April 19, 2006

News & Opinion: Does This Post Plug John Bogle's New Book?

By: 800-CEO-READ @ 2:43 PM – Filed under: Management & Workplace Culture

There are certain books that suffer from extreme author self-promotion. Contrary to recent published reports, John Bogles Battle for the Soul of Capitalism is not one of them. On Saturday the Wall Street Journal ran a snarky item headlined Man of Letters: Bogle Joins Campaign Urging SEC to Act on Executive PayAnd cites His New Book.
The article describes the efforts of a number of financial executives and experts who have submitted letters weighing in on proposed changes to the policy on executive pay disclosure. The fifth paragraph of this story reports, Before taking his stance calling for more sunlight on compensation matters, Mr. Bogle opened his four-page letter dated April 10 with a plug for his new book The Battle for the Soul of Capitalism. The book focuses intensely on what Mr. Bogle calls grossly excessive executive compensation.
Heres the letter Bogle wrote. Note how on the first page he cites the book once, in passing, not in the opening, describing his credentials to write the subsequent analysis of this not-so-simple financial issue. Gee, thats guerilla marketing for you. Clearly the man who helped invent the mutual fund industry, whose previous books have sold literally hundreds upon hundreds of thousands of copies, felt the desperate need to boost sales of his latest book by coming up with a marketing plan that could only be called innovative: write a complex and well-argued 1000-word critique of executive compensation and related party disclosure as a means of encouraging that vast book-buying market, comprised of the SEC, to buy his book. If successful, he could generate sales of at least five copies.
I cant wait to read from his upcoming media blitz capitalizing on this cool new strategy. I hear hes moved the mention of his book to the first sentence of his comments on the pending FASB policy regarding Accounting for the Conversion of an Instrument That Became Convertible upon the Issuers Exercise of a Call Option. Moreover, word has it that hes planning to mention the book twice in his paper on measuring and interpreting oscillators and clock performance at the 31st Annual NIST Time and Frequency Metrology Seminar. There must be at least eight metrologists who have yet to buy his book.
But seriously, folksHeres what Jack Bogle said yesterday when I asked him the simple question Did you write and submit the SEC letter to promote your book?
Please. I wrote the letter because I wanted to focus on the big problems. I was trying to call the SECs attention to a great big gaping hole in their compensation release policya gaping hole thats big enough to drive several tanks through. And in fact several tanks are driving through it now.
I just pointed out that the mutual fund industry doesnt get the same kind of disclosure that corporate America gets. Theres a huge body of investors that is getting no information. I was trying to open their eyes to a real need for compensation disclosure.
Bogles thoughts are timely, given the news this week of CEO Lee Raymonds nearly $400 million parting compensation package from ExxonMobil. Bogle has two big problems with this news:
This sends the message that the CEO makes the company, which is absurd, he says. You have several hundred thousand people doing hard work in companies like this, and the CEO gets rewarded. The other problem is that people shouldnt get rewarded for exogenous factors. If you are in a commodity business and the business goes up you shouldnt get the reward for it. And thats what has happened here.