Part 2 - The Dow Tumbles and Ethics

A Personal View, continued
October 15, 2008 It will be interesting to follow prices for miniature portraits and other art, during and after the present financial crisis. As I write this on October 15, the Dow has dived again, nearly reaching the level of October 10 and from the level of the Dow Futures, it looks as if the Dow may reach a new low tomorrow.

(Later note re Oct 16. Yes, it did fall 300 points in early trading, down to 8198, but then ended 400 up from the opening at 8979!)

From the examples shown below, it can be seen there has been some downward pressure on miniature art prices, but I do not expect that to be long term.

Please forgive the following diversion from art, but advanced age does give privileges! Today CNBC had an interesting conversation with Carl Icahn. He made comments I have heard him say before. That the Board and Executive structure of many companies is often a cosy club, with the Board and Executive more interested in golf, private aircraft, functions, and personal rewards, than running a large company in the best interest of the shareholders.

Having worked in a number of large listed corporates, at both CFO and CEO level, and never having been attracted to the baubles Icahn mentioned, I agree with his comments.

I once recollect reading that one should avoid working for a company where any four of the following applied;
1 the Chairman had a knighthood,
2 the Chairman drove a Bentley,
3 he employed his son in the company,
4 the company owned a company yacht,
5 the company owned a company airplane.
6 the Chairman had a number of pet projects

At the time I was CEO of a listed investment company and had to answer "yes" to all six points!

I used to inwardly groan at needing to attend cocktail parties, sports and other functions, and to fly on the company plane. (I managed to avoid the company yacht!) When needing to travel, I quickly tired of eating out and so often had cheese and biscuits in a hotel by myself.

A little later, I resigned after a major argument over the Chairman's then pet project, to buy an airline, as part of a consortium he was trying to put together.

The project evaluation was very detailed, including visits to Boeing and McDonnell Douglas, but I became more and more nervous about the risks during the evaluation.

Therefore I recommended against the project, saying to the Directors; "the risk was too great for the company to pursue"!

Although they were scared of the Chairman, the Board seemed relieved at my recommendation and agreed with me, but the disagreement with the Chairman could not be mended.

(The airline was purchased by the other members of the consortium, but soon failed! However, I never ever received any belated thanks for saving the company from the same fate!)

In my previous analysis of the crisis I mentioned one personal credo "Profits are interesting, but cash is vital".

I had a couple of other personal credos when facing difficult situations, such as the airline project, one was; "The shareholders are paying my salary and hence I want to do what is right for them".

Another was "I have to look at myself in the mirror every morning when I shave, and so want to be able to tell myself I have done the right thing."

Corporate politics can be vicious, with many executives and directors pursuing their private agendas at the expense of the company and its shareholders. Not infrequently, I found myself a lone voice, forced to consider how to react to such private agendas.

On more than one occasion my conscience and personal credos led me to resign, rather than follow the private agendas and rewards sought by others. That was where I felt the direction proposed was incorrect for the shareholders and so could not support it.

However, once the stress of the events leading to my resignation had reduced, I normally slept a lot better! Now, I miss the income, but not the politics!