This is an interesting post by Marc Andressen (creator of Netscape among other things) about "dual-class" stocks.
A dual class stock situation is when a company issues 2 types of stock, where 1 class has significantly more voting power than the other. This puts most of the control of the company in the hands of the few people allowed to buy the special stock.
He makes an interesting case why he now thinks this is a good idea. I agree, under certain situations, that this would be for the best. Especially if the company is dealing in a fast-changing industry, or with very technical & sensitive information they cannot safely explain to the general public.
Saturday, May 30, 2009
Saturday, May 23, 2009
New Credit Card Rules
A new set of rules governing the credit card industry has just been signed into law.
Provisions include:
I'm all for the Second Amendment (within reason), but what does this have to do with credit cards?!? These non-related amendments kill me!
Now you know!
Provisions include:
- The companies cannot "go back in time" and raise your rates on past balances.
- They must post their guidelines & credit card agreements online.
- They must mail out bills 3 weeks before they are due.
- They cannot change the payment-due dates.
- People with concealed-weapons permits are now allowed to carry hidden, loaded weapons into national parks & wildlife refuges.
I'm all for the Second Amendment (within reason), but what does this have to do with credit cards?!? These non-related amendments kill me!
Now you know!
Thursday, May 7, 2009
UAW + Ownership = Conflict of Interest
An article in BusinessWeek set me thinking. If the UAW ends up owning a large stake in GM or Chrysler, what does this really mean for the union? It opens up a lot of conflicts.
First, The UAW would make a lot (hopefully) of it's income from the profit of the company. Often, what helps boost profits doesn't also help workers - so which way should the board members appointed by the union to vote?
Second, how could the union ever go on strike? They would be in-part striking against themselves. When they stop working, the company stops making money, so the income the union needs to support the striking workers goes away. Oops.
Third, especially for GM, the UAW would be the majority stakeholder. So, how can they recruit people who work for other manufacturers?!? If a non-GM worker were to join the union, they would be helping to support the competiton of their employers - jeopardizing their own jobs.
Forth, Once the UAW gets this big stake in these companies, they are stuck with them. To sell off those shares would be a huge vote of no-confidence against your own workers. They could only sell them off a bit at a time. So, in reality, those shares are essentially worthless to the union. They could GIVE those shares to their beneficiaries in lieu of the cash they are supposed to pay. Imagine instead of getting your retirement check in the mail, you get a handful of stock certificates. The workers would need to find brokers to cash-but their shares for them. But this would depress the sock price, hurting the value of the remaining shares the union holds.
Fifth, If they own a big chunk of 2 competing car companies, with representatives on both boards, doesn't that could as an FTC violation?!? You bet it does! Google & Apple are currently being investigated b/c they are in the same industry, and they share 1 board member (also, Google's CEO is on Apple's board). Do the board members vote to sabotage one company in order that the other profits?!?
So what should the UAW do? Agree to take the stock-for-debt trade from GM & force Chrysler to pay cash, essentially sinking the restructuring that the bankruptcy court is looking for. Fiat doesn't have enough cash to pay that bill & continue to buy Opel as well.
So, does the UAW kill Chrysler, and then pray that Fiat decides to try instead for a piece of GM? Killing Chrysler would let Fiat buy the assets cheap, without needing to deal with the UAW, and where does that leave the UAW?
The UAW has to play ball, but it will be an ugly game.
Perhaps the government refuses to allow the UAW to have members of wither board. Then, the largest shareholder has no say in the direction of their company - their investment - their money! How unAmerican is that?!? But that might be the price to pay.
First, The UAW would make a lot (hopefully) of it's income from the profit of the company. Often, what helps boost profits doesn't also help workers - so which way should the board members appointed by the union to vote?
Second, how could the union ever go on strike? They would be in-part striking against themselves. When they stop working, the company stops making money, so the income the union needs to support the striking workers goes away. Oops.
Third, especially for GM, the UAW would be the majority stakeholder. So, how can they recruit people who work for other manufacturers?!? If a non-GM worker were to join the union, they would be helping to support the competiton of their employers - jeopardizing their own jobs.
Forth, Once the UAW gets this big stake in these companies, they are stuck with them. To sell off those shares would be a huge vote of no-confidence against your own workers. They could only sell them off a bit at a time. So, in reality, those shares are essentially worthless to the union. They could GIVE those shares to their beneficiaries in lieu of the cash they are supposed to pay. Imagine instead of getting your retirement check in the mail, you get a handful of stock certificates. The workers would need to find brokers to cash-but their shares for them. But this would depress the sock price, hurting the value of the remaining shares the union holds.
Fifth, If they own a big chunk of 2 competing car companies, with representatives on both boards, doesn't that could as an FTC violation?!? You bet it does! Google & Apple are currently being investigated b/c they are in the same industry, and they share 1 board member (also, Google's CEO is on Apple's board). Do the board members vote to sabotage one company in order that the other profits?!?
So what should the UAW do? Agree to take the stock-for-debt trade from GM & force Chrysler to pay cash, essentially sinking the restructuring that the bankruptcy court is looking for. Fiat doesn't have enough cash to pay that bill & continue to buy Opel as well.
So, does the UAW kill Chrysler, and then pray that Fiat decides to try instead for a piece of GM? Killing Chrysler would let Fiat buy the assets cheap, without needing to deal with the UAW, and where does that leave the UAW?
The UAW has to play ball, but it will be an ugly game.
Perhaps the government refuses to allow the UAW to have members of wither board. Then, the largest shareholder has no say in the direction of their company - their investment - their money! How unAmerican is that?!? But that might be the price to pay.
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