Blog: Spirit of Money, Financial Fluidity
by munificent

5 smartest things on Wall Street

Smart because they either dumb down controversy, or they made bucoo bucks..It's the name of the brain game, babe

Date:   12/29/2005 8:38:57 AM   ( 16 y ) ... viewed 1585 times

Mack Attack
Morgan Stanley (MWD:NYSE - news - research - Cramer's Take) kind of backed in to a smart decision when it hired John Mack as CEO this summer, but no matter. The change has paid off already.

Shares in the big investment bank were stumbling when Mack's predecessor, Phil Purcell, touched off the boardroom brawl that led to his June departure. Charles Knight, the board member who headed up the search for a new CEO, initially ruled out Mack as a candidate.

But Morgan Stanley's alumni and its rank-and-file rallied behind Mack, and by the end of June Knight was calling Mack "the very best candidate to lead the firm.'' Since his appointment the stock has gained more than 10%.

Of course, the road back to white shoe glory hasn't been smooth. Mack promptly swung his trusty ax, firing some underperforming brokers and forcing out some Purcell loyalists. The board took some well-deserved heat for the lavish severance packages it threw at people like Stephen Crawford, who was paid $32 million to head for the exits.

But at least investors aren't heading for the exits anymore, which is to Mack's great credit.

3. Magic Kingdom
Delaware isn't in the news much, but it did host a smart court ruling this year that had big implications for Disney and other big companies.

Chief Chancery Court Judge William B. Chandler III ruled in August that Disney directors weren't negligent in their handling of the hiring and firing of former exec Michael Ovitz. A class action suit had sought to force the directors to fork over the $140 million or so Disney paid Ovitz for his 11 months of work in the mid-1990s.

The suit accused Disney's directors of putting their allegiance to then-CEO Michael Eisner ahead of their duties to look out for shareholders. The episode fueled growing investor disenchantment with Eisner's imperial rule, and testimony in the suit made just about everyone involved look idiotic.

There was a memo in which Eisner called Ovitz a psycho, and there was a time when the Disney board met in a glass-walled room to discuss Ovitz's firing -- with Ovitz outside looking in. Disney directors "fell significantly short of the best practices of ideal corporate governance," the judge surmised.

But to his credit and to the relief of businesspeople everywhere, Chandler ruled that the Ovitz farce was simply a lamentable mistake, not a cause for legal redress.

"Despite all of the legitimate criticisms that may be leveled at Eisner, especially at having enthroned himself as the omnipotent and infallible monarch of his personal Magic Kingdom, I nonetheless conclude ... that Eisner's actions were taken in good faith," Chandler wrote in a 174-page ruling.

2. Casting a Spell
Spelling doesn't seem to be its strong point lately, but in just about every other regard Motorola (MOT:NYSE - news - research - Cramer's Take) has been letter perfect.

Long mocked as unfocused and bumbling, Motorola this year has flourished under CEO Ed Zander's smart mandate to home in on the booming wireless business with shiny new phones.

Where rivals like Nokia (NOK:NYSE ADR - news - research - Cramer's Take) are increasingly relegated to hawking cheap lookalike phones in poor countries, Motorola is making a mint off its four-letter, low-vowel phones, notably Razr but also Rokr and a host of spinoffs planned for next year.

Of course, Zander is well compensated for his efforts, having signed a $24 million deal when he came over from Sun Microsystems (SUNW:Nasdaq - news - research - Cramer's Take) in 2004. But Wall Street loves a frontrunner, and Zander is certainly that. After publicly rooting in 2004 for baseball's Boston Red Sox, who went on to an improbable World Series win, Zander admitted that he "changed my colors" last year just in time to back the new champs -- the Chicago White Sox.

After this year's 35% gain, Motorola holders are feeling victorious too.

Southern Bell
Maybe the smartest move this year is SBC's decision to get an identity change.

The San Antonio telco has been expanding, but that didn't make its name any easier to remember. So when CEO Ed Whitacre & Co. signed the papers last month on their $16 billion acquisition of New Jersey's AT&T (T:NYSE - news - research - Cramer's Take), they decided they'd take the name too.

Of course, they didn't put it that way. What they said was that they were going to create "a new standard-bearer in communications, entertainment and service for the 21st century." But an SBC survey indicated that 98% of people recognize the AT&T name.

Which is, let's face it, probably about 90 points higher than the number who recognized the SBC name.

Happy New Year.


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