Contrary to popular belief, I do understand that business must able to
compete in global markets and that a healthy business climate is crucial to
California’s prosperity. Moreover, I resist the notion that J.K. Rowling had
corporate America in mind when she created Voldemort.
That said, a news item and a children’s book recently reminded me that I
know zip-dah about the way the business community views the world and so
have little appreciation for what it considers “healthy.”
This is an opportunity for someone to educate me, because I hate wallowing
in this kind of ignorance.
First, background on the news item. Knight Ridder publishes 32 newspapers
around the country, including the San Jose Mercury News, Philadelphia
Inquirer and Miami Herald. Among its other California properties are the
Contra Costa Times and Monterey Herald. An investment firm (Private Capital
Management of Florida) holds a large chunk of K-R stock, and it has been
exceedingly crabby over that stock’s double-digit plunge. PCM has pestered
K-R management to cut costs and even to sell off newspapers to generate
assets PCM can better appreciate.
Recently, however, K-R itself detailed this company filing with the
Securities and Exchange Commission: “The [Compensation] Committee determined
that the bonus target for 2006 for the Chief Executive Officer should be
increased to 95 percent of salary from 85 percent of salary for 2005. The
Committee also determined that bonus targets for 2006 for the Senior Vice
Presidents of the Company, should be increased to 60 percent of salary from
50 percent of salary for 2005 and amended the Knight Ridder Annual Incentive
Plan (“Bonus Plan”) to allow the Committee to set bonus targets for the
Senior Vice Presidents of the Company outside of the 50 percent limit
prescribed by the Bonus Plan.”
So, then, the primary K-R investor is so grumped out over performance that
it is yammering to dismember the company while, at the same time, the
executives responsible for that performance are to be rewarded with larger
I seem to be missing the logic that bridges these two actions. Maybe the
Chamber or Business Roundtable or Steve Westly–any business savvy
person–could connect the dots.
While we wait for a reply, let’s examine a book of photographs: “Kids at
Work, Lewis Hine and the Crusade Against Child Labor,” by Russell Freedman
(Scholastic Press, 1994).
Nearly a century ago, Hine was a photographer for the National Child Labor
Committee–an organization dedicated to exposing the evils of sending
children to factories rather than to kindergarten. He traveled the country
between 1908 and 1918, visiting mines, canneries, mills, farms–any site
where children, many under age 10, worked long hours for little pay. Under
the pretext that “seeing is believing,” Hine chronicled spinners and doffers
in Tennessee cotton mills, oyster shuckers in Louisiana canneries, coal
breakers in Pennsylvania mines, furnace tenders in Virginia glass factories,
newspaper boys and bootblacks on Brooklyn streets, pickers in New Jersey
cranberry farms and Texas cotton fields, toppers and pullers in Colorado
beet fields, needle workers in New York’s garment industry.
The resolve behind this undertaking was to “shock and anger” the country and
to provide a visual argument on behalf of child labor laws. According to the
book, Congress responded with several such laws between 1918 and 1930,
including a 1924 constitutional amendment, but business fought every effort
to the bitter end, teaming with states’ rights advocates in court actions
that successfully blocked implementation. The practice of employing very
young children did not begin to fade until the mid-1930s, not because
business had a change of heart but because the Great Depression created a
vast pool of unemployed adults who competed for the same low-wage jobs. Not
until 1938 did the Fair Labor Standards Act finally place federal limits on
child labor, and you could argue that the practice merely moved offshore.
Yesterday, the issue was child labor, migrant workers, risks associated with
smoking. Today, it’s global warming, the cost of prescription drugs,
price-gouging after the disaster d’jour. Perhaps while clarifying the
relationship between K-R’s executive bonus plan and company performance,
someone also might explain why business chronically trails the public when
it comes to social conscience.
The answers might help all of us understand what business considers “healthy.”