Forget ‘greed is good’, now giving is better

WHAT’S going on?

Company executives and Wall Street analysts are doing the right thing? Even playing Mr Nice Guy?

While the current big business story — the backdating of stock options that padded executive pay — is a sad commentary on corporate morality, there has been brighter news.

Pablo Zuanic, for instance. He works as a food analyst for JPMorgan Chase & Co. His firm’s investment bankers have helped HJ Heinz, the ketchup and pasta sauce producer, develop a strategy to fight off an irritating shareholder.

Zuanic said earlier this month the strategy has little chance of succeeding. He continues to tell investors to sell Heinz shares, something he’s been doing since he began covering the company two years ago.

When a Coca-Cola employee allegedly tried to peddle secrets of the biggest soft-drink company to rival PepsiCo, PepsiCo told Coca-Cola, which went to the FBI.

Then there’s Warren Buffett, a chief executive who takes a modest salary and refuses to play the stock-options game.

He has begun a process to give 85% of his stake in Berkshire Hathaway — or about $37 billion (€29.02 billion) — to charity.

Cynics will say they are exceptions that prove the rule.

Analyst Zuanic’s firm-defying stance at JPMorgan is just the kind of independence that state and federal regulators hoped for after Wall Street firms agreed in 2003 to pay $1.4bn (€1.09bn) to settle claims they produced phoney research favouring their clients. JPMorgan’s share of the settlement was $80m (€62m).

JPMorgan has helped Heinz sell three bond issues for $2.8bn (€2.1bn) since 2000, says Bloomberg, and has teamed up with Zurich-based UBS on a Heinz defence against New York investor Nelson Peltz.

Peltz, whose funds hold 5.5% of Heinz stock, urged the usual cost-cutting and share buybacks to improve the firm’s share price. Heinz and its advisers responded with an offer of cost-cutting and buyback tactics.

The US Attorney in Atlanta said Joya Williams, a secretary who worked for a Coca-Cola brand executive, tried to sell stolen documents and a sample of a drink in development to PepsiCo.

A Coca-Cola security tape caught Williams stuffing papers and a white-labelled glass bottle into her bag, the US Attorney said. Williams pleaded innocent.

In contrast to PepsiCo’s action, Boeing on July 26 reported a net loss of $160m (€124m) for the second quarter after settling claims with the US Defence Department. One allegation was it improperly acquired documents from defence rival Lockheed Martin.

Most of the money Buffett is giving away will go to the Bill & Melinda Gates Foundation; the rest will be donated to four foundations run by Buffett relatives.

Buffett, still running Berkshire Hathaway at 75, said Gates, co-founder of Microsoft, and his wife will put the money to better use than he could.

But bad news still abounds. The US Securities and Exchange Commission is now trying to prevent further stock-option scandals by forcing companies to disclose the value of their options and how they chose the dates for granting them.

It’s possible, though, the deeds of Zuanic, PepsiCo and Buffett may change the tone of business critics from cynicism to healthy scepticism.

David Pauly is a Bloomberg News columnist. The opinions expressed are his own.