Relax, Unwind, Renew – and Rewind

Busy, busy, busy –

·        Sept 7^th: Pratt open house, then a joyful surprise birthday party with people in from all over – and me totally clueless.

·        9^th: committee meeting at Pratt;

·        10^th: appointment at anti-coagulant clinic, meeting with lawyer to update wills and trusts;

·        11^th: two committee meetings at Pratt, birthday dinner with Ann. 

12^th: thank God, off to the Methow.

The bucolic Methow: unplug and renew in this valley of peace.  We based ourselves at the Mazama Country Inn – no TV, no radio, no nothing except fresh air and good food. 

Sept. 12^th, my day one embarkation on this 86^th year: Ann and I hiked Maple Loop, the most beautiful hike we’ve ever done – notwithstanding the Kleine Schetigg and the Grundewald, the Dolomites and Sud Tyrol, Montana’s Glacier and BC’s Waterton Park, Yosemite and Yellowstone, Lake Louise and the Ice Fields, Mts Rainier and Adams and the rest.  The Maple Pass Loop, a glacial cirque above Rainy Pass in the North Cascades.

Half-way up the north rim; Lake Ann down below.

The north rim takes one up 2,100’ in 4 miles and then curls around the lip and back down the south rim, with Ann Lake on one side and Rainy Lake on the other. We’ve done the seven and a half miles in mist and cloud; this week, in crisp, bright air. . . simply stunning either way.

 

From the lip @6,995', looking northeast into the Cirque 

From the lip, looking southwest toward Glacier Peak (left)

A panorama from the twelve-foot wide south rim; Lake Ann on the left, Rainy Lake on the right; path down the middle. 

Why did the hoary marmot cross the path?  Because he decided Ann was benign.

Friday morning, out on a northern section of the Pacific Crest Trail between Hart’s Pass and the Canadian border.  Despite its glamorous reputation, the trail itself but an unassuming track across Alpine meadow and tundra – just one foot ahead of the other.  One might hope to meet one PCT-er, but we met nine!  Four Kentuckians, 4 months and eleven days from the Mexican border and 31 miles to go; they planned to finish yesterday.  A North Dakota lad, lean and blonde, who finished Thursday, five months and 23 days, who has now walked back south to Hart’s Pass, looking for a ride down to Mazama.  A cold and wet Missouri girl, chilled through and through, calling a halt just 31 miles from her goal; she probably ran out of her food supply – they need 3,000 calories a day.  She planned to warm up a few days in Seattle and then come back and finish.  An Oregon couple, married 34 years, whom we met above Hart’s Pass, adding 31 miles to their completed 2,756; we ran into them at breakfast in town today. 

The Pacific Crest Trail north of Hart's Pass

The border crossing is just a set of post markers and a welcome to Canada sign; no guns, no badges, no questions.  Don't tell Trump.

Finally, Debra, a New Zealander, also finished and coming south. She blew by us at a pace we couldn't match. Debra caught the walking bug back home when for a charity fund-raiser, she did a sponsored walk of the 1700-some miles from south end of South Island to north end of North.  She never went back to her office job in water management civil engineering .  She has walked the Allegheny, on which she acquired a Ohioan boyfriend. Her PCT was interrupted last year in Stevens Pass by a pulmonary embolism that hospitalized her in Wenatchee for two weeks, so she came back this year to finish the last bit in 13 days.  Next: a job in Toronto and then the Continental Divide Trail from Canada to New Mexico.  We gave Debra a lift down to Mazama from where she intended to hitch to Everett and reconnect with trail pals. These free spirits are infectious – but, no, I am not about the tackle the PCT even in small increments.  Seven to ten miles are challenge enough for this lad.

The trail to Blue Lake

Today, a weekend finish on the short, simple Blue Lake Trail between Rainy and Washington Passes.  The huckleberries and blueberries have been hoovered up by the bears; larches turning yellow; small cutthroat hitting at flies in the lake; the rock spires calling for Taylor and Corriell to come and climb.   All is ancient and peaceful and the “real world” far away.  But which is that real world?

These magical 31 years with Ann; we are so lucky to have each other and to share our love of outdoor air, of views, of ascendant challenges.  Onward and upward to renew, recharge, rewind and to keep life in perspective.

PS.  On the way out, we made reservations at the Freestone for MLK Jr weekend in January.  Our winter Methow-fix.

14Sept’19

To Jamie Dimon: Long Over-due But Still Insufficient

Jamie Dimon and The Business Roundtable recently made headlines re “shareholder value” and the “purpose” of corporations.  Long overdue, but still insufficient. 

In 1976, on becoming an officer of General Mills, I began to be invited to management retreats.  I regularly had appeared before the board and top management as part of the “venture teams” that were indulging in (runaway?) mergers and acquisitions, taking us into toys and games, specialty retailing, restaurants and fashion.  (GMI has subsequently divested itself of all of these – but that’s a different story.)  The point is that despite being a new and very junior officer I was confident and comfortable with top brass and unrestrained in speaking up.

At that time of increasing rates of inflation, how to set GMI’s annual goals was a lively issue.  Henry Porter, whom I had in a minor way helped Bo Polk recruit to General Mills, was our brilliant, hard-charging Treasurer. (It’s an interesting feeling watching someone younger attain high position before you; in my case, more bemusement rather than resentment for I acknowledged Henry’s brilliance.) Henry was a crusader for “shareholder value” as the prime measure of success and the metric of our corporate goals. “Shareholder value” is a just fancy way of saying stock price. 

I along with Bernie Loomis of Kenner and a couple of others argued, year after year, against this simplistic goal of increasing “shareholder value” because translated into action it meant focus on quarter-over-quarter gains in earnings per share at a rate higher than the inflating CPI, and catering to investment analyst lemmings.  I was a member of a squad who regularly met with industry investment analysts; my beat was the Toy and Amusement Industry gurus, who really didn’t know much more than what they were fed by me and other company spokespersons as I.

My beef with shareholder value was and is that it rewards short-term thinking and penalizes investment of energy and capital in long-term opportunity.  I always lost those debates with Henry; he was the more articulate, had more at stake than did I, and had the backing of stock-option motivated top management.  One evening at such a retreat at a flossy golf club, Bob Kinney, then President of GMI, and I were relaxing and amusing ourselves on the putting green.  I not only lost money to Bob but he gently but firmly shut me down as I reprised my concerns about focus on stock price and market esteem.  “Fletch, just put one quarter ahead of the last and everything else will take care of itself.”   Two corporate moves later, at UAL/Westin, CEO Dick Ferris won my respect when he refused to allow release of quarterly estimates to the market for the same reason of not indulging short-term focus.  His reward was the financial markets turning on him and on our creation of an integrated airline/ hotel/ rental car/ reservation travel company and helping corporate raiders -- Icahn, Trump, the Basses and finally the Coniston Partners -- to break up UAL.

Now, forty-some years later, comes Jamie Dimon and The Business Roundtable pronouncing on August 19^th that shareholder value is not enough, that a corporation should adopt as its purpose “to deliver value to its customers, . . . to invest in its employees, . . . to deal fairly and ethically with its suppliers, . . . to support the communities in which it works, . . . and to generate long term value for its shareholders.”  The 181 CEOs who signed on were not motivated by my concern about short-term focus. They were more concerned about the Elizabeth Warrens and Bernie Sanders of the world who are challenging the very foundations of corporate rights and structure.  And they are right to be concerned and right to adopt these self-evident and self-servicing “purposes” (for what sensible business leader other than the con-artist-who-shall-not-be-named would expect to succeed by delivering shoddy value, screwing his employees, screwing his suppliers, and weakening his community?)

As laudable as is this statement of “stakeholder capitalism” signed off on by Tim Cook of Apple, Jeff Bezos, Jamie Dimon, Ben and Jerry, Muilenberg of Boeing and Barra of GM and their 174 compatriots -- it is insufficient.  It won’t help return long-term thinking to the forefront or encourage investment and opportunity seeking.  And the immediate push-back from the editors of The Economist and The Council of Institutional Investors demonstrates that more must change than just anodyne statements of purpose.  Corporate goals and management incentives must change. Society’s tolerance of privatization and mergers must change.

Re goals: long-term objectives, strategies, tactics and annual goals must be set for each “stakeholder” and management held accountable for performance on each one.

 

Re management incentives: managers should not be rewarded in stock.  Yes, not; pay management in cash.  The old saw about “aligning management goals with shareholder interests” is crap, a glib rationalization for management taking excess rewards.  Shareholders, most of whom are fund managers, have no loyalty to companies or to its long-term goals.  Their rewards and penalties are today’s price rises and falls and the fees they can collect. Remove management’s near-sighted dependence on stock awards and options and you will free them to look up and outward and to become better business developers and stewards of your investment.  Pay them in cash and you will steadily reduce the compensation gap between them and their employees.  Pay them in cash and you will deter stock-buybacks and encourage new investment and search for new opportunities to use capital.

Re privatizations and mergers: we need more corporations, not fewer.  In 1998 there were some 7,300 corporate equites listed on US market exchanges.  Today there are around 3,600.  Imagine that! In but two decades, at a time when low yields on bonds drive investors toward equities, your choice of what to buy has been halved. Little wonder that the bull market continues despite worries and risks ever more evident; more investors are chasing fewer things to buy.  The FTC and DOJ must change their permissive stance on mergers and acquisitions.  Privatizations must be constrained. (I have no idea how to do that but smarter guys than I, young Henry Porter types, ought to be put to work on how to reduce private equity tale-overs through tax and regulatory constraints.)  I repeat: we need more corporations, not fewer.

Corporations must change themselves or be changed.  The fault is not narrow purpose or lack of recognizing stakeholders.  The fault is management rewards and incentives and inadequate regulation of stock buy-backs, mergers, acquisitions and privatizations. Stakeholder capitalism is and always has been the foundation of a healthy, growing, equitable economy, but the way to realize it is to change management’s goals, rewards and attentions and the rules of the game they play.       

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 [FW1]