Timesizing®
[Commentary] ©1999-2003 Philip Hyde, The Timesizing Wire™, Box 622, Cambridge MA 02140 USA (617) 623-8080 - HOMEPAGE

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Glimpses of Miracle CEOs
"...No peace lies in the future which is not hidden in this present instant. Take peace." ... Fra Giovanni, 1513

6/29/2004   Had to wait 6 months for this one -

• Visteon Corp. - Pestillo to step down as CEO, remain chairman until May, WSJ, C15.
  The man who negotiated one of the most union-friendly labor agreements in recent history is stepping down from his post as CEO of Visteon Corp. Peter Pestillo...has been credited with placating union worries when Ford Motor Co. decided to spin off the company in 2000. In an agreement that heavily favored workers, blue-collar Ford employees who were reassigned to Visteon remained Ford employees for life, earning salaries that were almost twice as high as the wages of workers at other parts suppliers.
  [In the great tradition of Henry Ford's early period when he paid his workers an above-market $5 a day "so they could afford to buy their own products."]

• CEO plans to donate his salary to employee scholarship fund, WSJ, A8 (//12/20 NYT, B3).
  Cott Corp. Chairman and CEO Frank Weise, who is credited with turning around the Canadian beverage maker, said he plans to donate all but $1 of his $425,000 base salary in 2004 to a scholarship fund for children of Cott employees....
  [...though we're a little suspicious of someone who announces something like this in advance. Also, there's the much bigger matter of his non-base salary -]
  He said he still will be eligible to collect his performance-based cash bonus, deferred stock and stock options. In 2002, Mr. Weise's cash bonus was $850,000 and he also received deferred stock valued at [another] $850,000, in addition to 200,000 stock options....
  [So this ain't exactly what you'd call "sacrificial giving."]

• Bonus sums it up for these Mainers - 'They do little things...but this is the first time they've ever done anything like this.' Charlene Wyman, who with husband Lawrence will get $38,000, by Meadow Merrill, Boston Globe, B1.
  Former employee Marie McNichol praised SAS's founder, Terry Armstrong. "He just wants to give back," she said. "He started out with nothing." [photo caption]
  PITTSFIELD, Maine - When Charlene Wyman headed to the break room at the shoe factory here last week, she braced for bad news. "Everybody thought the factory was going to close because there aren't so many shoe shops left," Wyman recalled.
  Instead, Wyman and about 200 other employees of SAS Shoemakers were stunned to learn that they were being rewarded with Christmas bonuses of $1,000 for each year worked for the company.
  ...Wyman and her husband [are] two of 58 employees who have worked at the factory since it opened 19 years ago.... "We were shocked," said Wyman, who has made shoes most of her life....
  While employees in this small Maine milltown in one of the state's poorest counties were opening their checks, workers in four other manufacturing plants around the country were also getting [the] one-time gift. "It was done simultaneously," said Sandy Mann, office manager at the Maine plant. She said the decision to give the bonuses came from top management.
  Far from crowing about the good deed, company officials in Maine and the firm's Texas headquarters have brushed off media inquiries. "Comments are being kept to an absolute minimum," Mann said. "We are a very private company, so this is the most publicity we have ever received, and it is not very welcome."
  [Shades of Jesus' response to the feedback his disciples provided when he asked them, "Whom do men say that I am?" They gave him the range of answers. He asked whom they said he was. Peter said, "The annointed one." And he essentially replied, "You're right. Tell no one." Mat.16, Mk.8, Lk.9]
  The company makes hand-sewn, high-priced walking shoes under the brand name SAS, which retail for around $100 a pair.... The company logo depicts a gray-haired cobbler bending over a sheet of leather laid upon a wooden bench..\..
  The company is still operating in Maine, according to workers, because its founder, Terry Armstrong, was raised in these parts. Many employees now choke back tears at the mention of his name. "I tip my hat to Terry Armstrong," said Donna Dunphy, daughter-in-law of the Pittsfield plant's manager. "He said he'll never close this factory as long as he's alive."...
  It seemed as if it was all about to change last week, when the staff listened to plant manager Red Dunphy. "I'm thinking, maybe we are going to have to work more hours," said Eleanor Flood, 70, who has worked at the plant since it opened. "Then he reads the announcement..., 'As we reconstruct SAS for the needs of the future, we are proud to be able to fulfill a long-standing dream by giving each of you a one-time gift of $1000,' and he stops," Flood recalled. "But if you know this guy, you know there's a punchline coming. ...And he goes, 'For every year of service.'...
  "I was standing with this group of ladies, and they all started crying," Flood said, her own voice cracking. "And I said, 'I've worked here 19 years. That's $19,000.' "
  The bonus bucks the trend over the last few decades in Maine's shoe industry, which has seen many plants move overseas, causing layoffs of thousands of workers with few marketable skills..\..
  Instead of loss, \the\ generosity of the town's last shoe company has changed Christmas and the future for many of its families [and] the talk is about how to spend the windfall....
  [And if every fool CEO in the astronomically oversuperbloatedstuffed top brackets did this, they would create a real recovery, because they would be reinvesting in their own consumer base by channeling spending power to the people who actually spend it and get millions of little spirals of dynamic monetary velocity going throughout the economy. And if they realized that a systemic way of doing this would be much better, they could implement Timesizing and market forces, responding to a perceived overall labor shortage, would centrifuge the income of the nation and provide solid growthrates such as we've seen only the beginnings of during the nationwide timesizing of 1938-40, and after that only via the horrible labor-hours kill-off of world war.]

• Alstom's ex-chief rejects severance pay package, by John Tagliabue, NYT, W1.
  PARIS...- Among this summer's oddities, which have included a record-breaking heatwave and a lack of tourists, the French were startled [yester]day by news that a former senior executive at one of the country's largest conglomerates was forgoing a $4.6 million (4.1m-euro) severance payout after being criticized for his management record.
  The manager, Pierre Bilger, the former chairman and CEO of Alstom, which makes [e.g.] gas turbines, told...Patrick Kron, Alstom's present chairman..\..in a letter...dated last Thursday..\..that he would repay the money...because he did not want to be a burden on present management. ...Mr. Bilger wrote that he had taken his decision, "not to be an object of scandal for the 100,000 employees of Alstom whom I had the honor to direct, and for the shareholders, whether employees or not employees, who placed their trust in me." Mr. Bilger said that he had received a total of 5.1m euros upon leaving Alstom...in March..\..but that a part of that represented his pay for the final period of service. ...At a shareholders' meeting in July, he was bitterly criticized for taking the severance package..\..
  Once a giant of French industry, Alstom has been shaken by heavy losses at its gas turbine business by the insolvency of a customer for the cruise ships it...builds. Alstom has also said that its unit in the U.S. is under formal investigation by the SEC over accounting improprieties.
  ...Alstom posted a net loss of 1.4B euros in its latest fiscal year ended in March under Mr. Bilger's stewardship..\.. Earlier this month, the French government showed its continuing willingness to bail out struggling companies when it said it would buy [for $600m euros = over $2/3B] up to 30% of Alstom to prevent it from going bankrupt....
  [See our makework cases, 8/06/2003. So Bilger may possibly have been trying to head off investigations which could have revealed more and deeper problems.]
  Colette Neuville, the president of the French shareholder group that had criticized Mr. Bilger, said...it was the first time a French company had been reimbursed for severance pay approved by a company board, though she noted that there had been precedents elsewhere in Europe.
  • In December, the departing chairman of the Credit Suisse group, Lukas Muehlemann, gave up his right to an undisclosed amount as severance;
  • earlier, two former CEOs of the engineering giant ABB [Asea Brown Bovery], Percy Barnevik and Goran Lindahl, were pressed into repaying more than half of the almost $140m they received in pensions and other benefits.
  "We welcome it, even if it was not entirely spontaneous," Ms. Neuville said, noting that Mr. Bilger was under heavy shareholder pressure....

[Another mega one-time reinvestment in employees -]
10/12/99 Brothers will sell Jordan's Furniture - Berkshire Hathaway to acquire Jordan's, by Kimberly Blanton, Boston Globe, front page.
Eliot and Barry Tatelman, known to Boston-area shoppers for their goofy yet memorable television ads...said yesterday they have agreed to sell their business to Berkshire Hathaway Inc....By selling...they can give their children the freedom to choose any career - not necessarily the family business..\.. Under an agreement with [Hathaway CEO] Warren Buffett, the Tatelman brothers said they would continue to have free rein in running the four-store furniture chain founded by their grandfather during the Roaring 1920s....
The brothers, who in May flew all their employees to Bermuda for a day, plan to share the sale proceeds with the company's 1,200 workers. Each employee will be paid 50¢ for every hour worked at Jordan's - for long-time employees, that could mean bonuses of up to $20,000....
[And so the Tatelman brothers join our Honor Roll of Reinvesting CEOs, listed below in the 10/09 story about Sweden's Ikea. But the recurrence of depressions proves that this kind of once-in-a-blue reinvestment in employees is not nearly enough to grow general markets at a bubble-preempting rate. We need weekly or even daily automatic reinvestment at a rate that would seem colossal by any present-day standards. It is this type of direct automatic reinvestment that is eventually going to enrich all humanity and allow us to get on with a whole roster of problems subtler than - what am I going to eat today, or, how can I get medical attention.]

[Is this the secret of Sweden's recent success, as recounted in yesterday's story (below)? - ]
10/09/99 Ikea workers to get one-day bonuses, Agence France Presse via NYT, B2.
The Swedish furniture chain Ikea will give the day's receipts on Saturday [today] to its 37,500 employees to thank them for their work in the previous year. The windfall is estimated at $61 million.
Each employee in the company's 151 branches around the world should get a bonus equal to about $1,530 at the end of the day, a company spokesman, Anders Eriksson, said. For some workers, like those in China, the bonus will work out to the equivalent of three months' salary.
It is the second time that Ikea has rewarded its employees this way. The previous instance was in 1985. Mr Eriksson said the company's 73-year-old founder, Ingvar Kamprad, was behind the idea. "He wanted to make a gesture before 2000," Mr. Eriksson said.
[Ever notice how much nicer and more generous and far-seeing the founders are than the mediocrities who succeed them?

• W.K. Kellogg was behind his company's shift to the 30-hour workweek back in 1930 - 30 hours' work for 35 hours' pay which rose to 40 hrs' pay by 1935 - his successors gradually eliminated it over 50 years and recently have been laying people off as if they were Chainsaw Dunlap (click here for Kellogg downsizing story on 8/15/99).
• Lord Leverhulme was behind his company's 6-hour day back in 1918 - Lever Bros. has since been merged and taken over beyond recognition (Unilever) and is now just another boring short-sighted corporation, laying off people like used tissues (scan down to Unilever downsizing story on 9/22/99).
• Even recently (early 80s), Mitch Kapor started Lotus in a burst of generosity toward employees - a 35-hour workweek, free sodapop and fruit juices, free yoga and childcare - but now Lotus has been swallowed up by the Big Blue (IBM) and the latter is today's mass layoff story (10/09/99) of 1000 people singled out and downsized instead of everyone kept together by timesizing.
• And let's not forget John Tu and David Sun at Kingston Technologies (5/20/99), Bob Thompson of Thompson-McCully (9/17/99), and of course the huge yearly bonus at Lincoln Electric, founded by John and James Lincoln (no close relationship to Abraham).]

[Get your hankies. This following is so inspiring it makes Bill Gates with his showy charity approach look bogus, boring, and self-seeking. And we suspect, though involving a fraction of Gates's figures, this smaller-dollar deed will have much greater effect for good, because it's a huge step towards a systemic rather than random (dba "discretionary") approach. You don't need Bill Gates to give money to richrich Harvard to get his name on a library, or to set up a $17B fund (see 9/16 below) to make beggars out of all kinds of gold-digging charities. One imaginative business owner in Mich., with a tiny fraction of Bill Gates' loot, shares riches from the sale of his firm with his own employees. This brings us halfway to a systemic solution to the mind-boggling disparity that so belies our claim to being an "intelligent species" - it's unsoiled by the speculative crapshoot of Wall Street, and untouched by the soaring arbitrariness of Bill Gates' PR "largesse." It's work-related, and therefore more clearly reinvestment than charity.]
9/17/99 For $128 million, a seat in bosses' hall of fame - After sale of firm, owner splits riches, by Sharon Cohen, AP via Boston Globe, A3.
BELLEVILLE, Mich. - When Bob Thomson sold his company for $422 million, he could have chartered a jet, flown off to an island, even bought the island, perhaps. But he had a secret plan. It was only when the sale of Thompson-McCully Co., his road-building firm, was completed in July [we caught this on 7/09 "CRH of Dublin agrees to acquire another U.S. company" tho' we misspelt McCully as Scully] that he let all of his workers know, in a letter.
First, the good news: They would not lose their jobs.
Then, the great news: They would share in the proceeds.
The boss divided up $128 million among his 550 workers, making more than 80 of them millionaires.
"I was flabbergasted," said Rusty Stafford, a manager who opened his envelope at home, with his wife, Tammy. She tearfully said, "'Russ, I think the commas are in the wrong place,'" he recalled. "I looked at it, and kept looking, and thought the next thing I knew Ed McMahon would be knocking at our door."
But the 67-year-old Thompson is casual about his generosity. "It's sharing the good times, that's really all it is," he said.
[And that's something that discretionary charity can't really lay claim to, we're sorry. Taking money from the Microsoft Company of employees, we said COMPANY OF EMPLOYEES, and giving it to Harvard or some other arbitrary destination that has nothing to do with the source of the money, is NOT "SHARING THE MONEY." It's merely trying to justify the series of largely random events that got you that totally beyond-irrational amount of money. We need a systemic, designed solution to the gross and dangerous disparity that we are still opening up in our population with the rich getting richer and the poor poorer. And it's gotta be along the lines of reinvestment, not charity. And that means weekly or even daily reinvestment at COLOSSAL levels relative to the levels we're familiar with today. Can you possibly imagine the MARKETS that would result from such deconcentration??!!]
"I don't think you can read more into it. I'm a proud person. I wanted to go out a winner and I wanted to go out doing the right thing."
If that philosophy seems like a throwback to an earlier era, consider the source: a businessman whose life reads like a Frank Capra script.
Humble guy with a soft spot for Norman Rockwell art. Starts a business in his basement with $3,500, supported by his school-teacher wife. Owns same modest house for 37 years. Expands his asphalt company into road-building juggernaut. Sells it after 40 years, collects nine-figure check. Shares the money with the salespeople and the secretaries, the folks in the gravel pits, the people who hold the road signs.
[Listen up, Bill Gates et ilk. It's the eve of the third millennium, and we want a solution here, and not just a bunch of statues of you.]
"People work exceedingly hard for us," he said. "It's a tough business and this is a demanding company." Translation: 14-hour days, six-day weeks, 99-degree sun, 300-degree asphalt.
[More work-saving technology than ever before in the history of humanity and we're still working 84-hour workweeks just as we did in 1850? If Bob Thompson had known of a systematic way to reinvest and share the wealth all along the path, instead of just at the end, all these "little people" would have had a life over the last 40 years instead of just starting now.]
"We're dependent on people," Thompson said, "so it would just not be fair not to do it. They've allowed me to live the way I want to live."
[Hey, at least he did it now. Unlike, what would you say, 99.9999999% of other business owners? Yet this is the type of tiny margin by which the future often starts.]
Actually, [the way he wanted to live] was pretty modestly. Thompson and his wife, Ellen, have a three-bedroom frame house. She still mops floors and washes windows. His [office is wood-panelled but] has no Persian rugs or oil paintings. Instead, there are photos of their three children and five grandchildren, Rockwell prints, a copy of poet John Donne's meditation that "No man is an island", and a clock with its hands frozen shy of 3 o'clock.
Thompson does not play the stock market, belong to a country club, or collect rich men's toys; the only boat he owns [is] a rowboat. His indulgences are few: He drives a Lincoln, and he and Ellen travel and take in an occasional Broadway show.
Thompson plans to give away much of what's left of the $422 million and plays down what he already has doled out. "I'm not trying to be a big shooter," he said. "A lot of people don't get the opportunity, but would if they could ... This didn't change my life a whole lot when you get right down to it."
But it did change the lives of many hundreds of others, including that of Thompson's 54-year-old administrative manager, Marlene Van Patten, who has worked for the company for 15 years and will cash in a generous annuity certificate upon retirement. (Like other employees, she took Thompson's advice and kept the amount private.)
Thompson had long planned to reward his workers, naming scores of them in his will. But in July, he sold his firm to CRH PLC, a building and construction firm based in Dublin. He says he chose it because of its record of not breaking up companies or firing workers; he will stay on to run the business.
As the sale becomes final, Thompson worked with senior staffers to develop a share-the-proceeds plan. Hourly workers, most of whom have pensions or 401(k) plans, received $2,000 for each year of service; some checks exceeded annual salaries.
Salaried workers, who do not have pensions, were given checks or annuity certificates that they can cash in at age 55 or 62. Those range from $1 million to $2 million each.
In addition, Thompson included some retirees and widows in his plan.
And he paid the taxes, which amounted to $25 million.
[Talk about "innocent as a dove and wise as a serpent"!]
When the checks were distributed one recent Sunday [Sunday? why Sunday?] morning in seven Thompson offices across Michigan, it was as if dozens of co-workers had all bought winning lottery tickets: There were tears and hugs. Some folks were speechless, others chattered away.
[Reminiscent of the 2 great guys who own Kingston Technologies - see our 5/20/99 goodnews story. Actually they're one design step ahead of Thompson in their corporate reinvestment technology because they're doing it all along the line without selling the company. Lincoln Electric does this too by divvying up a huge yearly bonus. But we're thinking even higher frequency and efficiency, and lower drama - revinvesting overtime profits and earnings in training and hiring - every week or even every day.]
Thompson stayed home that day, worried it might be too embarrassing and maybe too emotional. He also told supervisors he did not want to be flooded with phone calls.
Slowly workers have revealed plans for their newfound [riches]:
Furniture. A car. In-vitro fertilization. Braces for a granddaughter. College tuition for a son. Retirement homes.
But Jim McInnis, whose father also worked at the firm, echoes the thoughts of many others who say the checks did not change their work ethic. Many were back on the job at 5:30 a.m. the day after the checks were distributed. "I've always held my head up high working for this company," he said. "Now it's a little bit higher. I'm standing 10 feet tall."
[Fine, but all of us are now needed to share the work, and some people working 84 hour weeks, no matter what they call it, while others can hardly stitch together enough part-time jobs to break even, is increasingly the pattern of the age of endless work-saving technology, and increasingly the root disparity that Timesizing, with its direct automatic reinvestment based on the incidence of overtime, is so far the simplest, most common-sensical, and most complete solution to. We need balance, and the Step One in balancing the wealth is to balance the fact that we're splitting into people with free time and no money and people with money and no free time.]

[Some CEOs still remember something about incentives for others besides themselves - ]
5/20/99 [Kingston Technologies] gives employees [another!] $20m bonus, AP via Bos Globe, C2.
Another $20 million bonus will be handed out to the 1,000 employees at a computer memory-chip firm that boasts a family-style "we're in it together" philosophy. John Tu and David Sun, cofounders of Kingston Technology Co., told employees in memos that the big payoff will come in July.... Tenure and performance determine how much each employee gets.... The Fountain Valley, Calif. company paid a $38 million bonus to employees in 1997 and $20 million in 1998.

[A New England CEO responds remarkably to tragedy.]
??/??/?? When *Malden Mills, maker of PolarTec(R) in Lawrence, Mass., burned down, its owner Aaron Feuerstein carried his employees through the crisis financially by keeping them on the payroll for months while rebuilding the plant. To him, it was no big deal, - just a non-short-term business decision.

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