Re: [CANSLIM] Arthur Andersen

From: "Robert Gammon" <rgammon51@yahoo.com>
Subject: Re: [CANSLIM] Arthur Andersen
Date: Sun, 20 Jan 2002 08:05:49 -0600 (CST)

Next Article (by Date): AW: AW: [CANSLIM] Arthur Andersen Andreas Himmelreich
Previous Article (by Date): [CANSLIM] DFXI vs. JEC--Faulty handle? "Katherine Malm"
Articles sorted by: [Date] [Author] [Subject]

On Sat, 19 Jan 2002 20:29:01 -0500, Tom Worley wrote:

[snip]

>I hope two things come out of this horror story: a flat
>prohibition against using company stock in any 401K plan; and a legal
>prohibition against any auditing firm having any other business relationship
>with a firm they audit. Consult, or audit, but not both with the same or
>related company.

There were quite a few IBMers that got burned much the same way, although not quite 
to the same degree a few decades ago.  Stock ownership by employees is often an 
important tool of management to keep the company intact, keeping the takeover artists 
at bay.  Balancing these two forces will always be a delicate action.  

I don't expect to see an outright prohibition of stock ownership in 401(k)s.  One 
possible compromise that I envision is a new requirement for 401(k) plan 
administrators.  Under this proposal, the 401(k) plan administrators would be 
required to send periodic notices to employees whose stock holdings amounted to more 
than XX% of the employee's 401(k) plan value.  ??Periodic?? == quarterly, monthly, 
weekly, daily, frequency COULD be made dependent on the percentage that the company 
stock represented of account value.  A list of employees whose holdings are above the 
magic percentage number should be given to CEO/CFO.

The wrinkle I already see is ISO grants.  The value of these can often dwarf 
everything else the employee has, particularly as the value of the stock reaches a 
multiyear peak.  I have seen fairly low level salaried employees ($60K-$90K salary) 
who manage to accumulate ISO grants worth several million dollars.  Are these to be 
included in stock ownership calculations?  ISO administrators are often different 
organizations from 401(k) administrators.  Will employers be required to circulate 
ISO management ideas to employees?  Perhaps.  Will there be legislation requiring 
employees to liquidate ISO grants according to some fixed schedule? Doubtful.

Robert

_________________________________________________________
Do You Yahoo!?
Get your free @yahoo.com address at http://mail.yahoo.com

- -
- -To subscribe/unsubscribe, email "majordomo@xmission.com"
- -In the email body, write "subscribe canslim" or
- -"unsubscribe canslim".  Do not use quotes in your email.

Go to Jeff Salisbury LWGate Home Page.