Recent shareholder meetings at Citigroup and the Bank of America devolved into morality plays—wronged shareholders berated executives, executives apologetically vowed to improve—with a rather curious epilogue: every member of the board of directors was reelected. The reason is that corporate boards are often filled with under-informed, over-paid yes-men who rarely pay any consequences for bungles, James Surowiecki explains in the New Yorker.
Reform that includes new regulations, more independent directors, and greater diversity hasn’t helped. Shareholders have little say in director nominations, independent directors sometimes lack experience, and too often celebrity dominates (Tommy Franks is a BofA director). Worse, board members are part-time employees. “If the last few years have shown anything, it’s that protecting shareholder interests is a full-time job," notes Surowiecki.
Friday, May 29, 2009
The CIA is looking for a few good bankers to track down millionaire bad guys and stymie financial terrorism, the New York Post reports. Ads on Bloomberg Radio ask money whizzes to use their “intelligence for the work of a nation.” The $160,000 salary will probably be a pay cut for most applicants—provided they still have a job. Interviews will be held at an undisclosed New York location.
Monday, May 25, 2009
In the midst of a recession, so-called “executive fugitives” are driven to increasingly desperate efforts to flee as schemes implode and they face ruin—or prison time. NPR examines the tactics of these con artists—and how more often than not, say the law-enforcement authorities who chase them, their flight is just as doomed as their fraud.
Executive fugitives often attempt to fake their own deaths—sometimes cleverly—but often meet their own undoing when they miss the comforts of affluence and resurface long enough to be nabbed. “It’s either familiarity, lack of human contact or you miss going to the barista to get a coffee,” explains one US Marshal.
Sunday, May 24, 2009
A growing number of colleges are looking at ways to cram 4-year degree courses into 3 to help students combat tough times, the Washington Post reports. More than half of teens have changed their college plans because of the economy, according to a recent survey, and many in the world of higher education believe the time has come to rejig the centuries-old 4-year model to help students save time and money.
"It's a creative solution to a lot of different things," said the director of Chatham University's new 3-year program. "Students enter the workforce quicker, they save a year of tuition and they can go on sooner for graduate study. And no, they aren't missing anything. Academic quality stays the same." Critics, however, believe shortening courses will diminish students' academic—and social—experience.
Nashville really is Music City, Richard Florida writes in the Atlantic. Charting the demographics of the music industry from 1970 to 2004, Florida found that “Nashville was the only city that registered positive growth. In effect, it sucked up all the growth in the music industry.” It’s not just stars and bars, either: The city is home to a staggering 180 recording studios and 80 record labels, across many genres.
“While conventional wisdom holds that modern technology allows musicians to work from anywhere,” Florida writes, “the reality is music, like many other industries, is actually becoming more concentrated and clustered.” So it’s not surprising that a city that in 1970 was a provincial country music capital is “now the center for multiple musical genres from country and gospel to rock and pop.”
Liberal arts students are ditching traditional summer internships of office coffee-fetching for life on the land, reports the New York Times. As part of a generation well-versed in Michael Pollan's attack on industrial agriculture and interested in social change, these students see organic farm work as a political statement. "Everyone eats, and everyone has a vested interest in this," said one intern of his decision to spend summer down on a farm.
But the students may be in for a bit of a culture shock. The hard labor can be a strain, as can the clash between farmers and their politically correct interns. In one case, an intern in Florida threatened to report her boss for using antibiotics, a rather routine matter for the operation. For some farmers, the interns are just not worth the trouble. "They need structure. We need farmhands," said one.
Hollywood's toughest power-brokers—the big shot "10 percenters" of the top talent agencies—are no longer immune to recession, reports the Independent. With the merger between once-rival agencies William Morris and Endeavor officially approved, 100 top agents got the ax. Officials of the new agency hope the firms' combined strength will help it weather the economic downturn, which has led to industry-wide salary cuts.
"The fallout hasn't really begun. I expect a waterfall in the coming months," said Frank Wuliger of the Gersh Agency. "When agents get fired, the actors they represent think again, because the agent-client relationship is intimate; it's like a marriage."
A growing number of older US workers are bucking expectations and retiring early, risking financial hardship in their senior years, the Los Angeles Times reports. Instead of staving off retirement to rebuild diminished nest eggs, many older Americans, frustrated by the job market, are simply calling it quits. Add aging Baby Boomers to the mix, and Social Security claims are up 25% over last year.
Early retirement reduces benefits by up to a quarter, leaving elderly men—and their wives, who tend to live longer—in danger of going broke. "When the recession ends and the economy bounces back, there may be a band of people for whom things will never be the same again," said one AARP director. "They'll still be paying the price for 10, 20, 30 years down the road."
Wednesday, May 20, 2009
Creativity is a tough thing to put your finger on, but Fast Company takes a shot at picking world’s top 100 business innovators. The first five:
Jonathan Ive: Apple’s design chief—responsible for the iPhone, iPod, MacBook, and iMac—ushered in an era of “design perfection” that became “the benchmark by which companies in all industries judge themselves.”
Melinda Gates: The co-chair of the Bill & Melinda Gates Foundation essentially controls the world’s largest charity: “Maybe it should be called the Melinda & Bill Gates Foundation.”
Shai Agassi: The CEO of Better Place has a modest goal: make electric cars the norm, complete with charging stations. Countries around the world have already signed on as testing zones.
Reed Hastings: The CEO of Netflix didn’t just create an innovative DVD mail service—he’s currently working on a plethora of projects with the biggest names in tech.
Rich Ross: The President of Disney Channels Worldwide turned tween entertainment like Hannah Montana into a 100-channel, 163-country behemoth.
Warren Buffett, Bill Gates, and David Rockefeller Jr recently convened a top-secret meeting of many of the world’s wealthiest people to discuss the financial crisis, according to an Irish Central report confirmed by ABC News. A total media blackout prevailed during the get-together, which took place May 5 at Rockefeller University in New York. Attendees included Oprah Winfrey, Ted Turner, George Soros, and Michael Bloomberg, among others.
It’s unclear how so many famous figures could meet without drawing any attention. Each spoke for 15 minutes, giving their perspective on the economic meltdown. Though the event is sure to fuel conspiracy theories, attendees say it was “100% about philanthropy,” though they wouldn’t discuss any details. Gates, Buffett, and Rockefeller are all renowned philanthropists.
Tuesday, May 19, 2009
Google is dealing with the departures of several prized employees the way it deals with nearly everything: with an algorithm. The search giant has a mathematical formula it says will identify which employees are at risk of jumping ship, the Wall Street Journal reports. The formula has already spotted employees who feel underused, a key complaint.
The company fears that it's lost its biggest draws—a startup atmosphere and ever-soaring stock price—now that it’s a 20,000-person behemoth. Many are leaving for burgeoning startups where they feel they can make a bigger impact. But with the formula, Google’s human resource head says they can “get inside people's heads even before they know they might leave.”
When it comes to vacationing this summer, “the power is with the consumer,” says a consultant: The troubled economy has airlines, hotels, and cruises dropping prices dramatically. International airfares are down 14%, domestic fares 17%, Travelocity says; and for the first time since 2005, AAA predicts an uptick in Memorial Day travel, thanks to cheaper fuel and good deals, the Wall Street Journal reports.
Trips may be easier, too: Airlines’ on-time rates have increased from 72.8% last year to 78.1% this year—and airport lines are shorter. Analysts say domestic travel will be more popular than international this summer, as Travelocity sees bookings to cities like Minneapolis, Salt Lake City, and San Francisco rising. Still, with the dollar strong and business-class seats getting cheaper, Europe may not be a bad idea.
Monday, May 18, 2009
he recession hasn’t done anything to stem the tide of young people pouring into places like Portland, Austin, and Seattle, the Wall Street Journal reports, and that’s straining those cities’ job markets. If anything, hipsters who’ve lost jobs elsewhere are more likely to set out for these reputedly cool locales. “A lot of people figure there aren’t jobs anywhere,” said one economist, “so they might as well be where they want to be.”
Portland’s unemployment rate has doubled since February 2007, and local business are closing rapidly as spending decreases. College grads are viciously competing for jobs they’re over-qualified for. “You have to wonder what would inspire someone to walk into a higher than US average unemployment rate,” says the president of a local staffing firm. But here's the rub: This same group of the educated under-employed could help cities like Portland rebound once the economy recovers, the Journal notes.
Lawyers nationwide are learning about foreclosure law to help new clients keep their homes, NPR reports. Housing attorneys are even teaching seminars to lawyers, who accept cases pro bono, knowing homeowners can't turn to swamped legal aid offices. Some find it "incredibly rewarding to help someone save their house as opposed to help protect a company's intellectual property,” one lawyer said.
Case in point, personal injury lawyer Liz Quick. She decided to help bakery cleaner Haji Mirkab keep his two houses. But navigating housing law meant learning a dense web of rules. "I almost feel more like a lender and a banker than I do a lawyer at times, because we're really just trying to put a deal together," said Quick. BofA finally approved Mirkab's loan modification, so he's avoided foreclosure for now.
Capitalizing on public disgust with Britain’s big banks, Richard Branson plans to launch an Internet bank through subsidiary Virgin Money that will take deposits and offer mortgages, the Guardian reports. Branson is talking to investors and some US banks about financial backing and could set in motion more ambitious plans to acquire Northern Rock if the government decides to sell part of it back to the public before 2010 elections.
Friday, May 15, 2009
At Utah’s Neumont University, everyone majors in computer science and “geek” is a badge of honor, not an insult. But some at the school are worried that grads—though highly valued for their tech skills and nearly certain of landing jobs—might be lacking in other areas, the Los Angeles Times reports. So administrators have made classes on people skills mandatory and encourage social clubs.
One, the Gentlemen's Order, focuses on socializing with women, who are in short supply at Neumont. But a recent mission to score digits was a bust. “We got shot down as hell—it was horrible,” a member said. Still, many self-professed geeks love the atmosphere. “It’s a bunch of people addicted to sitting in their mom’s basement playing World of Warcraft and drinking Dr Peppers,” said one, as he drank a Dr Pepper.
Thursday, May 14, 2009
To the list of casualties of the economic crisis, add the three-button power suit. And don't cry for the fashion industry—men are investing in replacements for their cookie-cutter wool security blankets, making men's clothing priced over $100 one of the few bright spots in the bleak retail landscape, reports the New York Times. "It’s the preppy chic these guys have been into, and they’re just refining it," says a Berdorf's exec.
“I have guys coming in here saying, ‘I don’t want to look like a banker anymore,’” one boutique owner says. GQ cover boy Zac Efron, clad in a slim-cut suit with a gingham shirt and knit tie, epitomizes the trend. “This time, guys have looked at the downturn, and said, ‘I have to look the part, find ways to compete,’” one analyst said.
Kids with a sunny disposition may have inherited that attitude from happy parents, a scientist hypothesizes based on research showing that personal experiences can change the traits parents pass on to their kids. This could mean that parents’ pre-conception mental state influences the child, he contends. If that proves true, people may be able to pass on the joy they accumulate in life, LiveScience writes.
While life events still play an instrumental role in people’s moods, related studies have shown that certain personality-related genes predispose children to be happy. “There is a heritable component of happiness which can be entirely explained by genetic architecture of personality,” says a psychologist who led one of those studies.
Wednesday, May 13, 2009
Shades are a precious necessity for paparazzi-wary celebs, but Jack Bernstein has no sympathy. The vintage-sunglasses peddler demands top dollar—up to $25,000—for his tricked-out eyewear, often scooped up at flea markets, American Way magazine reports. With his own Los Angeles shop and an upcoming line, Bernstein has caught, and shaded, the eyes of Brad Pitt, Beyoncé, Fergie, John Travolta, and Jay-Z.
Bernstein takes vintage Diors, Cazals, Alpinas, and Ray-Bans, and reshapes and outfits them for his clients’ faces. The result is a customized pair no other celeb will be caught wearing. If his clients pick a pair that looks bad, Bernstein will be the first to say so. “I’ll argue with them right in the store,” he says. “I don’t want anyone wearing my stuff looking ridiculous.”
Monday, May 11, 2009
She's chef, cheerleader, and Florence Nightengale to scraped knees, but with the economy stinking like a previously enjoyed diaper, Mom is more and more often also a family's breadwinner, reports NPR. As male-dominated industries hemorrhage jobs, 14% of working moms are taking second jobs, a survey suggests. The recession has cost some 5.7 million jobs, four out of five of which were held by men. “Working moms want the gift of time this Mother's Day,” says a careers expert.
The unemployment rate among men last month was 9.4%, compared to 7.1% among women. But equal pay is still out of reach: Women are earning 77 cents for every male-earned dollar—and they get fewer benefits. “Nearly one-third” of working mothers “say that despite it being one of the toughest economies in the nation's history, they would even consider taking a pay cut to spend more time with their kids,” the expert notes.
Wall Street and Washington financial gurus may be seeing “green shoots” of economic recovery, but small businesses are still stuck in the mud, Kevin Kelly writes in Newsweek. Kelly, the CEO of a bag manufacturing company, says too many colleagues' businesses are losing sales, laying off workers, or shutting down altogether. “Call us pessimists, but we're not sure the green shoots aren't just weeds,” he writes.
Still, Kelly wonders if pessimism is its own worst enemy. Worried about debt, he has instinctively avoided major new investments; his like-minded customers are making smaller orders. But doesn't that thinking prevent recovery? If “I wait, and lots of other businesspeople like me wait,” Kelly writes, “what will become of those green shoots that may be dotting the landscape?”
How to engineer a marketing disaster: Make offer, rescind offer, turn away hungry customers. Kentucky Fried Chicken’s grilled-chicken promotion was to be the largest launch in the chain’s history but turned out to be a promotional nightmare, Advertising Age reports in a look at how a massive TV ad campaign and an Oprah tie-in has led to increased negative feelings toward KFC’s brand. How does one bungle something as simple as grilled chicken?
KFC’s offer made the brand the No. 1 Topic on Twitter by last Wednesday, but by Friday, the day after the offer was pulled, negative mentions on the Web shot up 33%, while the 89% positive mentions of the day before evaporated. Says one ad exec: “KFC did more damage to its brand by running an incomplete promotion than if they had just not launched the campaign in the first place."
Saturday, May 9, 2009
Visitors will soon be able to roam the Statue of Liberty’s crown for the first time since 9/11, the New York Post reports. The landmark’s loftiest perch will reopen—when else?—July 4. Ken Salazar announced the move on the Today Show this morning from inside the crown. At first, only 30 people will be allowed in the crown at a time, but after further "rehab" that number will increase.
“We will open the crown of the Statue of Liberty to the entire people of America,” Salazar declared. Asked about safety fears, he said that prospective crown-goers will have to submit to two layers of security screenings, but that even then, it’s “not going to be totally risk-free.”
The pace of layoffs slowed in April when US employers cut 539,000 jobs, the fewest in 6 months; economists had expected 620,000 job cuts. But the unemployment rate climbed to 8.9%, the highest since late 1983, as many businesses remain wary of hiring in a climate of economic uncertainty. However, the slowdown in layoffs may bolster expectations that the worst of the downturn's hefty job losses are past.
"There are glimmers of hope. We are moving in the right direction in terms of layoffs. They are measurably less bad than what we've been through," said an economist. If laid-off workers who have given up looking for new jobs or have settled for part-time work are included, the unemployment rate would have been 15.8% in April, the highest on records dating to 1994.
The recession will mean paltry pay for the Class of '09 for many years to come, economists tell the Wall Street Journal. College grads are entering the toughest labor market in 25 years and competition is driving down starting wages for those lucky enough to land jobs, an effect research shows can linger for up to 15 years.
A survey of workers who graduated in the 1980 recession found that they earned 7% to 8% less in their first year at work than grads from better times and were still earning around 5% less 12 years later. Economists say the trend is largely due to recession grads having to accept lower-grade jobs than they would otherwise have done, meaning they take years longer to acquire saleable skills than those who finished college in boom times.
All you naughty Newser commenters, take note: Software developers are readying an algorithm to glean the human emotions in text and possibly censor inappropriate online discussions, New Scientist reports. So far, the biggest users of such pricey “sentiment analysis” tools are companies looking to gauge consumer reaction to brand-name products.
One firm, using the software to examine Twitter responses to Amazon’s announcement of a new Kindle, found that 89% of 1,500 messages were neutral, 7% positive, and 4% negative. Such software could also warn job seekers to smarten up their resumés or help singles optimize their online profiles. The software will soon be widely available, so be careful how you respond below.
Tuesday, May 5, 2009
Apple is closing in on a $700 million, all-cash deal to buy Twitter, Gawker reports. Silicon Valley sources say an agreement could be announced as early as next month at Apple’s annual Worldwide Developers Conference, and the iPhone is reportedly the force behind the deal: Its users already post countless Twitter messages on Tweetie and other Apple apps.
Twitter recently turned down a $500 million cash-and-stock offer from Facebook, and has also been approached by Microsoft and Google. And though some point to a disconnect between hardware-focused Apple and Web-based Twitter, the deal makes sense, Owen Thomas writes, in that it could help “secretive and paranoid” Apple overcome its resistance “to the wide-open ways of the Web.”
Jimmy Fallon, Trent Reznor, and Twitter have all been honored with a 2008 Webby Award, CNET reports. Fallon, described by the awards committee as “one of the most ardent online evangelists,” was named the Webby’s “Person of the Year” for incorporating Twitter feeds, blogging, and online video into Late Night.
Nine Inch Nails leader Reznor was named “Artist of the Year” for his vocal support of online music distribution. Family Guy creator Seth MacFarlane, who created a new series, Cavalcade of Cartoon Comedy in partnership with Google, was awarded the film-specific version of “Person of the Year.” Lastly, Twitter nabbed the award for “Breakout of the Year,” a new category.
Sunday, May 3, 2009
While many schools struggle to entice new students in hard times, one is receiving more applications and higher-caliber resumes. How does Berea College in Kentucky do it? By offering free tuition, Time reports. Founded in 1855, Berea demands that all 1,530 students work 10 hours a week or more at a service or campus job throughout their 4-year term.
Despite the recession, Berrea is on track to enroll 78% of students it accepted—same as last year—with 10% more ranked in its highest, 4-star academic category. Funded 80% by an endowment and the rest with donations, the school did have to lay off 30 workers this week, but education remains free. "It would be a little presumptuous of me to say" enrollment will rise during the recession, an administrator said. "But I wouldn't be surprised."
It's a small step from the streets of New York to the bright lights of the soccer field, the New York Times finds in a look at Street Soccer USA, a nonprofit that's giving homeless men the chance to pull themselves up by their cleat-straps. The 16-city network turns shelter residents, suffering from a lack of exercise and a surplus of despair, into confident teammates in matching red jerseys networking with the white-collar corporate teams they're playing—and making strides toward integrating back into society.
Founder Lawrence Cann, himself a college soccer standout, lays down ground rules when recruiting his ragtag players: no getting drunk or high before practice, call out the name of your receiver, and keep the coach up to date about how you're doing. It's not “a return to being normal, but it makes me feel like myself again,” says one player. “Two weeks ago, that was the first time that I forgot. I forgot where I was and what was going on.” So far, one player has gone home to his family, and another scored a job and apartment.
Saturday, May 2, 2009
Even with the unemployment rate shattering records, 3 million jobs nationwide remain unfilled. But the growing mismatch between employers and workers tarnishes that silver lining, Peter Coy argues in BusinessWeek. Untrained job-seekers often don’t have necessary skills to work in growing sectors like health care and accounting, and employers complain of the mounting backlog the labor shortage causes.
The problem could worsen even when the economy rebounds, because unemployment figures will likely remain high, bidding wars over qualified workers will boost inflation, and Washington’s quick fixes may make things even worse. Some workers aren’t helping, refusing to relocate or accept lower pay. But smart policy and a dose of realism from all sides can spark a turnaround, Coy contends.