June 20, 2003


        A new round of corporate housecleaning
is coming...18 months after the Enron scandal
and one year after Congress passed legislation
to tighten accounting and financial reporting.
        This one is dictated by the exchanges.
Both the New York Stock Exchange and Nasdaq
will adopt new rules for public companies.
        Listing standards will be strengthened
starting in 2004, after the SEC blesses them.
 The primary focus of the new rules:
 More-muscular boards of directors,
ensuring that the members act as strong,
independent governors and not just yes-men
for company executives...especially on matters
related to pay and perks for those execs. So...



        A board majority of outsiders and a much tighter definition
of who is considered an "independent" board member. Anyone who worked
for the company, or has a family member who worked for the company,
in recent years is out. Ditto, anyone with ties to the firm's auditors.
And outsiders will have to meet periodically without "inside" directors.
        Beefed-up committees. Compensation panels will get more control
over CEO pay decisions. Companies will have to create new committees
to handle searches for new directors and to set governance policies.
        Better preparation. New directors will undergo special training,
and incumbent board members will have to bone up on governance practices.
        Shareholders will also get a bigger voice under exchange rules.
Theyll get to vote on equity-based compensation plans for top execs.
And the practice of broker voting, which gives corporate management
control of large blocks of absent shareholders' proxies, will be curbed.
At the same time, coming SEC regs will make it easier for investors
to get proposals on meeting agendas and to nominate board candidates.
        Some big companies are getting a headstart, moving swiftly
to put reforms in place, even before they are mandated. Black & Decker
requires 75% of its board to be outsiders. GE directors must check plants
unaccompanied by GE managers. Pfizer directors must be elected each year.
And GM's outside directors meet regularly to review executive pay plans.
        Even private firms can't afford to ignore new exchange rules,
which will soon become commonly accepted standards of corporate behavior,
expected of ALL businesses by lenders, customers and even the courts.
        Will the new rules draw investors swiftly back to stock markets?
        No, but they'll ease an impediment as market prospects improve.
 Congress will pass a Medicare prescription drug bill this year.
 Bush is no longer insisting that the prescription drug benefit
go only to seniors joining private plans. Eligibility will be universal.
        Both parties want political credit. The GOP for passing the bill,
giving Bush a domestic accomplishment to tout in stumping for reelection.
The Democrats for standing up to Bush and ensuring that drug benefits
go to folks who don't want to leave the traditional Medicare program.
        A break for employers, too: Firms that provide Rx drug coverage
for their retirees will get government subsidies to help pay the tab.
 An energy bill is also a good bet this year. Partisan bickering
 that killed similar measures before is giving way to consensus.
Political reasons are clearly at play here. Soaring natural gas prices
this winter will have voters screaming for lawmakers to do something.
        The legislation won't alleviate short-term energy woes, though.
It will focus instead on spurring energy production over the next decade.
        Nuclear power will be a big winner...federal loan guarantees
to help finance up to half of the cost of building nuclear power plants
plus $500 million for research on safer nuclear power technology.
        For oil & gas drillers, tax incentives and speedier permitting,
helping them squeeze out more product from marginal and offshore wells.
        A national electrical power grid will get the nod from Congress,
ensuring smoother delivery of electricity in a deregulated environment.
        Ditto, more money for conservation. A $77-million grant program
that helps low-income Americans insulate their homes will be doubled.
        But no dice for oil drilling in Alaska's arctic wildlife refuge.
        And fuel efficiency standards wont be raised for SUVs and cars.
        As for this year's natural gas worries, firms face a catch-22.
On the one hand, the Energy Dept. will urge manufacturers and utilities
to switch from natural gas to fuel oil or coal and improve efficiency.
On the other, many firms would need federal waivers from clean air laws
to change over to oil or coal. But the EPA is not likely to grant them.
 Amtrak will get enough money from Congress to keep running as-is.
 A major overhaul will have to wait until next year or later.
A preview has members of Congress already riled over the expected loss
of many long-distance routes, an inevitable outcome of Bush's goal
to turn the troubled passenger railroad into a profitable corporation.
        Bush wants Amtrak to sell longer routes that are losing money,
but few buyers are likely to emerge. State subsidies are also unlikely.
 Does your company ship lots of small packages? New delivery firms
 are sprouting like mushrooms, charging as little as half
of what FedEx and UPS charge. They're more flexible on package formats,
though not all deliver nationwide. Such firms include Universal Express,
Ground Express, City Performance Logistics and Lone Star Overnight.
        Run a small or midsize business? IT vendors have some good deals.
With their sales to big corporations slowed by the sluggish economy,
vendors are tailoring business applications software for smaller firms.
Siebel Systems, SAP, Check Point Software Technologies and IBM
are among vendors cutting out the bells and whistles demanded by bigs
and delivering software solutions that smalls can use and better afford.
 Will 2004 be the year that college voters make a difference?
 Presidential candidates think so. Both of the major parties
 are steering more resources to their student-run political groups.
 The funds will be used to get out the vote, mainly in key swing states
 with large student bodies...Fla., Va., Pa., Ohio, Ind., Mich. and Mo.
        Politics appears to matter more on college campuses these days
 compared with the 1980s and 1990s, when student turnout was low.
 The Sept. 11 terrorist attacks and Iraq war kindled student interest.
 The economy, environment and global issues are also motivators.
        Nearly 60% of college kids vow to vote in next year's election,
 recent polling shows, vs. a 32% turnout in 2000. Not all students
 who say they'll vote will, yet the impact figures to be significant.
 Female students are slightly more likely to vote than college men.
        Over 40% of the nation's 10 million students are independents,
 up a quarter since 2000...easily enough to decide an election.
        Democrats claim 29%, Republicans, 26%. That's quite a change
 from the 1970s, when the vast majority of college kids were Democrats.
        Students backed the war in Iraq by two to one, a plus for Bush.
        But nearly 75% worry about finding work, a boost for Democrats.
 Employers are about to get help with COBRA notices to employees.
 Proposed Labor Dept. rules seek to end confusion many firms
face on how to fulfill the requirement that they let former employees know
they can keep health coverage for up to 36 months if they pay the cost.
Disputes over the timing and content of notices spawn many lawsuits.
        Guidance is much needed and long overdue...Uncle Sam's first stab
at helping with COBRA notices since the benefits law was enacted in 1985.
        Another break for employers: They can recoup more 401(k) expenses
under new Labor Dept. guidelines that will give them greater flexibility.
        Individual participants can be charged for certain transactions,
including distribution of plan benefits, processing hardship withdrawals
and handling court orders to divide assets if an employee gets divorced.
        And companies can now charge each plan participant equal amounts
for fixed expenses such as recordkeeping, claims processing and audits.
        For details, go to
        The Federal Trade Comm. will offer new protections on two fronts:
        Relief from annoying telemarketers is just a few months away.
The FTC will begin taking names for its national "do not call" list
by July 1. Those on the list can expect the calls to stop in Sept.
Folks stay on the list for five years or until they change their number.
Charitable organizations and political fundraisers will be exempt.
Click on for more information about the program.
        And a crackdown on foreign-based scam artists preying on the U.S.
is in the works. Scamsters rake in $400 million a year from Americans,
and the number of complaints to the FTC has doubled in the past year.
To catch crooks, the FTC will share more information with police abroad.
Favorite ruses: Sending companies phony invoices for goods and services,
promising money transfers that are just a trick to get bank account info
and selling fake airline tickets. To learn more, see
 Long-term interest rates will creep higher on the heels of data
 suggesting stronger economic growth. As the Fed cuts short rates,
May's rise in industrial output and an uptick in core inflation,
which excludes food and energy, bode well for a second-half upswing.
        The 10-year Treasury will yield about 4% by the end of 2003,
up from 3.3% now but still lower than it has been for several decades.
        Real estate won't be crimped by the increase. Mortgage rates
will still be low enough to keep home buying and refinancing humming.
 Bush will insist that China open its markets to U.S. companies
 to comply with pledges it made in 2001, when it joined WTO...
the World Trade Org. Since then, China has been dragging its feet.
        Politics is certain to fan the flames. Bush needs to look tough
on trade. Otherwise, he risks a lot of flak from business and labor, 
who will claim that he is sacrificing U.S. jobs
to win China's backing on foreign policy issues,
such as on the North Korean nuclear threat.
        Trade complaints will get more sympathy
from the White House than previous trade cases
by U.S. makers of hydraulic parts and hangers.
Bush will be more hesitant to reject industries
seeking government help on challenging China.
        A fight is brewing over semiconductors.
China is propping up its domestic producers
by unfairly taxing semiconductor imports...
violating promises it made when joining the WTO.
U.S. producers of semiconductors want Bush to insist on compliance.
        Makers of Rx drugs, plastics and machine tools are also upset.
They see the growing U.S.-China trade gap as proof of unfair treatment.
        Global demand for U.S. beef is rising due to a ban on exports
of meat from Canada in the wake of its recent bout with mad cow disease.
        Good news for cattle producers, who'll see cattle prices buoyed.
        Chile will be a growing market for U.S. beef, pork and lamb,
now that U.S. exporters no longer have to pay for Chilean inspection.
        And Mexico will become hog heaven for U.S. pork exporters.
It is ending its ban on imports of lightweight hogs, clearing the way
for about a million U.S. hogs to be sent south of the border every year.
 There ARE signs of progress in the Mideast, despite the violence.
 U.S. occupation of Iraq strengthens Bush's hand in the region.
Syria and Saudi Arabia have been toning down their anti-Israel rhetoric.
Anti-Israel clerics in Iran are facing growing problems of their own.
Egypt is trying to salvage a role by helping facilitate the negotiations.
And Palestinian Prime Minister Abbas is starting to gain political power.
        Israel's Sharon won't abandon Bush's road map. He faces pressure
at home, as well as from Bush, to ease his hard line on some policies.
        Still a very long road but not without hope of incremental gains.
                           signature.jpg (2111 bytes)