Archive for the 'Board Services' Category
The House just passed the Cap and Tax bill that will dramatically change the economy of our country for decades to come, without anyone reading the bill! In fact they passed it on Friday and the last 300 pages are still not available for anyone to read on Monday!
Can you imagine as a board member coming to meeting, not reading the board book, not having any idea what a completely new business strategy was, and then approving the new strategy with out any idea of the details just because the CEO wanted it passed? Clearly you could be sued for dereliction of duty, as every congressman who voted for this bill should be.
We need term limits and we need to vote out anyone who votes for bills they have not read regardless of party.
Just 13 years ago I was CEO of KENETECH WindPower Inc. the largest Wind Turbine manufacturing company in the world at the time (now GE Wind Inc.). At the time our largest turbine was around 750KW with a 45 Meter diameter. My engineers told me that was the largest practical size for a turbine. Boy were they wrong the normal size these days is 1 to 1.5 MW and the big boy are running 5 to 8MW.
One thing has not changed worldwide the industry still depending on Government handouts. This causes a cyclical demand as government fail to maintain any consistence in their programs. The industry needs to wean itself from the government nipple. Wind Power should win when it is financially viable and loose out when it is not.
Last week I attended an excellent program put on by the Directors Round Table. The title of the event was: DUTIES & LIABILITIES OF DIRECTORS & C-SUITE MANAGEMENT.
Much of the discussion centered on the subject of company and board investigations in this very business unfriendly environment. It is very scary with the administration pushing for the SEC and others to rack up a number of hits now that they have failed so publicly with the Madolf scandal and the Banking situation.
Clearly as Board Members we need to every accusation or indication of any possible wrong doing very seriously and get out in front of fast. The cost of a typical board investigation seams to be $250K to 3 or 4 Million. The largest factor impacting most investigations is the amount of data that must be searched (emails, documents, company records, PC and Smart Phone data dumps, etc.). This is one place we can all take some action (as long as we have no hint of any upcoming investigation), make sure that you do not retain anything any longer than absolutely required by law. Time to update your electronic document retention policies. The more you have the more it cost!
Friday I attended the annual meeting for the RENN III Fund (one of my former clients). One of the speakers was Beau Johnson a noted expert on doing business in China. Here are few of the facts from his talk:
. US China
Government Cash Position -$11 trillion +$2 Trillion
Bank lending 09/08 Down +29%
GDP Forecast 09 -6% +8%
Personal Savings Rate 4% 40%
Rather startling comparisons. Beau is very bullish on doing business in China. During the question and answer session he was asked if he was worried about the risk of doing business in China with a Communist government. His answer was that he was more worried about doing business in the U.S. given the recent actions of the Obama administration.
I am afraid he is right.
I was asked today to comment for a national publication on the statement by T. Boone Pickens: “In an interview with FOX Business Network at ACG InterGrowth, T. Boone Pickens predicted oil will hit $75/barrel by the end of the year. How is your firm playing the energy sector, how does the current economy factor into your strategy and will it take “pain at the pump” to strengthen the push toward alternative energy sources?”
My Comments:
My firm RDSeismic LLC provides Seismic Imaging Equipment for Oil and Gas exploration world wide. With oil selling for less then the replacement value (cost of exploration and development of fields) our customer business in the US is down over 50% this year. Clearly this is not a good thing for our economy long term. I was perviously CEO of the largest US Wind-Power company so I know a little about alternative energy. Wind Energy and other renewables are great, however they will never replace our dependancy on Oil and Gas. $75/ Barrel oil is a good thing for the US and the world, without a higher price soon the US energy business will be decimated. What we could really use is some support from Washington for a bold Nuclear Power initiative (much like China and France are doing).
I was asked the question yesterday “How do companies maintain margins in this economy?”
I think it was the wrong question. The right question was how maintain cash flow and preserve cash in this economy.
Forget income, just work on cash flow. Here is how:
• AR: Everyone I know seams to be having issues with late payments (over 90 days not being unusual). This is one of the most important issues to work on. This is not the time to be understanding. Use any leverage you have to make sure you are the one who gets paid first.
• Contact your customers, work on your relationships, and ask them for referrals.
• Make sure you know which customers or products are the real moneymakers for you. If you have a marginal customer or product, now maybe the time to ditch them.
• Clearly control spending
My son wrote a post on his blog “How NOT to build an advisory board. . .” which I think should be of interest to all board members. If a company selected board members the way the government does I think they could be sued for dereliction of duty. Here is Alexander’s post:
“Thinking about building an advisory board for your startup? I think there are a couple of important lessons on ‘what NOT to do‘ to be learned from Obama’s Presidential Task Force on the Auto Industry.
Rule No. 1: Ensure that your advisory board has experience in the area where you need advice. Obama named 18 members to his Auto Task Force - the sole purpose of the group is to save the domestic auto industry. The problems with the team?
1. Not a single member of the advisory board has ever been in the auto business. Even the transportation secretary, Ray LaHood, has no automobile, transportation or business experience (he was a school teacher before entering politics). The closest any member of advisory board has come to the auto industry is Ron Bloom, the Senior advisor on the Auto Industry for Treasury, who started out as an investment banker at Lazard Freres and ended up as a labor negotiator focused on corporate bankruptcies in an array of industries from steel to airlines. When you are looking for members of your advisory board, my advice is to pick a few with some real world experience in your space.
2. Out of 18 members of the advisory board, only two drive American cars. Ron Bloom drives an aging Taurus, but I suspect that is because his largest client the UAW. (Geithner - Acura TSX, Summers - Mazda Protege, Orszag - Honda Odyssey, Jackson - Toyota Prius, Goolsbee - Toyota Highlander, DeBoer - Lexus RX350, Zichal - Volvo, Heinzerling - Subaru Legacy Outback, Utech - Mini Cooper S, and Bernstein - Honda Odyseey.) You might be surprised to learn that a few members like Carol Browner, Diana Farrell and Steven Chu don’t even own cars (Browner is the climate czar so we will give her a pass). So I am not sure whether or not owning an American car is an important factor, but to be sure you need to question the judgment of Rick Wade, senior advisor at Commerce, who drives a 1998 Chevrolet Cavalier - I thought rental car companies were the only owners of Cavaliers - a Cavalier? Can we trust someone who actually picked a Cavalier?
http://incontrol.nexteppe.com/images/vehicles/1G1JC1243WM121603_01.jpg
Rule No. 2: Ensure that your advisory board has experience in the area where you need advice. Really, I am not kidding. It is a VERY good idea to ask people with experience before tapping people who work for you. You want outside opinions and advice. Obama would have been better off picking 18 people from the Reagan International Airport lobby than he did. Don’t make the same mistake.”
Written by Alexander Muse · http://www.texasstartupblog.com/
Today I attended the ACG Texas Capital Connection in Dallas. A great program as usual. Over 1100 attended, clearly a financially knowledgeable group. The morning speaker asked is the economy was going to get worse, all 1100 raised their hand that it would. Hope we are wrong. Another interesting fact was that out of the 100 companies in the capital connection room, I could only find 5 lenders. Normally lenders are around 25% of the companies. Not a good time to get money.
Everyone should read this post Ruin Your Health With the Obama Stimulus Plan: Betsy McCaughey !
The Stimulus Plan includes health rationing. Maybe the government will decide that you are too old to waste money on cancer treatment or a new hip.
“XYZ today announced that its Board of Directors adopted a Shareholder Rights Plan. The Rights Plan is designed to enable all of the Company’s shareholders to realize the full long-term value of their investment and to provide for fair and equal treatment for all shareholders in the event that an unsolicited attempt is made to acquire the Company.”
You may have seen a number of these “shareholder Rights Plans” or as we used to call them Poison Pills. Interesting that companies that used to be very proud of not having anything that would hinder an acquisition now are rolling out poison pills with vigor. I think board members should think long and hard before voting on one of these plans for a company that may well be in Charter 11 with out a white knight to buy them out. The shareholder may end up with nothing.
