Taking & Managing Risk - Mahony Partners

Oct

2011

Crisis continues for Olympus

The crisis at Olympus shows no sign of easing after the resignation of Chairman Tsuyoshi Kikukawa. Japanese regulators have joined investors in calling for a full explanation of payments Olympus made in connection with acquisitions it made in recent years. His resignation will not remove Kikukawa from the company, however. He remains a director on the board, a situation that critics say could allow him to continue to influence a board he’s managed very closely for year... Read More

Oct

2011

Olympus: Where were the auditors?

Taking & Managing Risk

The hole is getting deeper for Olympus and its chairman, Tsuyoshi Kikukawa. And his outside auditor, Ernst & Young, might find itself alongside him. A day after denying allegations by its former CEO, Michael Woodford, that it paid advisory fees of $687 million on a $2 billion acquisition, the company reversed itself and acknowledged that Woodward’s figures were correct. Analysts have downgraded the shares, and Goldman Sachs suspended its rating over doubts about the company’s accounting, calling into question the accuracy of Olympus’s books over the past several years. It hasn’t helped that three different company officials are speaking on the matter - Chairman Kikukawa, Executive ... Read More

Oct

2011

Firing the CEO: Olympus in focus

Taking & Managing Risk

The messy firing of Olympus CEO Michael Woodford provides another example of the challenges in communicating an executive exit. The Japanese camera and medical-imaging company last week fired Woodford, its first non-Japanese CEO, after less than a year. In announcing his dismissal, Olympus cited Woodford’s inability to work effectively with Japanese managers and chairman Tsuyoshi Kikukawa, the former CEO. Woodford countered today, ... Read More

Oct

2011

Give Bill Gross Credit

Financial Services, Taking & Managing Risk

Give credit (no pun intended) to PIMCO chief Bill Gross for dealing honestly with the underperformance of his flagship fund, PIMCO Total Return (PTTRX). In an open letter to investors released today, Gross is candid about the misjudgments that produced an anemic 1.09% total return for the fund so far this year, compared with a 5.56% gain for the iShares U.S. Aggregate Bond Fund (AGG), a comparable (but cheaper) i... Read More

Oct

2011

There’s only one fix for GE’s image problem

Financial Services, Taking & Managing Risk

GE, the embodiment of American capitalism, is under fire from conservatives for CEO Jeff Immelt’s role on a presidential advisory panel and other alleged misdeeds. The sniping has mostly been heard on Fox News and at Republican presidential primary events, but Monday’s Wall Street Journal brought the story right to the doorstep of GE’s clients. GE gets good marks for combating its critics, in the article and elsewhere. It has provided facts on its Read More

Oct

2011

Friday Risk Reading: Fostering a healthy risk culture

Friday Risk Reading, Taking & Managing Risk

Lately I’ve been thinking a lot about risk and corporate cultures. Some cultures produce disasters, like the massive, concealed trading loss at UBS – the most recent in a long streak of debacles for the bank. Other environments, however, seem consistently to produce good things – valued products and great experiences. Apple of course comes to mind in this category; Starbucks, too. Both have cultures that nurture and sustain healthy risk-taking, and I am offering two quick items about them for this week's Risk Reading. I’ve written Read More

Oct

2011

Morgan Stanley struggles to quell risk rumors

Financial Services, Taking & Managing Risk

The note earlier today by Morgan Stanley CEO Jim Gorman addressing what he called “confusion and misinformation” about the firm wasn’t too reassuring. It’s not likely to quell the rumors about the firm, nor does it do much to improve Gorman’s stature. By penning such a short memo (a mere 218 words), Gorman clearly did not want to appear to overreact to rumors, but he did not want to leave them unchallenged, either. He didn’t reply directly to the “misinformation” but instead offered up a few encouraging points from research analysts who cover the firm, along... Read More

Sep

2011

Firing the CEO, Part 4: Parsing the UBS statement

Financial Services, Taking & Managing Risk

Swiss banking giant UBS today announced the resignation of CEO Oswald Grubel after a marathon meeting of its board in Singapore. There was speculation all week that the scandal could ultimately cost Gruebel his job but the suddenness of his departure is a bit of a surprise. His exit marks the fourth CEO firing in the past two weeks, and the second in the banking industry. The statement by UBS, while more detailed than earlier commentaries, nonetheless leaves several questions unanswered. There is no complete explanation of how the trading losses occurred and who besides the jai... Read More

Sep

2011

A one-hand clap for Jefferies

Financial Services, Taking & Managing Risk

Jefferies Group (NYSE: JEF) could have spared itself (and its shareholders) a lot of pain if it had better handled the news CEO Richard Handler’s stock sale. The news, reported as a result of a regulatory filing, sent shares of the investment bank tumbling more than 11% on Thursday. They recovered somewhat today, but investors remain shaken over the sale and the clumsy way it was handled. That’s a shame, because Jefferies did the hard part right. Usually, the CEO is tight-lipped about the reaso... Read More

Sep

2011

Communicating a CEO firing – Part 3

Taking & Managing Risk

Technology giant HP is demonstrating still another way to fire the CEO - by leaking your intentions to the media. The New York Times and other media outlets, citing anonymous sources "with knowledge of the board's actions," are reporting that the board is preparing to oust CEO Léo Apotheker, who has been in the post less than a year. No formal statement from an HP spokesperson has yet appeared. By contrast, other recent CEO dismissals - Carol Bartz of Yahoo and Robert Kelly at Bank of New York Mellon - were not telegraphed in advance by leak... Read More