Public Relations

BP’s Image Campaign Can’t Work Now

Posted by Neal Lipschutz on June 07, 2010
Commodities, Crude Oil, Energy, Environment, Natural Disasters, Public Relations, United States / Comments Off

BP PLC has reached the point in the Gulf oil spill crisis in which its responsibility for the environmental disaster permits outsiders to feel entitled to comment on every aspect of the oil giant’s business.

So a public debate ensues about whether BP should continue to pay a dividend to investors when the oil is still leaking and the eventual level of BP’s liability and costs can’t yet be known.

And, as cited in an article by Suzanne Vranica in today’s Wall Street Journal, a debate ensues about whether the company should have spent a reported $50 million for image-improvement advertising on television.

On that latter point, whether you think the spending ethically justified or not, it certainly is premature.

Despite the image experts Vranica lists as being hired by BP, the final line of the article to me is the most telling.

“Until the leak is stopped, no amount of advertising or PR will help,” said Chris Gidez, U.S. director of crisis communications at Hill & Knowlton NY, as quoted by the Journal.

For BP that stop has to happen before any image repair work can be successfully undertaken.

Nothing can compete with the images of the continually spewing oil from the ocean floor and the oil-drenched birds.

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Tin Ear Department – Another Chapter

The latest example of tin ears in the so-called c-suites and in board rooms comes courtesy of reporter Elizabeth Holmes in today’s Wall Street Journal. The retailer Abercrombie & Fitch Co. agreed to pay its CEO $4 million to limit his personal use of the company’s jet.

That’s right, CEO Michael Jeffries gets a lump sum payment of $4 million to induce him to only fly in the corporate jet for personal trips up to $200,000 a year. 

Jeffries’ prior employment agreement gave him unlimited personal use of the corporate jet. It’s a perk he seems to have put to good use. His personal travel on the jet in 2008 tallied about $1.1 million, the Journal said.

It’s simply hard to imagine why a board of directors of a public company would find it necessary to put unlimited personal use of a corporate jet into a CEO’s employment agreement.

One more piece of context supplied by the Journal article. Jeffries’ pay package in 2008, the last year for which data are publicly available, totaled $15.9 million.

Think about how this news is going to go over with Abercrombie & Fitch employees, customers and shareholders. Not to mention the broader public, where the deep recession has stirred significant resentment against high CEO pay, especially in situations where the pay doesn’t seem tied to company financial performance.

Abercrombie’s financial performance isn’t even the issue here, in this blogger’s view. I’ve maintained many times that what upsets many people is not so much high pay at top jobs when companies are performing, but the perks granted alongside that high compensation, perks that are typically unavailable to others.

That’s the tax “gross ups,” the easy terms on a mortgage, the country club payments. The view of the resentful, understandably, is that if you are making a lot of money you can pay your own taxes like everyone else.

Same thing applies here. With nearly $16 million in compensation in 2008, it doesn’t seem like too much to ask the CEO to limit his personal, not business use, of the corporate jet, and not have to pay big dollars for that adjustment.

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Scrabble Fights To Stay Cool, With Help From Jay-Z and New Boyz

Scrabble may be a simple game to learn to play, but it sure gets complicated as a business. For a start, Hasbro owns the rights in the USA and Canada and its arch-rival Mattel owns them for the rest of the world.
Now, adding further to the confusion are reports (for example here) that the rules are being changed to allow proper nouns. If you’re stuck with hard-to-play tiles you’ve now got Jay-Z, New Boyz and Nhojj to help you out.
The change, as many commentators have pointed out, is proof that the world is becoming a dumber place, where youngsters know the names of soul singers instead of words such as hajj or calx (the residue from burning a metal), which previous generations used to great effect to clear troublesome tiles out of the racks.
Except that it’s not true. The rules of Scrabble aren’t being changed.
What’s happening instead is a smart piece of brand extension by Mattel. Scrabble may be a great and loved brand, but the core game hasn’t changed for decades so most people who want to play have a set.
Mattel UK spokesman Philip Nelkon told Randomly Noted that Mattel in the UK is planning to launch Scrabble Trickster, a souped up version of Scrabble in which players in some circumstances will be able to play proper nouns, steal tiles from rivals and even spell words backwards.
Standard Scrabble will continue to be sold, Nelkon says. “The rules of that are sacrosanct,” he stated.
Over recent years the Scrabble brand has been stretched and applied to games that aren’t standard Scrabble or even anything like it. Going by amazon.com sales rankings, the best-selling Scrabble game in the U.S. at present is Scrabble Slam, a $5.99 card game with no plastic tiles, no double word scores and indeed no board. However the Scrabble brand name gives it instant shelf space in retailers and credibility with buyers. The original board game doesn’t feature in the top 100. However neither Hasbro or Mattel will be pleased to see that Bananagram, a UK-designed wordmaking game that uses tiles but no gameboard, is selling far faster than any Scrabble spin-off. Word games may have been around a long time but Scrabble can’t rest just on its brand.
Based on this writer’s own recent visit to Toys R Us, brand extension in board games is a craft Hasbro has turned into a fine art with Monopoly. Our local toy superstore on the last visit had seven varieties of Monopoly, including Simpsons and Star Wars themes, upmarket versions with lots of electronics, a version where property values have been adjusted for inflation so you’re trying to keep track of huge-denomination bills, and another one with different rules where you don’t need to own all of a color set to start building. Yet Hasbro still make the traditional version available, although they’ve included an optional twist in the rules using an extra die that can make the game quicker to play.
Of course the real money in all these classic games is going electronic. The success of Lexulous online shows that Scrabble has a real edge over many other games in that it’s easy to dip in and out of playing, making it ideal for mobile phones or playing in a 10-minute coffee break in the office. One question yet to be answered is whether spin-offs and electronic versions can survive if the original is deemed to have lost relevance or be played only by the non-digital generation. Mattel is obviously not keen to find out.

Scrabble may be a simple game to learn to play, but it sure gets complicated as a business. For a start, Hasbro owns the rights in the USA and Canada and its arch-rival Mattel owns them for the rest of the world.

Now, adding further to the confusion are reports (for example here and here) that the rules are being changed to allow proper nouns. If you’re stuck with hard-to-play tiles you’ve now got Jay-Z and New Boyz to help you out.

The change, as many commentators have pointed out, is proof that the world is becoming a dumber place, where youngsters know the names of rappers instead of words such as adze (a woodworking tool)  or calx (the residue from burning a metal), which previous generations used to great effect to clear troublesome tiles out of the racks or get a high-scoring tile onto a triple-scoring space on the board.

Except that it’s not true. The rules of Scrabble aren’t being changed.

What’s happening instead is a smart piece of brand extension by Mattel. Scrabble may be a great and loved brand, but the core game hasn’t changed for decades so most people who want to play have a set.

So Mattel UK spokesman Philip Nelkon told Randomly Noted that Mattel in the UK is planning to launch Scrabble Trickster, a souped up version of Scrabble in which players in some circumstances will be able to play proper nouns, steal tiles from rivals and even spell words backwards.

Standard Scrabble will continue to be sold, Nelkon says. “The rules of that are sacrosanct,” he stated. Scrabble Trickster is aimed at a new audience.

It’s not a new idea. Over recent years the Scrabble brand has been stretched and applied to games that aren’t standard Scrabble or even anything like it. Going by amazon.com sales rankings, the best-selling Scrabble game in the U.S. at present is Scrabble Slam, a $5.99 card game with no plastic tiles, no double word scores and indeed no board. However the Scrabble brand name gives it instant shelf space in retailers and credibility with buyers. The original Scrabble board game doesn’t feature in amazon.com’s top 100 games. However neither Hasbro or Mattel will be pleased to see that Bananagram, a US-designed wordmaking game that uses tiles but no gameboard, is selling far faster than any Scrabble spin-off. It shows that word games may have been around a long time but Scrabble can’t rest just on its brand.

Based on this writer’s own recent visits to Toys R Us, to see brand extension turned into a fine art it’s necessary to find the shelves selling Hasboro’s Monopoly. Our local toy superstore on the last visit had seven varieties of Monopoly, including Simpsons and Star Wars themes, upmarket versions with lots of electronics, a version where property values have been adjusted for inflation so you’re trying to keep track of huge-denomination bills, and another one with different rules where you don’t need to own all of a color set to start building. Yet Hasbro still makes the traditional version available – although they’ve included an optional twist in the rules using an extra die that can make the game quicker to play.

Of course the real money in all these classic games is going electronic. The success of Scrabble-alike Lexulous online shows that Scrabble has a real edge over many other games in that it’s easy to dip in and out of playing, making it ideal for mobile phones or playing in a 10-minute coffee break in the office. One question yet to be answered is whether spin-offs and electronic versions can survive if the original is deemed to have lost relevance or be played only by the non-digital generation. Mattel is obviously not keen to find out.

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Dimon’s Too-Long Letter Makes Some Points

When it comes to annual letters to shareholders, Jamie Dimon is no Warren Buffett.

Dimon, JPMorgan Chase’s chairman and chief executive, recently deposited 37 pages on unwitting holders that included none of the folksiness nor clever turns of phrase that pepper the writing of the famous Omaha investor.

Somebody should have told Dimon, arguably the most influential person in banking, that 37 pages is just too long and a little humor never hurts.

Continue reading…

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The Way It’s Supposed to Work

Posted by Neal Lipschutz on December 03, 2009
Compensation, Corporate Governance, Executive Compensation, Public Relations, United States, Wall Street / Comments Off

News that Goldman Sachs Group Inc. is meeting with big investors in an effort to win approval, or at least staunch disapproval, of its generous compensation practices is a nice show piece for corporate democracy.

Hey, this is the way it is supposed to work. No government-appointed pay czar  needed. Wall Street Journal reporter Susanne Craig gets to the heart of the hub-bub around Goldman’s pay – especially after it received government aid and more broadly benefited from government interventions in financial markets. Click here to see her article.

Continue reading…

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A Bad Idea at the Movies

Posted by Neal Lipschutz on June 25, 2009
Advertising, Entertainment, Public Relations, United States / Comments Off

The decision to double the number of U.S. films nominated for the Best Picture Oscar is a bad one. It manages to dilute the brand of the Academy Awards. I am not sure of  the marketing value of the banner  Academy Award Nominee for Best Picture plastered on a printed advertisement. Whatever it was, it’s worth less now that 10 U.S. movies can boast that designation rather than the previous five.

Sid Ganis, the prsident of the Academy of Motion Picture Arts and Sciences, is quoted in today’s Wall Street Journal saying, “This wasn’t a knee-jerk decision.” In fact it had been considered for a couple of years and there was “no pressure” from the film studios. “We just felt we needed to expand the possibilities to allow more genres,” he told the Journal.

Cynics will think it’s tied to ratings declines for the annual awards broadcast. Cynics will think it’s another example of a we-are-all-winners culture that winds up diluting real achievement.

Being named Best Picture has never meant the film was really the Best Picture, which ultimately is a subjective judgment. 

The phrase that all the nominees use, whether sincere or not, is that win or lose it was an honor just to be nominated. Now, for Best Picture, it’s a little less so.

Message To Six Flags – Save Your Money

Posted by Rick Stine on June 24, 2009
Bankruptcy, Public Relations / 2 Comments

medium_nj_daredevildiveAvenue Capital Management owns some of Six Flags bonds and it went to bankruptcy court the other day to seek restrictions on how Six Flags spends its money. It seems some other bondholders were striking a deal or deals with Six Flags regarding a restructuring and Avenue Capital felt left out and wanted spending put on hold for the time being.

Yesterday, a judge ruled Six Flags can spend some money.

Today, Six Flags spent some money – on a press release announcing extention of a corporate alliance with Chrysler that allows the just-emerged bankrupt company to say it sports the Official Vehicles of Six Flags.

Huh?

Continue reading…

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More From The PR Spin Files…

Posted by Rick Stine on June 22, 2009
Public Relations / Comments Off

See if you can guess what this company does?

In it’s earnings press release today, it describes itself as a “legendary 157-year-old company in the global business of safety, security, protection and sport.”

No idea? Click to the next page…

Continue reading…

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A Bit More on Steve Jobs and Disclosure

I agree with what my colleague and fellow blogger Gabriella Stern wrote here about the disclosure obligations of the Apple Inc. board of directors and the illness of the company’s leader, Steve Jobs. Despite already being on medical leave, shareholders did indeed deserve to know that Jobs, the man widely viewed as Apple’s innovator-in-chief, had a liver transplant about two months ago.

It sheds light on an interesting and ongoing issue in U.S. corporate disclosure. In simplistic terms I describe it as the difference between material and merely important. To reach the level of materiality, and thus obligate a publicly traded U.S. company to report it, new information has to be of a level to change the mix of an investor’s thinking about the company.

The definition of what is material is not written down anywhere. It is developed in case law and so open to some, usually lawyerly, interpretation. A few years back in a court case, the Securities and Exchange Commission said something is material if “there is a substantial likelihood that a reasonable shareholder would consider it important” in making an investment decision. Also, if there was a substantial likelihood a reasonable investor would think the information ”significantly altered the total mix of information available” about a company.

Continue reading…

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Chrysler’s “Historic Day”

Posted by Gabriella Stern on April 30, 2009
Auto Industry, Bankruptcy, Public Relations, Transportation / 1 Comment

A good friend, Chrysler employee (still employed!), and the father of a young brood in the Detroit area,  sent along Bob Nardelli’s swan-song staff memo (plus a few quick personal comments.) I get a kick out of legally-vetted, HR-and PR-laundered missives which attempt to strike a jaunty, upbeat note while purporting to be candid and tell-it-like-it-is. Some excerpts: “This is a historic day for Chrysler.” That’s one word for it. “I am very pleased to report that Chrysler LLC and Fiat S.p.A. have reached an agreement in principle to establish a global strategic alliance.” How times have changed – a former basket-case Italian auto maker is poised to help an American legend survive.  “…I plan to leave the company and return to Cerberus Capital Management as an advisor…(T)his is an appropriate time to let others take the lead in transformation of Chrysler with Fiat.” Lucky fellow – has a fancy job waiting for him at the private equity firm that did such a lackluster job in the first place. Chrysler and Fiat will “fully optimize our respective manufacturing footprints…” Footprints – the work of  speech writers and publicists trying to avoid mundane words like “operations” or “factories.” Continue reading…

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