Whether what a CEO does in his spare time is important or not, The Wall Street Journal gives the impression that Bear Stearns (NYSE: BSC) chief James Cayne spent too many hours golfing and play bridge when two of the firms hedge funds were in trouble this summer.
The news about Mr. Cayne spending hours out of the office during the problem period in July is already well-known. But in the lead story at the paper's online edition, reporters for the paper write about Cayne's schedule, his habit of not having his cellphone with him at certain times, and rumors that he smokes marijuana to relax.
The paper also reports that when the hedge fund crisis was at its worst "Mr. Cayne left for Nashville to play in the bridge tournament, accompanied by his wife, Patricia, who is a neuropsychologist and another avid bridge player." He stayed in the city for most of the next ten days.
The WSJ wants to make a virtue out of playing detective, which is fine, but whether it helps shareholders in Bear Stearns is another question.
CEOs of large companies often leave the management of problems in the hands of other senior executives. There is too much activity and too many problems to go around for one person to spend close to full-time on any one. Whether Mr. Cayne did or did not allocate his time correctly during the failure of two of the investment bank's hedge funds will always be a matter of conjecture.
What is certain now is that history will re-write the roles of people like Cayne and Merrill Lynch (NYSE: MER)'s Stan O'Neal. They will be cast as villains. And perhaps they should be. But playing bridge during a crisis is never going to look good.
Douglas A. McIntyre is an editor at 247wallst.com.
Warren Buffett, tells us more!
Oil has dropped $13, so gasoline should drop 30 cents, Americans hope
Wal-Mart's new Supermercado concept could be huge
Reader Comments (Page 1 of 1)
11-01-2007 @ 6:14AM
hal c said...
The average working stiff has a hard time reconciling the actual work performed vs compensation of CEO's. His perception is that once you become CEO all you have to do is make a lucky guess or two about the company's direction and head to the golf course in the company jet, never to do another day of real work.
What should we expect that same stiff to think about a CEO who has to quit before he gets fired and earns a nice little 161 million dollar payoff. You have to wonder what purpose the board of directors really serve.
11-01-2007 @ 8:42AM
jay said...
See. As an avid pinochle player myself, I've always been suspicious of bridge players. They spend way too much time having fun when they should be concentrating on the bids.
11-01-2007 @ 12:08PM
James Sand said...
When I read about failed CEO's receiving such huge fees for failure, I have to confess that it's tempting to start a consulting practice advising such CEO's on how to fail quickly, take the cash and move on. You have to ask yourself; with failure being so lucrative, why bother with success. A strategy James Cayne may be following as as well. Perhaps the two should merge, call it Bear Merrill, put the names of the Board members in alphabetical order, select every other one and bingo, a new investing powerhouse.
11-01-2007 @ 2:38PM
mark w said...
First, I did not know that Cayne was playing bridge while this crisis occurred, maybe its just Wall Street insiders who get this kind of info. The WSJ article was new news to me. Second, it is leadership 101 to be engaged when something big is happening. That usually means being in the office, by the phone, or briefed regularly. Third, I am sure Cyne will get some big payout, which will further reinforce the public perception that CEOs are a bunch of lazy overpaid ill-mannered boobs. Maybe this perception is correct??
11-02-2007 @ 2:03AM
John said...
Since Cayne insists he doesn't smoke pot, why should he not sue the WSJ for libel? What is he afraid of? After all, his name has been irreversibly tarnished. Period. What a loser!