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TreasureKY -> RE: Video - Cain Not Black Enough for MSNBC? (10/8/2011 3:50:11 PM)
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quote:
ORIGINAL: mnottertail
Why don't you lay out the facts for us, with credible citations, that the company did not lay off people, did not lose the lawsuit for fundamentally violating the law, stealing from employees, and he did not recommend those bonuses as the company was failing....
quote:
ORIGINAL: mnottertail
His business experience seems to be in great part partaking in the dismantling of business, laying off people thru bankrupting the business, after stealing their money, and paying large bonuses to executives, and we just don't need that sort of experience, we have alot of that out there now in the private sector and I see no reason to let it invade the public sector.
I'm going to take you to task on your summations above, mnottertail, and include anyone else who hasn't bothered to do anything but take the word of a single article and draw their own biased conclusions.
First, as Firm pointed out, Cain was an independent director for Aquila. You understand what that is, don't you? In case there is any question in your mind, let me help...
An independent director is a non-working director of a firm who is not an employee and, therefore, does not participate in the day-to-day management of the firm. He or she is usually involved in planning and policy making, and is sometimes included to lend prestige to the firm due to his or her standing in the community. They are often referred to as a non-executive director, an external director, or an outside director.
The purpose of identifying and appointing independent directors is to ensure that the board includes directors who can effectively exercise their best judgment for the exclusive benefit of the Company, judgment that is not clouded by real or perceived conflicts of interest.
Feel free to google if you doubt this information.
Herman Cain served on Aquila's BoD as an independent director from 1992 until 2008. During that time, he was part owner and the CEO of Godfather's Pizza until he resigned in 1996. He was also a member of the BoD of the Federal Reserve Bank of Kansas City from 1992 until 1995, when he became chairman of that board and served in that capacity until 1996. 1994 through 1998 he was involved with the BoD for the National Restaurant Association. In 1999 he became CEO and President of RetailDNA. He also served as a director for The Reader's Digest Association from 2001 to 2007, as well as director for Bell Research Companies, Inc., KCP&L Greater Missouri Operations Co, Whirlpool, Nabisco, and AGCO Corporation at various times throughout 1992 through 2008.
Bloombert Businessweek
Forbes
Kansas City Federal Reserve Bank Statement
Horatio Alger Association
Purdue University
There are significantly more "credible" citations I could give, but I trust these will be enough for this particular section. [;)]
Now... I haven't even listed all the dealings that Cain had during the time period in question. He has a consulting company T.H.E Inc. that he created and some books that he wrote, but I trust I've listed enough to make you consider just how much time he had to be deeply involved in Aquila's inner corporate workings.
I've worked with enough Boards myself to be aware that you take the information provided by the executives (the actual day-to-day employees of the company) and work with that. You don't spend a great deal of time and energy researching and vetting the information. You typically can't as boards usually only meet once a month.
Consider also, that while Cain served as the Chair of the Compensation Committee for Aquila, the Chair is not a dictatorship position. His vote only counts as much as any other board member. We can only assume that measures passed by the board require a majority vote, but we don't know... Cain's may have been the sole dissenting voice on the board for approving those $30m in bonuses.
Considering all this, I find it extremely disingenuous for Mother Earth News to make the claim that "As chair of the compensation committee, Cain also saw fit to dole out $30 million in bonuses, not including stock options, to the top five execs at Aquila in 2002, with the company's stock plummeting."
Yeah... it was all Cain's idea and his sole responsibility. [8|]
With regard to the bonuses paid, as reported in the Kansas City Business Journal in July of 2002, "Aquila Inc. Chairman Richard Green Jr. has been criticized by some shareholders for receiving $10.5 million in 2001 salary, bonuses, stock options and other compensation. The company reported Green's compensation at roughly the same time it began laying off employees. Green's base salary for 2001 was $972,116. Green has pointed out that the $30 million in bonuses he and other Aquila executives received were for performance in 2001."
Before you go off on Cain being responsible for setting Green's compensation, keep in mind that the Green family founded and owned the company under various names since the early 1900s.
I agree that the amount of bonus money sounds incredibly large, but considering the windfall profits made by Aquila in 2001, and taking into account the outrageous sums typically paid to executives of fortune 100 corporations, I'm not surprised.
Forbes Article from 11/28/2000
August 9, 2001 Article from the Kansas City Star (only available with paid subscription) excerpt:
"Kansas City-based Aquila Inc. on Wednesday said second-quarter net income quadrupled to $101.3 million, led largely by contract sales and added output from electric plants it had bought or built in the past year.
Aquila "for the second quarter in a row posted results that are leading the industry," said Robert K. Green, chairman of Aquila and president and chief operating officer of parent company UtiliCorp United Inc."
As for the 500 employees laid off mentioned in the Mother Earth News article, they were related to a sale of Aquila's energy trading division (Aquila Merchant Services) falling through, not because the company was going bankrupt.
Creditable citations:
Aquila finding interest in its trading division, Kansas City Business Journal, July 14, 2002
Hedge funds kick Aquila unit's tires, Kansas City Business Journal, July 28, 2002
No buyer means Aquila will close trading business, Kansas City Business Journal, August 6, 2002 and an excerpt:
"Aquila Inc. has ended its search for a buyer or partner for its wholesale energy trading operations and will exit the business, the company announced Tuesday. The move means most of the 500 remaining employees involved in wholesale trading operations will lose their jobs."
Aquila has never been bankrupt. Their stock dropped significantly after the Enron scandal and they were eventually bought out in 2007 by a rival power company.
Concerning the lawsuit filed and settled, I'd first like to direct your attention to the linked article from The American Bar Association from 2005.
ERISA Stock Drop Pleading Motions
"Over the past three years, the plaintiffs’ class action bar has discovered that ERISA with its common law trust antecedents can be used to address securities law claims.
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When an employer’s stock declines in value and there are some indicia of a securities violation, the class action bar has filed ERISA-based complaints that typically charge a wide variety of defendants with breach of fiduciary duty.
...
Second, there are the garden-variety stock drop cases, where the plan’s stock fund has lost value because of a decline in the company’s market capitalization. These cases typically raise more negligence-based allegations of general breach of fiduciary duty, including lack of prudence or diligence.
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Plaintiffs commonly sue everyone in sight and sometimes fail to make any factual allegations against a peripheral corporate officer. In order to impose liability, plaintiffs need to plead and prove that each defendant enjoyed fiduciary status.
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The most common pleading motions are motions challenging defendants’ fiduciary status. As mentioned above, ERISA prescribes a functional test for fiduciary status. The definition is “functional,” meaning that one is a fiduciary if, and only to the extent, she is performing a function described in section 3(21)(A)."
Section 3(21)(A) of ERISA provides that a person is a fiduciary with respect to a plan to the extent (i) he exercises any discretionary authority or discretionary control respecting management of such plan or exercises any authority or control respecting management or disposition of its assets, (ii) he renders investment advice for a fee or other compensation, direct or indirect, with respect to any moneys or other property of such plan, or has any authority or responsibility to do so, or (iii) he has any discretionary authority or discretionary responsibility in the administration of such plan.
Of course, not knowing the specifics or extent of Cain's responsibilities, I can only guess, but had Aquila not decided to settle the case rather than litigate, I suspect that Herman Cain would have been dismissed from the suit as not having fiduciary responsibility.
But feel free to research for yourself on this and see what conclusion you come to. Here's a good place to start:
ERISA Fiduciary Responsibility and Liability
And you can also read the Department of Labor's opinion here.
Which brings me to the point that Aquila did not lose any lawsuit. They agreed to settle rather than go through expensive litigation.
Aquila settles class-action suit for $10.5M, Kansas City Business Journal, July 25, 2007
"It's just more efficient for the shareholders for us to settle than to go through a protracted legal case," Aquila spokesman Al Butkus said Wednesday.
The case was dismissed with prejudice*. Here you can view a copy of the Final Order and Judgement, In Re Aquila ERISA Litigation, Case No. 04-00865-CV-DW.
* When a case is dismissed for good reason and the plaintiff is barred from bringing an action on the same claim.
Now... are you (or anyone else) willing to come back to provide rationale with credible citations proving that Cain laid off people "thru bankrupting the business", stole their money, was personally and solely responsible for recommending or paying out large bonuses to executives, caused Aquila to lose the ERISA lawsuit, or in any way, shape or fashion partake in dismantling Aquila or cause it to fail or to go bankrupt?
If not, can I assume that you'll come back to admit you were just talking out the side of your mouth and were wrong?
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