Word: laggardly
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...year kicked in 59% of the company's $2.6 billion in operating income. But in the U.S. the $103 billion-a-year fast-food industry is slowing down, and McDonald's, far and away the leader, is feeling the loss of momentum hardest. Its stock has been a notable laggard, returning a paltry 1.2% to investors last year...
More galling is exorbitant CEO pay at companies with laggard stocks. Gil Amelio, the new CEO of struggling Apple Computer, received total compensation valued at $23 million last year while Apple shareholders lost 40% on their investment. Nolan Archibald, CEO of Black & Decker, received total compensation of $6.5 million even though shareholder returns were a pathetic negative 13%. To be fair, in the case of Amelio, $16 million of his package was in stock options. That will prove vastly overstated if he can't fix what ails Apple, and if he does fix it, he's probably worth every penny...
Daniel Kadlec questioned why Reebok appeared on the California Public Employees' Retirement System's list of laggard companies [MONEY IN MOTION, Feb. 24]. He overlooked 12 reasons: the members of the Reebok board. The sneaker company's "lean years" landed it on the CalPERS list, and rightfully so: $100 invested in its stock in 1991 was worth only $122 five years later, vs. $232 for industry competitors. Sure, Reebok's stock has seen the light in the past 10 months, but this glitch hardly gives CalPERS assurance of the company's future long-term success. Our putting Reebok...
True to Wall Street form, the new titans are exploiting their influence. Mutual-fund manager Michael Price actively pushes for change at companies--Dow Jones is a recent target--in order to improve their laggard stock prices. Meanwhile, the California Public Employees' Retirement System (CalPERS), the nation's largest pension fund with a mountainous $108 billion under management, each year flaunts a list of losers it owns to try to embarrass CEOs into remedial action. CalPERS and other managers--be they of mutual funds or public or private pension funds--have generally wielded their clout for the good...
...moves against Big Business. He approved olestra, a fat substitute that can cause diarrhea and cramps, and BST, a hormone injected into cows to increase milk production--arguing in both cases that his decision was based on sound science. The FDA under his regime was faulted for being too laggard in approving new drugs, even though Kessler cut the waiting time from 33 months to 19 months...