Tag Archives: Reporting tips
Marlene Kennedy, the business editor at the Albany Times-Union, had this to say about the upcoming proxy season in this morning’s paper: “You have to be a hard-core business reporter — or a moderately serious investor — to enjoy sifting through the documents’ minutiae.
“‘Beneficial ownership reporting compliance’; ‘Certain relationships and related transactions’; ‘Compensation committee interlocks and insider participation’ — what eye-catching proxy subtitles! But while the filings with the U.S. Securities and Exchange Commission may follow a standard form, some can be more revealing than others in their substance.”
I don’t know about you, but my mouth is watering already.
Thereâ€™s plenty of other information in a proxy filing to interest business readers. Most business reporters immediately turn to the compensation chart of a proxy when they receive it. How much a CEOâ€™s salary or bonus rose or fell in the past year is obviously news. The hard part is deciphering the numbers and explaining them to readers who also want to know this information, but donâ€™t have access to the proxy, or investors who havenâ€™t received their proxy yet.
Compensation stories are among the most widely read in the business section. Executives at other companies want to know what their counterparts are making down the street. Employees of that company want to know what their boss is pulling in. And shareholders of that company want to know whether the executive is worth his salary. This last one can often be determined by comparing the percentage increase or decrease in the CEOâ€™s compensation package in any given year to the percentage increase or decrease in the companyâ€™s stock price for the same year.
What most investors would like to see is an executive’s total compensation package â€“ his salary, bonus, stock options and other pay â€“ rise somewhat in line with how the company performed for the year. For example, if a CEOâ€™s pay increased 75 percent during a year in which the companyâ€™s stock price fell 40 percent and profits dropped 50 percent, then an investor is likely to be upset and could ask questions at the annual meeting.
Here are a few other things to look for in proxy statements that are newsworthy:
1. Business relationships between board members and the company issuing the proxy;
2. Shareholder proposals, specifically those related to executive compensation or business practices;
3. Change in board members. Are there new members joining and old ones retiring?
4. Change in board compensation;
5. Change in the largest shareholders of the company.
Look elsewhere in the proxy for explanations about compensation and why executives are receiving stock options and restricted stock. A reporterâ€™s best bet is what is called the â€œCompensation Committee Report.â€? The compensation committee is composed of board members. This report on executive compensation is not usually found with the chart on executive compensation. Instead, youâ€™ll have to look for it elsewhere in the proxy. Some companies place it early on in the proxy with all of the other board of director-type information. Others place it way in the back, assuming that many proxy readers will fall asleep before they get to it. But look for it. It is the report from the members of the board of directors who sit on the compensation committee, which decides how much or how little executives get paid.
Richard Holden, a former editor at the Wall Street Journal who is now executive director of the Dow Jones Newspaper Fund, has spent the past few years collecting examples from newspapers of how journalists improperly use numbers in their writing. He also teaches seminars across the country to journalists on how to better use numbers.
The Numbers Guy column, which should be required reading for any business reporter, in this morning’s WSJ, catches up with Holden and his quest to improve number usage in stories. It’s an amusing and somewhat embarrassing tale.
Writes Carl Bialik, aka as “The Numbers Guy”: “Part of the problem is embedded in the culture of the profession, Mr. Holden says: ‘Journalists always prided themselves on knowing so little about math.’ (Specialists in business, economics and sports were notable exceptions.) He also points out that many journalists can sail through college and journalism school without taking a class in math or statistics. Numerical knowledge often gets acquired on the job. ‘You learn by doing, and learn somewhat from your mistakes,’ he says. ‘Hopefully we’re kind of spreading the word a little bit by doing this.’
I would have agreed with Bialik about business and sports reporters until I started reading the profile of NFL commissioner Paul Tagliabue in this week’s Sports Illustrated. The second paragraph reads: “Take league revenue: $5.7 billion this year versus $975 million in 1989. (Major League Baseball made $4.1 billion in 2004, the NBA about $3 billion.)”
The word “made” is what bothers me in this sentence, and it shows a lack of knowledge about what “revenue” means. Revenue is not money “made.” Net income, or profit, is money “made.” When I see something like this in a major publication, it makes me question what’s wrong in the rest of the issue.
There has been a movement, so far unsuccessful, here at my university to require students to pass a math test similar to the spelling and grammar test that they must pass to receive a degree from the journalism school. If you have trouble with math, I recommend a book called Math Tools for Journalists by Ole Miss professor Kathleen Wickham, herself a former reporter.
Read the entire Numbers Guy column here.
Timothy O’Brien is a New York Times business reporter and the recent author of Trump Nation: The Art of Being the Donald, which the real estate developer has criticized vociferously. O’Brien was interviewed Friday on the On the Media radio program for NPR and criticized the Forbes 400 list as being investment pornography.
Here is what O’Brien said: “Forbes looks at the publicly held assets of individuals who have stock in publicly traded companies. That’s just a fairly straightforward exercise when you have a Bill Gates whose wealth is tied up in Microsoft, or a Warren Buffet whose wealth is almost solely tied up in Berkshire Hathaway. It becomes a little trickier when you’ve got somebody like Donald Trump who has wealth and real estate which isn’t publicly traded, the valuations are always elastic. And anybody that’s based in the private world has a lot of leeway to tell Forbes whatever’s on their mind, including how big they think their wallet is.”
In fact, O’Brien criticized Forbes’ accounting of Trump’s net worth in his book. See this earlier posting.
I have never been a big fan of such lists. It’s scorecard business journalism at its worst.
The Forbesâ€™ list, which began in 1982, has increased the publicâ€™s fascination with the wealthy and how they had gotten that way. In turn, business journalism began focusing more on those who were in charge of accumulating the wealth â€“ for themselves and for shareholders. A direct correlation between an increase in coverage of the net worth of individuals and the increase in coverage of CEOs can easily be made.
No longer were readers of business coverage simply interested in the Rockefellers of Ida Tarbellâ€™s time from the perspective of the broader effect on society of their companies. Consumers of the business press now also wanted the details of their personal lives. Business journalism happily complied, although at first even Forbes was dubious. â€œ’I thought it was pretty dicey at first,â€? said then-editor James Michaels. â€œI thought how do you find out about somebody who owns six shopping centers and isnâ€™t on the society pages?â€? That’s O’Brien’s point, exactly.
By 1987, the magazine added lists of foreign billionaires and the highest-paid entertainers. Three years later, it added a list of the top 40 highest-paid athletes.
Writing about the personal wealth and other private details of the richest families and the world and executives is not necessarily off limits for business journalism. Some of the best investigative business stories have uncovered wrongdoing in how the richest of the rich operated their businesses and squandered their inheritances. Less than half of the people on the original wealthy list remained a decade later, a great story unto itself.
But writing about wealth simply to ascertain the wealthiest led business journalism down a path of simplified coverage that caused many publications to ignore more substantive stories, I believe.
I hate to beat a dead horse, but we have yet to hear from all sides of the issue regarding Overstock.com President Patrick Byrne’s posting on the Internet of his responses to a long list of questions from BusinessWeek e-commerce editor Timothy Mullaney – before the story was published in the magazine or on its Web site.
Brendan Hodgson is a public relations professional with Hill & Knowlton in Ottawa and is a specialist in Internet communications.
Here is is perspective: “Certainly, this activity would appear to level the playing field with respect to the traditional journalist – interviewee relationship, and offer further safeguards against the potential for lazy or shoddy journalism that can occur even at the most respected of publications. It provides a clear window into the motivations of the reporter and the style of questioning being employed. Moreover, and where reporters tend to publish only small snippets of interviews, the ability to view full transcripts can provide critical context behind the selected quotes. Then again, does this activity not contradict the role of the journalist in presenting the ‘whole’ story… not simply one side, as such a transcript would present. Might one also look at the possibility that what was posted is in fact not what was said… who to believe?”
Read Hodgson’s entire post here.
Some interesting points made here. I argued at lunch today with someone who works for a national business news service that I could envision investor relations departments at companies posting these interviews on their Web site. He shot back at me that it appears as if this would fulfill a number of Sarbanes-Oxley requirements for companies as well.
CNBC star Maria Bartiromo was in Virginia Beach on Tuesday giving a speech at Regent University. She made several comments about business and personal finance journalism that are interesting to note, according to an article in this morning’s Virginian Pilot:
1. â€œIâ€™m part of the noiseâ€? that complicates investment choices, Bartiromo acknowledged. The news she delivers is aimed at a broad spectrum of viewers, she said. â€œDo you as an investor need every bit of it? No.â€?
2. One challenge that she and other financial reporters face, Bartiromo said, has been tracking the flow of money into hedge funds and private equity funds, two investment classes that have grown rapidly in asset size but lack the financial transparency of publicly traded securities.
3. Some of her coverage from the stock exchange floor could have been more investigative , Bartiromo said during an interview Tuesday, but she expressed no misgivings. The Brooklyn native said her coverage was rooted in a time that included a long-running bull market and investor expectations of a new era that would be fueled by the Internet.
4. The cost of American companiesâ€™ health care plans and the demise of corporate pension plans are topics that she plans to pursue during 2006. â€œThe cost of health care,â€? she said, â€œis the No. 1 issue for corporations today.â€?
Despite her reputation as being simply a pretty face, I came away from reading this article more impressed with her analysis of the business news world than at any other time.
We all know who Henry Blodget is. The disgraced former Wall Street analyst now has a Web site called Internet Outsider where he posts comments about Internet stocks.
Blodget took at look at the Overstock.com/BusinessWeek tussle between President Patrick Byrne and e-commerce editor Timothy Mullaney. Here are his decidedly anti-journalist comments:
“Well, first, he takes the time to write answers to a lot of the questions. This sort of thing is a waste of a CEO’s time, especially for a little 1,000-word jab. But Byrne-the-CEO clearly enjoys being Byrne-the-famous-and-entertaining-renegade and spending a couple of hours crafting such answers is par for his course. He does duck several of the key fundamental questions–some of which I’ve raised here–and he devotes hundreds of words to detailing short-seller conspiracies, branding some Wall Street analysts charlatans (plausible), and then saying he never reads their stuff (also plausible, and perfectly defensible–this is also a waste of a CEO’s time). This, too, however, is vintage Byrne.
“And, of course, Byrne had another agenda in answering the questions: He sent them to a buddy, who published them. Before the Business Week story ran. With the (reasonable) logic that an on-the-record interview is on-the-record for both parties. And the next thing that happened, according to Bryne, is that Mullaney called up screaming and threatening, called Byrne’s two temp secretaries ‘dumb bitches’, and vowed that, when the story came out, Byrne would be sorry. So Byrne wrote Mullaney another note, and the buddy published that, too.
“To anyone who has ever been burned by a reporter, Byrne’s move seems like poetic justice. Yes, Byrne should have told Mullaney that he might publish the answers–a reputable journalist with integrity, of which there are many, would have given him this courtesy. On the other hand, given the colossal amount of time Mullaney was implicitly requesting, a bit more courtesy and gratitude on his part would have been nice, especially for someone who might later want to lecture temp secretaries about how he’s not being shown any.
“In any case, the Q&A is an amusing read, and the image (true or not) of a reporter cursing out some temp secretaries because he’s had the tables turned is worthy counterpoint to the media’s perma-story about how the main character flaw of most corporate titans is ego. And stay tuned for Mullaney’s story–which, one hopes, will include his version of the events…”
The full post can be read here.
The Financial Times newspaper has settled a libel lawsuit with a broker that sued it, agreeing to pay damages and legal fees to the broker.
This Reuters story reads in part:
“Collins Stewart had sued the FT over its 2003 coverage of allegations by former equity analyst James Middleweek, who accused the brokerage of regulatory breaches in a document he sent to the financial watchdog.
“Collins Stewart’s legal counsel Rod Christie-Miller, reading from a statement, said: ‘The Financial Times is happy to clarify that it did not ever endorse Mr Middleweek’s allegations and apologises for any impression to the contrary that may unintentionally have been given.’
“‘The Financial Times has agreed to pay substantial damages and legal costs to Collins Stewart, and to publish an apology to that effect on the front page of the ‘Companies and Markets’ section of its newspaper,’ Christie-Miller said.”
Here is the FT statement.
“As a journalist with feet (or arms) in both the world of traditional media and the world of blogs, Iâ€™m well acquainted with the reputation that journalists have â€” and this exchange doesnâ€™t do anything to help that. Itâ€™s ironic that a man who has been described by Mr. Cuban as ‘a paranoid fool’ actually comes off looking better than a reporter from a respected newsmagazine.
“Ironically, the approach Mr. Byrne took by posting the email and his comments has been used before by his nemesis Mr. Cuban. These examples are a warning to journalists everywhere â€” you no longer have the high ground (if you ever did), so you had better tread carefully, or your flaws will be exposed for all to see.”
Unlike a lot of business journalists I have talked to in the past few days, Ingram understands this issue better than most.
The rest of the mass communications world is beginning to catch on to the issues surrounding the posting by Overstock.com President Patrick Byrne of an e-mail interview he had with BusinessWeek e-commerce editor Timothy Mullaney.
Blogger expert Dan Gillmor wrote about the issue on his blog at Center for Citizen Media today and stated: “This isnâ€™t an entirely new phenomenon. In We the Media I noted that the Pentagon has been posting transcripts of major interviews with the defense secretary (I cited this one in particular), and others have posted such exchanges as well.
“But itâ€™s a harbinger of a changed situation for journalists. They may think theyâ€™re working behind a curtain, able to make (what they choose of) what theyâ€™ve learned public when they wish. Increasingly, theyâ€™re not.”
If Gillmor is right, and I suspect he eventually will be, then business journalists everywhere need to be more careful about how they conduct e-mail interviews — or really any type of interview. The parameters of the interview and what can be done with the interview will need to be clearly defined by journalist and subject before the interview begins. I can foresee a future where companies will want to record interviews with executives and post them on their Web sites in a special section — maybe even in the investor relations section of their URL.
Ken Ward Jr., of the Charleston (WV) Gazette had an excellent article last week examining the business ramifications of the mining disaster at Sago and how regulation of the industry has been lax.
Here is an excerpt from his story:
“Over the past 30 years, the number of teams taking part in the once-popular national mine safety contest has dropped by nearly 70 percent, according to U.S. Mine Safety and Health Administration records.
“From 2000 to 2002 alone, the number of MSHA-approved safety teams nationwide dropped by 10 percent.
“By law, every coal mine in the United States must have at least two mine rescue crews. As of 2004, the latest year for which figures are available, there was actually just one rescue team for every four underground coal mines nationwide, according to a computer-assisted analysis of the MSHA data.
“Since at least 1995, the United Mine Workers union repeatedly has warned about the ‘depleted rescue team structure in this country.’
“In a 2002 letter to MSHA, the Pennsylvania Bureau of Deep Mine Safety wrote that the ‘loss of experience’ and ‘lack of readily available’ rescue team members ‘has been dramatic.’
“As rescuers retire, their positions are going unfilled. Smaller coal companies are opting not to have their own teams, and instead contracting out to rescue companies.”
Ward’s story is so damning about the mining industry it’s scary. My bet is this story — and the Gazette’s coverage — wins some awards in a year.