Family
Business Magazine E-Newsletter
April
15, 2008
Contents
1.
Samsung chairman questioned in bribery case.
2.
Seattle Times to cut about 200
jobs.
3.
Pay for Comcast's Brian Roberts fell 20% in 2007.
4.
Family firm Pernod Ricard acquires Absolut maker V&S.
5.
Outside directors' role in conflict resolution.
6.
Turning in-laws into team players.
1. Samsung chairman questioned in
bribery case. Samsung Group chairman Lee Kun-hee was
questioned twice by special prosecutors appointed by the South Korean
legislature in the wake of allegations by a former employee that the
company created illegal bank accounts to pay bribes and buy art, the Wall Street Journal reported. "Some
of the activities alleged by the former employee are tied to efforts by
[Lee] to pass control of the group of 59 Samsung companies ... to his
son," the Journal article
said. After being questioned by the prosecutors, according to an
Associated Press report, Lee said, "This is all due to my carelessness.
I am responsible for everything and must take responsibility." But
after a reporter asked if he was admitting responsibility for the
principal allegations, Lee said, "not 100%," the AP report stated.
Lee's son, an executive at Samsung Electronics Co., and his wife and
brother-in-law were also questioned, as were senior Samsung Group
executives, the AP noted. After a second round of questioning, the Journal reported, Lee said, "We
will take this opportunity to seriously consider the issue of reforming
the group's management system, including myself." But the next day, the
Journal report said, "a
spokesman for Samsung Group said ... Mr. Lee meant Samsung is willing
to make changes if the special prosecutor decides to file charges after
the investigation ends April 23." The Journal
noted that Lee "is rarely seen and, in public, hasn't offered more than
a surface observation about Samsung's direction or strategy in years."
The article added that the scandal "sparked a new look at the methods
by which Mr. Lee moved to pass control of the conglomerate to his
son.... If the special prosecutor determines that illegal activity was
involved and tries to reverse the transfer of power, the family's
control of the group would be jeopardized. Investors have largely
written off such an outcome as too unpopular in South Korea, which has
a tradition of not imposing stiff penalties on conglomerates, for fear
of harming the country's economy." (Sources: Wall Street Journal, April 4, 2008,
April 14, 2008;
Associated Press, April 7, 2008.)
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to the top.
2. Seattle Times to cut about 200 jobs. Seattle Times publisher Frank
Blethen sent an April 7 e-mail to the newspaper's employees announcing
a plan for $15 million in budget reductions, including "a reduction of
our workforce of approximately 200 positions through a combination of
freezing open positions and a significant number of layoffs." The
company earlier had announced plans to sell its three Maine newspapers.
Even amid his privately held family company's current fiscal woes, in
an April 9 panel discussion sponsored by the Columbia University
Graduate School of Journalism, Blethen said that public ownership of
newspapers "has proven a failure because shareholders want profits at
the cost of quality, in many cases," according to a report on the
website of the trade publication Editor
& Publisher. According to the E&P report, Blethen said, "If
you live in a community, you are far more inclined to work to run your
newspaper with some element of public good. I'd rather have a crummy
paper owned locally than a supposedly good paper owned in
absentia." (Source: Editor
& Publisher, April 9, 2008.)
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to the top.
3. Pay for Comcast's Brian Roberts
fell 20% in 2007. Comcast Corp. chairman and CEO Brian
Roberts' compensation dropped 20% in 2007 to $20.8 million, according
to the company's proxy statement, the Philadelphia
Inquirer reported. "Comcast's stock was one of the worst
performers among big companies in the United States in 2007," the
report noted. "Its stock recovered this year after Roberts ... said the
company would pay a 25-cent annual dividend and repurchase a huge
amount of stock." Among the governance issues that Comcast shareholders
will vote on this year is a measure proposed by the Communications
Workers of America that seeks to eliminate the dual-class share
structure that gives Roberts voting control of the company, and another
proposal that calls for shareholders to vote on executive compensation.
"The Comcast board has asked shareholders to vote against the
proposals," the Inquirer
reported. Meanwhile, an article in Business
Week noted that Roberts has not made a big acquisition in years.
"I'm happy with the hand we have," Roberts told Business Week. (Sources: Philadelphia Inquirer, April 3,
2008; Business Week, March
24, 2008.)
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to the top.
4. Family
firm Pernod Ricard acquires Absolut maker V&S. Pernod
Ricard SA outbid Fortune Brands Inc. to acquire Sweden's V&S Vin
& Spirit AB, owner of the Absolut vodka brand, for more than $8
million. Pernod shares fell more than 4% on European exchanges on news
of the deal, according to a report on Business
Week's website. "Investors were rattled by the purchase price,
which was higher than the roughly $7 billion market watchers had
expected," the Business Week
report said. "Another concern: Pernod's plan to finance the deal
entirely with debt, doubling its debt load to more than $18 billion....
Despite the cost, Absolut represented 'a tremendous opportunity' for
Pernod, Chief Executive Patrick Ricard said." Business Week said Pernod's past
success has been partly due to its "decentralized management style that
grants considerable autonomy to managers of individual brands."
(Source: Business Week, March
31, 2008.)
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to the top.
5. Outside directors' role in
conflict resolution. "Through their objectivity (or
healthy detachment), non-family directors create a 'magnet' that pulls
family members toward greater maturity in dealing with each other --
and, correspondingly, toward greater effectiveness in running the
business," writes Delaware Valley Family Business Center president
Henry D. Landes in The Family
Business Conflict Resolution Handbook. "Outside directors, on
either an advisory or a statutory board, provide a much-needed reality
check. They play a key role in determining what is best for the
business, not necessarily the individual players," Landes writes. But
he cautions that other measures should be taken, as well: "This
stratagem must be used in tandem with other mediation resources, such
as regular family meetings."
For more tips
on achieving consensus in your family and your company, see The Family Business Conflict Resolution
Handbook. Learn more about the book and see the table of
contents here.
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to the top.
6. Turning in-laws into team players.
"In-laws who are team players can be a genuine asset. They can help
your child achieve maturity, conviction and drive," writes family
business adviser Loyd H. Rawls in the current issue of Family Business Magazine. "However,
there is at least a 50:50 chance that you are going to be dealing with
an in-law terrorist." Rawls offers the following tips "to turn in-laws
into team players and, where appropriate, help you deal with in-law
terrorists":
- Initiate
a family business council to facilitate family communication on general
business matters.
- Princes
and princesses should tell their betrothed about the family business
council and let them know that they will be included after the wedding.
Parents should do the same. This information will mean more coming from
the prospective mother- and father-in-law because it expresses welcome,
inclusion and respect.
- Within
the family business council, parents should forthrightly but
respectfully address any perceived meddling or rumors by starting with,
"We heard you had a question." Let it be known immediately that all
issues will be discussed and there will be resolution in an open forum.
Insist that the family communicate directly, and don't tolerate any
emotional hand grenades.
- Initiate
a board of directors rather than concentrating total responsibility
with the business owner.
- Parents
must recognize the autonomy and independence of their children's new
family. Give advice only when solicited.
- Princes
and princesses should hold both their parents and their spouse
accountable for respect and giving one another the benefit of the doubt.
For more family
business news and information, see the Spring 2008 issue of Family Business Magazine. See the
table of contents here. Learn how to subscribe
here.
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Coming in Summer 2008: An updated list of
America's oldest family companies. Family Business Magazine's
acclaimed list of America's oldest family companies is among the most
popular features of our website, www.familybusinessmagazine.com.
Since our list was last published in 2003, we've learned of some
companies we had inadvertently overlooked; other firms were closed or
acquired and thus have dropped off the list. Our Summer 2008 issue will
feature our newly updated list. After publication, the complete list,
along with extra features, will be available online. Look for our
updated list of the world's oldest family companies in Autumn 2008.
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