It was another amazing year on Wall Street, where some people got rich by taking jobs, and others got lots of money to leave them. Some were criticized for not admitting what had happened, others for not noticing. But all richly deserve the following 1995 awards. There will, alas, be no awards ceremony.
FIDUCIARY RESPONSIBILITY AWARD - To the directors of Morrison Knudsen, who raised no objections when the chairman, Bill Agee, moved to Pebble Beach, Calif., forcing other executives of the Idaho company to run up big travel bills just to report to the boss, and who seem not to have noticed that the company was hemorrhaging cash.WILE E. COYOTE STRATEGY AWARD - To Mitsubishi, which threw Rockefeller Center into bankruptcy, evidently thinking that would give it a negotiating advantage. Instead, it ended up losing its entire investment in the complex.
TALKING YOUR PORTFOLIO AWARD - To Jeff Vinik, manager of Fidelity's huge Magellan Fund, who seems to have told reporters repeatedly that he loved certain stocks, at about the time Magellan was selling them.
GENEROUS MANAGEMENT AWARD - To the Sony Corp. Having lost billions of dollars in movies under the management of Peter Guber, it allowed Guber to leave on terms that provided him hundreds of millions of dollars to set up his own operation and gave him the right to take over any promising movies Sony was already working on. To top it off, it then forced out Mickey Schulhof, the man behind the generosity to Guber.
MAXIMUM EMBARRASSMENT AWARD - To Bankers Trust and its crack legal team. Learning that Business Week had obtained documents that made the bank's dubious derivatives sales practices look even worse than they had appeared, the bank went to court to block publication, thus assuring that when the papers eventually did come out they would get a lot more attention.
BEST JOB SWITCH AWARD - To James Barksdale, who left AT&T in January to become president of Netscape Communications, and was given options to buy the company's shares at 11.25 cents each, the company's fair-market value at the time, its directors said. Wall Street had a more inflated view of the Internet software company. After going public at $28, Netscape shares now trade for about $140 ($141 on December 22) each, and got as high as $174. At the peak, Barksdale's options had a paper value of $696 million.
DUE DILIGENCE AWARD - To Salomon Brothers, which took public a company called Normandy America run by a hot money manager who was supposed to be the next Warren Buffett. Turned out that the manager's background had a few things in it that were not disclosed - that, for one thing, his impressive track record didn't quite match the facts. As Normandy's price plunged, Salomon said "Never mind" and canceled the offering.
KEEPING UP WITH BABY BOOMERS AWARD - To Johnson & Johnson, which pleaded guilty to charges of destroying documents to impede an investigation into whether the company had acted illegally in trying to position an acne medication as an anti-wrinkle cream.
AUDITING BLINDFOLD AWARD - To the internal auditors at Barings Securities, who praised Nick Leeson's "almost unique capacity" to produce big profits without taking significant risks by trading futures on Japanese stocks in Singapore and Osaka. A few months later, Barings was broke, as it turned out Leeson had gambled away the firm.
MISSING THE NEWS AWARD - To Deutsche Bank. A day after Barings went broke, Deutsche entered into a $48 million currency swap with Barings. A day after that, it sued, expressing shock that Barings had not lived up to the deal.
ACADEMIC FREEDOM AWARD - To Freeport McMoran. After a group that included students from Loyola University of New Orleans staged a demonstration denouncing the company's environmental record, the company angrily demanded that the university return money that had been donated by the company to endow a chair in environmental communications.
THANK YOU, PAINE WEBBER AWARD - To Joe Grano, president of the brokerage firm. After a series of disastrous personal investments, Paine Webber gave Grano a $4 million personal loan on exceedingly generous terms to enable him to avoid bankruptcy. Similar offers were not made to customers of the firm who might have made equally bad investments.
TEAMWORK AWARD - To the senior management of Daiwa Bank and officials of the Japanese Finance Ministry. Confronted with the knowledge that a Daiwa official in New York had managed to lose $10 billion through hidden trades, they buckled down and filed so many false reports that they were able to keep both customers and American officials in the dark for several months.
NEW LEAF AWARD - To Prudential Securities. After mounting a publicity campaign about how it regretted the abuses in its partnership business, the firm embarked on a campaign to stall arbitration proceedings filed by aggrieved clients, then said the proceedings had to be dismissed - not because Prudential did not owe them money but because the ripped-off customers had not returned a postcard about a class-action suit.
DERIVATIVES TIMING AWARD - To Sam Wyly, chairman of Michaels Stores, who in February cut a deal involving derivatives that would allow him to force Lehman Brothers to pay him $1.77 million for every dollar that Michaels stock price fell below $28.56. Wyly angrily denied that this indicated that he was negative on Michaels stock, but it has proved to be a good deal nonetheless. Michaels shares now trade for about $15.
SEE NO CONFLICT AWARD - Well after the senior management fight at W.R. Grace had erupted into public view, complete with allegations of sexual harassment and various management factions being out to discredit one another, the company released an annual report notable for its upbeat spirit and lack of reference to what was actually going on.