Randomly Noted

Yesterday’s blog about Microsoft CFO Chris Liddell’s appointment as General Motors’ new CFO promised an update about his pay package. This story, by WSJ colleagues John Stoll and Joann Lublin, has the compensation info plus details of the “arm wrestling” that went on between GM’s board and the U.S.’s “pay czar” Kenneth Feinberg. It also reveals that GM began wooing Liddell before he quit the tech giant and indicates, as I surmised yesterday, that he could be an eventual GM CEO candidate.

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For those who came of age as fans of rock music in the 1970s, there’s a romance about the bootleg – a surreptitious, illegal recording of a rock concert circulated among hardcore fans. Bootlegs of legendary live performers of the Grateful Dead, Bruce Springsteen and others became necessary acquisitions for anyone who considered himself a true fan of one of these rock gods.

Thirty years later, technology and a bit of creative thinking have turned bootlegs into a respectable revenue stream, which I learned during a weekend excursion with my wife to a Rob Thomas concert.

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The Securities and Exchange Commission last week approved more information for investors about a range of important things from compensation policies to the qualifications of director candidates.

In reality, it’s hard to know how much it will help or how much will even be read. At one point in its new rules the SEC asks for a “narrative” about compensation practices, but it’s unlikely to provide work for unemployed English majors.

Instead, it’s probably will mean more deadly prose from corporate lawyers. They’ll woodenly say as little as possible to meet the requirements.

The enhanced proxy disclosures, which go into effect next February, do have some good points. Among them is the request to list the bona fides of director candidates that come from a board’s nominating committee.

Boards should have to stand up for their candidates. Presumably, such a qualifications report, including other directorships and past legal proceedings, will give shareholders a better sense of the people for whom they are casting votes. Maybe it will even discourage the recruitment of “trophy” directors, well known people whose achievements are in fields miles and miles away from what the company in question does for a living.

Also not bad in theory is the requirement that companies explain why they do or don’t  have the chairman and chief executive officer positions split between two people. The split’s a good thing if the chairman role is to have real meaning for governance and broad ethical oversight.

This rule doesn’t require a split, just some explanatory language.

The new rules also ask for insight into the board’s role in risk oversight for the company. Risk meltdown and poor models and controls were near the heart of the financial crisis from which we are slowly emerging.

To truly be effective in a risk management role, especially at financial companies where it matters most, you’d better have some strong and independent finance experts on the board. 

A legitimate financial eminence, former Federal Reserve Chairman Paul Volcker, recently said the chances of boards understanding the complex financial instrumenst developed by Wall Street in the past decade were “nil.”

And then there’s narrative. An SEC press release says a rule is designed to help investors determine whether “a company has incentivized excessive or inappropriate risk-taking by employees.”

“Among other things, it would require a narrative disclosure about the company’s compensation policies and practices for all employees …” It’s hard to imagine any company will publicly own up to pay policies creating excessive risks. More likely, we’ll be told everything is under control.

Today’s WSJ piece about Apple considering launching an internet TV service underscores just how fast the television landscape is changing. Apple is almost certainly on the right track – in fact, it’s a bit late. Hulu (owned by three media firms including our own News Corp.) is already in that space, as is Netflix. In our home, we have a flat-screen TV but no cable television subscription. Instead, our television is hooked up to our computer as a second monitor, and we watch programs from Hulu and others, or borrow DVDs from the public library. We don’t miss real-time TV at all – mainly because we’re not sports aficionados. That said, the upcoming kick-off of American Idol’s new season will be the true test of our family’s TV-less experiment, which began when we moved back to the U.S. last June. While abroad, we always had cable TV and spent too many hours slumped on a couch flipping from one junky show to another. Viewers’ ability to buy the precise programs they want, whenever they want, is the way of the future. Apple, Hulu and Netflix have it right.