Y2K2 was worst for CEOs

Chief executives were forced out of their jobs last year at record levels all over the world, according to a global survey of leadership turnover quoted by Reuters.

Management and technology consulting firm Booz Allen Hamilton's Survey of the world's 2,500 largest publicly traded companies found that 253 CEOs left their positions last year a 10% of rise over 2001. Of those, nearly 100 were forced out of their jobs because of poor performance - a 70 % increase over the number fired in 2001.

"Business leaders are enduring scrutiny and pressure unseen since the Great Depression of the 1930s", Reuters has quoted Charles Lucier, senior vice-president emeritus of Booz Allen. "The CEO mystique has all but evaporated and director activism has replaced crony capitalism in the boardroom".

The report also shows that CEOs who were appointed from outside were more vulnerable than insiders during the slump. Most corporate leaders endure during the second half of their tenure.

The industries that saw the highest rates of CEO turnover were utilities and telecomes at nearly 16% each.

Buffetology-03

Warren Buffet, the billionaire investor, has advised the large institutional shareholders to be tougher with companies they invest on to counter the decline in corporate standards, according to reports quoting  Reuters.

Meanwhile, Buffet, the world’s second richest man, has appointed two of his close friends to the board of his company Berkshire Hathaway Inc. to comply with proposed corporate governance rules that he has been criticising.

The rules slated for approval this year require that the companies should have majority of directors that are independent of management.

Agencies have quoted Buffet as saying that companies saw large shareholders as “The 800 pound gorilla they don’t want to have mad.” Buffet said this at his annual press conference in Omaha, Nebraska (USA), the day after the annual meeting of his insurance and investment company.

He said large shareholders should cooperate to present a set of principles to companies they invest in, threatening to withhold support if the companies do not comply.

Last year’s Sarbanes-Oxley Act, designed to improve standard of governance and accounting at US companies, would not solve problems by itself, and individual shareholders had no realistic chance of forcing change on their own, said Buffet.

For more than a decade, the master of financial markets has been saying that the push for independent directors was misguided and that “business savvy, interested and shareholder-oriented board members” were more valuable. The recent appointment of his long-time friends Donald R Keough (a retired Coca Cola Co. President) and Thomas Murphy (former head of Capital cities/ABC Inc.) is to fulfil the proposed legal requirements while ensuring that Buffet’s control on the board of the company is not loosened.

VAT Delay in India

Indian government’s revised deadline of June 1, 2003 to implement Value Added Tax (VAT) throughout the country was not met, say reports.

Only nine of the 27 states of India were reported to be ready for this new uniform tax on consumption while two more were said to be in a position to be ready by June 1.

Though these 11 states are said to account for two-third of India’s trade and industrial output, federal government officials, including Finance Minister Jaswant Singh, are reported to be not willing to push ahead with the proposal until all the 27 states are prepared to implement the new system.

Japanese Slump

Japan’s forward-looking index of economic activity stood at 20 points in March suggesting the economy is heading into a slump, reports AFP quoting the country’s Cabinet Office.

The March index fell below the 50-point mark, regarded as the dividing line between growth and contraction, for the first time in five months. The index in February stood at a revised 54.5 points.

Japan’s leading index is based on a raft of financial figures such as commodity indices, new car registration and the number of new home building projects.