Trading The Boardroom
Michael Eisner, Carly Fiorina, Hank Greenberg, Bob Nardelli. They’re household names who shared more than fame and fortune – they’ve were all fired in the past three years. They, however, were not alone.
In 2004, 663 Chief Executives were dumped. In 2005 that number nearly doubled to 1322 according to Challenger, Gray and Christmas.
The departures underscored the changing face of corporate America – as the balance of power has moved from individual leaders to corporate boardrooms.
What sparked that shift? Regulatory fallout from the Enron and WorldCom scandals that made board members personally accountable for the actions of their corporations and the emergence of shareholder activism on the part of pension and hedge funds.
The result: The death of the imperial CEO, replaced with a group of individuals forced to act as politicians to satisfy demanding shareholders.
And while the stocks have responded, is this new corporate paradigm in the best long-term interest of investors?
Alan Murray, The Wall Street Journal's Assistant Managing Editor joins the guys to help sort if out. He just wrote a new book called “Revolt In The Boardroom.” (If you're a long-time CNBC viewer you might remember he hosted the primetime show "Capital Report.")
Alan explains in the 1960’s and 70’s CEO’s were almost never fired. It's a fairly new phenomenon.
Then Alan reveals that he thinks three CEO’s are close to being shown the door. They are Citigroup (C) CEO Chuck Prince, Motorola (MOT) CEO Ed Zander, and Time Warner (TWX) CEO Dick Parsons.
Tim Strazzini adds escalating CEO compensation has something to do with the new trend.
Eric Bolling asks where’s the logic? If the stock is not performing get rid of the CEO! He looks at the charts and reveals the MOT chart is terrible - the board should get rid of Zander.
Guy Adami says some corporation trade off their imperial leaders. Guy thinks if Sumner Redstone leaves Viacom (VIA) or if Bob Iger leaves Disney (DIS), their stocks will get obliterated.
Trader disclosure: On May 8, 2007, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders: Macke Owns (JWN); Bolling Owns (DIS), Gold, Silver; Bolling Is Short Nasdaq Futures, Bolling Closed Out His Tesoro Put Trade; CNBC Is A Service Of NBC Universal And Dow Jones
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