. White House spokesman Ari Fleischer articulated these concerns when he said, "The selective, inappropriate leaking of snippets of information risks undermining national security."

Both Tom Daschle and Trent Lott brushed this idea aside, as have all the members of the Intelligence Committee. Richard Shelby of Alabama, the top Republican on the Committee, said, "You know the Senate and, I assume the House, has always investigated their own."

Since we're all about tossing lie detector tests around to establish culpability for security failures, it stands to reason that someone should trundle a polygraph machine up to the front door of the White House and demand access. Condoleeza Rice, Donald Rumsfeld, Dick Cheney and George W. Bush himself should be strapped into it and asked, pointedly, about Sunday's explosive Time Magazine story ("Could 9/11 Have Been Prevented" by Michael Elliot) detailing the complete and utter failure of the Bush administration to address the pressing terrorism threat as outlined by exiting members of the Clinton administration.

Outgoing Clinton Administration National Security Advisor Sandy Berger made damned sure that the new Bush administration would have all the information it needed about terrorism before he left. Berger believed the subject to be of great importance, and is reported in the Time article to have told Condoleeza Rice, "I believe that the Bush Administration will spend more time on terrorism generally, and on Al-Qaeda specifically, than any other subject."

Berger had chairman of the Clinton-era White House's Counter-Terrorism Security Group Richard Clarke brief Rice on all the data they had, and all the plans they had laid to address the threat of terrorism. No aspect of those plans were implemented until after those commercial planes appeared in the skies of New York City. According to Time, "In the words of a senior Bush Administration official, the proposals amounted to 'everything we've done since 9/11.'"

"By last summer," writes Elliot, "many of those in the know - the spooks, the buttoned-down bureaucrats, the law-enforcement professionals in a dozen countries - were almost frantic with worry that a major terrorist attack against American interests was imminent. It wasn't averted because 2001 saw a systematic collapse in the ability of Washington's national-security apparatus to handle the terrorist threat."

That systematic collapse came as a result of many factors. The first, simply, was the reality of power-transition in America. New people come in after an election, others must be confirmed by Congress, and as one administration takes hold of the reins, it must encompass the realities known by the departing administration. This takes time. "If we hadn't had a transition," says a senior Clinton Administration official as quoted in the Time story, "probably in late October or early November 2000, we would have had (the plan to go on the offensive) as a presidential directive."

The transition is only a small part of the story. Much of this can be chalked up to the knee-jerk hatred within the denizens of the Bush administration of all things Clinton. According to Time, Condoleeza Rice was briefed in detail about the treat posed to America by Osama bin Laden and Al Qaeda. This warnings were completely ignored, fed into a bureaucratic meat-grinder that did not put forth an effective anti-terrorism plan until September 4, 2001. By then, of course, it was too late.

Elliot's Time article says, "Clarke's paper, says an official, 'was a Clinton proposal.' Keeping Clarke around was one thing; buying into the analysis of an Administration that the Bush team considered feckless and naive was quite another. So Rice instructed Clarke to initiate a new 'policy review process' on the terrorism threat. Clarke dived into yet another round of meetings. And his proposals were nibbled nearly to death."

Feckless and naïve. Remember those words.

The final reason for the Bush administrations failure to take up the anti-terrorism cause where Clinton had left off, according to the Time article, can be chalked up to a fundamental difference in priorities. Bush's national security team wanted to go full-bore after a national missile defense system. John Ashcroft wanted to fight the War On Drugs, and wanted to pursue pornography. Everyone on the team had a different agenda, and little of it had to do with fighting terrorism. "Terrorism," says a Clinton White House official in Elliot's Time article, "wasn't on their plate of key issues."

While all of this was happening, Northern Alliance Leader Ahmed Shah Massoud was fighting for his life and his anti-Taliban cause in Afghanistan. His forces had been beaten back into a tiny wedge of the country, and he was desperately seeking international aid to continue the fight. Massoud was roundly ignored by the Bush administration, even as he reported that Al Qaeda had basically taken control of the Taliban. Elliot's article in Time reports that, "In April (2001,) Massoud addressed the European Parliament in Strasbourg, France, seeking support for the Northern Alliance. 'If President Bush doesn't help us,' he told a reporter, 'these terrorists will damage the U.S. and Europe very soon.' No such help was forthcoming, and Massoud was assassinated by Al Qaeda on Sunday, September 9th.

The White House has denied ever being briefed by outgoing Clinton administration officials about terrorism, or their plans to attack it. The Berger quote predicting the Bush administration's focus on Al Qaeda has been floating around for a while now, yet no one saw fit to refute it until now. Someone is lying.

On Thursday, July 25, the House of Representatives voted 219-188 in favor of creating an independent investigation to look into the security failures which preceded the attacks of September 11th. The Bush administration vehemently opposes this, claiming it would distract the government from the War on Terror. They have good reasons for their desire to see this independent investigation go away. The current Senate investigation meets behind closed doors in secret. An independent investigation would be right out in the open, and would likely ask very public questions about the issues raised in Elliot's Time Magazine article.

I hope someone is dusting off that polygraph machine. If America has any interest whatsoever in ensuring that another 9/11-style attack can never again take place, the folks up on 1600 Pennsylvania have some questions to answer.

-------------------------------------
William Rivers Pitt is a teacher from Boston, MA. His new book, 'The Greatest Sedition is Silence,' will be published soon by Pluto Press.

truthout.com