The efforts of federal regulators to curtail cronyism on corporate boards have led to some odd outcomes. The case of Michael K. Powell, a new director of Cisco Systems, is a prime example.
Mr. Powell, the former chairman of the Federal Communications Commission, happens to be a son of Colin Powell, the former secretary of state. Cisco happens to have paid the senior Mr. Powell more than $100,000 to deliver two speeches in 2005.
Under guidelines established by the Nasdaq stock market, that connection disqualifies the younger Mr. Powell as an independent director, so he cannot sit on the company’s audit, compensation or governance committees. But by the same definition, Richard M. Kovacevich, the chairman of Wells Fargo, is an independent director of Cisco, even though his company has promised to lend Cisco $120 million.
The difference is that Cisco’s line of credit is deemed too small a part of Wells Fargo’s overall business to present a conflict of interest, while the payments to the senior Mr. Powell exceeded the allowable annual limit of $100,000 to any family member of an independent director. PATRICK McGEEHAN
PLAYING DEFENSE? The former National Football League player Dwight Sean Jones may have met his toughest opponent yet: federal securities regulators. The Securities and Exchange Commission ordered Mr. Jones, a former Los Angeles Raiders defensive end, to answer complaints that his investment firm, Amaroq Asset Management, has flouted federal securities law.
The commission’s order said Mr. Jones, who went on to become a players’ agent after winding up his pro career in 1996, had refused to produce or permit the inspection of business records at Amaroq, a registered investment adviser. Such examination is required by the Investment Advisers Act.
According to the S.E.C., Mr. Jones told the commission in 2003 that he was managing more than $44 million in assets for his clients, mostly athletes. He said at different times that company records had been destroyed in a fire, that they were on a moving truck and that they had inadvertently been sold by a storage company.
Securities regulators also said that although Mr. Jones contended that Amaroq discontinued business in 2004, he had never notified the commission.
The S.E.C. said Mr. Jones does not have a lawyer representing him. Mr. Jones, 44, did not reply to phone messages asking for comment. ELIZABETH OLSON
BRIDGING THE PAY GAP The average chief executive of a large corporation makes 400 times the pay of his company’s average worker, and that gap has quadrupled in less than two decades, says Senator Carl Levin, Democrat of Michigan. He wants to close the difference by ending a corporate tax break for executive stock options.
“The single biggest factor responsible for this massive pay gap is stock options,” said Mr. Levin, who introduced legislation on Friday to require the federal corporate tax deduction for stock option compensation to match the expense shown on corporate financial reports filed with the S.E.C.
Now, companies can show one stock option expense on their books and another on their tax returns, said Mr. Levin, whose legislation is supported by several consumer and labor groups.
The mismatch permitted companies in 2004 to claim $43 billion more in stock-option tax deductions than the expenses shown on their books, he said. That “shortchanges the Treasury,” said Mr. Levin, and “provides a windfall to companies doling out huge stock options.” ELIZABETH OLSON
RED AND GREEN IN AFRICA Red, a marketing program started last year by Bono, the singer, and Bobby Shriver, son of the first director of the Peace Corps, Sargent Shriver, evidently is doing more than raising money to fight AIDS in Africa through sales of Motorola, Gap, Converse, Emporio Armani and other products.
Speaking last week at an Advertising Club luncheon in New York honoring Mr. Shriver’s efforts, Ngozi Okonjo-Iweala, a Brookings Institute fellow and a former finance minister of Nigeria, praised Red for employing Africans, who make cloth for Converse sneakers and packaging for Motorola cellphones. “You’re creating so many jobs, and when you do that, they have money in their pockets, they can buy the antiretrovirals, they can send their children to school, they can feed themselves,” she said.
Ms. Okonjo-Iweala said Mr. Shriver was “not someone who just discovered Africa,” but “someone who started discovering it a long time ago.” In his youth, Mr. Shriver often visited Africa with his family.
Russell Simmons, the hip-hop impresario, said Red had inspired his jewelry company’s Green Initiative collection, which donates a percentage of profits to a fund for education programs in diamond-producing African nations. JANE L. LEVERE
LİNK:http://www.nytimes.com/2007/09/30/business/30suits.html?_r=1&oref=slogin
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