MT VOID 07/12/02 (Vol. 21, Number 2)

MT VOID 07/12/02 (Vol. 21, Number 2)

@@@@@ @   @ @@@@@    @     @ @@@@@@@   @       @  @@@@@ @@@@@ @@@
  @   @   @ @        @ @ @ @    @       @     @   @   @   @   @  @
  @   @@@@@ @@@@     @  @  @    @        @   @    @   @   @   @   @
  @   @   @ @        @     @    @         @ @     @   @   @   @  @
  @   @   @ @@@@@    @     @    @          @      @@@@@ @@@@@ @@@

Mt. Holz Science Fiction Society
07/12/02 -- Vol. 21, No. 2

Table of Contents

El Presidente: Mark Leeper, The Power Behind El Pres: Evelyn Leeper, Back issues at All material copyright by author unless otherwise noted. To subscribe, send mail to To unsubscribe, send mail to

Honors and Statues (comments by Evelyn C. Leeper):

People have commented on the fact that I was not a Hugo nominee this year and asked about it. I found a quote from Cato that pretty well sums it up: "I had rather men should ask why Cato had no statue, than why he had one." [-ecl]

Digitized Books and Print-on-Demand (comments by Evelyn C. Leeper):

The National Yiddish Book Center is announcing the official launch of the Steven Spielberg Digital Yiddish Library, believed to be the only project ever to digitize an entire modern literature. There are over 10,000 books available on acid-free paper for $29 each.

See for more details.

Sounds kind of science fictional to me. :-) [-ecl]

Stealing the Company (comments by Mark R. Leeper):

There seems to be a new and an unpleasant trend in American business. I call it "stealing the company," and it is happening in more businesses than we would like to admit.

There are really three groups of people involved in questions of power in a corporation, each with a different set of interests. There are the employees, the stockholders, and the directors. By directors here I mean the decision-makers including the Board of Directors and the highest levels of management. These three groups have interests in common, the financial health of the company. Also, they are not very distinct at all. They overlap. Upper management frequently may include people who have worked their way up from being employees, or it did at one time. And everybody holds stock. And presumably stock is the main incentive for the three to work together. Everybody benefits if the stock is high, at least in theory. To some extent the employees and the stockholders also have conflicting interests. Companies that give too many benefits to the employees make smaller profits, again at least in theory, and that hurts the stock price. Particularly with the cost of medical care skyrocketing, there is a smaller pie for the employees and the stockholders to split.

Mediating between the stockholders and the employees are the decision-makers of the company. They are charged with maintaining a happy balance between decisions made for the employees and those made for the stockholders. If you go too far in one direction, you have sweatshops and nobody of value wants to work for the company. If the decision makers go too far in the other direction, the company profits are eaten up and the company fails. Profits are the reward for all three parties.

Among the incentives of the decision-makers is the fact that they are usually large stockholders. If they make bad decisions the value of the stock declines and it is of less value to them. At least that is the theory. But a large part of their power derives from the fact that they are also usually the big stockholders.

The problem, as I see it, is that incentives for corporate decision makers have increased tremendously in the last few years. The decision makers whose only check on power is the value of the stock they own have made the decision that the company has to protect them from the negative effects of the price of the stock falling. In spite of the fact that they own large tracts of stock these days they benefit no matter what the stock does. In a situation that parallels that of Mel Brooks's THE PRODUCERS, frequently they can make more money managing a company that is a flop than one that is a success.

How do they do this? Essentially, as decision makers they can over-rate the value and importance to the company of their particular brand of decision making. This is not to demean the importance of good decision making to a company. It is a very important asset. But any asset can be over-valued, particularly when those who decide the value have a conflict of interest. Many corporations are being managed into heavy losses while the people at the top are being rewarded as if the company was a huge success. In fact, their rewards have been effectively de-coupled from their performance.

As an example reported in US News and World Report, this year Christos Cotsakos, the chairman and CEO of E*Trade, decided that his decision-making abilities were worth $80,000,000 of salary and benefits per year. Is that an exaggeration? Is he really giving the company that much value? How much of the company profit is attributable to this man's abilities? Well, it is really none. Since there was no profit. The company lost $276,000,000. The stockholders paid Cotsakos $80,000,000 for him take that money and to lose another $196,000,000 in addition to what they were paying him. But the stockholders probably thought that salary is okay based on the fact Cotsakos is probably the biggest stockholder. That is what I call stealing the company... legally. The chief decision-makers pay themselves a sizable proportion of the assets of the company at the expense of both the employees and the stockholders.

There was a time when the ratio of the highest salary to the average salary in most companies was something like 20-to-1. Today it is frequently 500-to-1. For many corporations it is in the thousands. And fringe benefits of the job and stock options inflate it far more than the salary, often in ratios in the hundreds. And among the rewards they can decide to give themselves is more stock. If the stock goes down it loses its financial value, but not its voting power. That voting power is really the engine behind the decision makers in the company. When executives get more stock, even stock of low value, the company is taking corporate power from other shareholder and giving it to themselves. This accumulation of corporate assets and power is the essence of this "stealing the company" from the other stockholders.

A powerful tool for stealing the company has proven to be stock options. The people with the power can issue themselves large numbers of stock options almost invisibly to the stockholders. If the company does well suddenly a substantial piece of the improved company value and voting power goes not to the pre-existing stock holders but to the people exercising those options. If the company does poorly the options need not be exercised. The stockholders have been made to take the risk of the company doing poorly, but they have had taken from them much of the potential benefit if the company does well.

One new strategy of the few and powerful is to buy off the auditors. Many auditors have opened up a side business of consulting for the companies they audit. For some this has become their biggest source of income. However doing separate business with a company they audit represents a substantial conflict of interests. It is a small matter for them to over-value the company by, among other approaches, turning a blind eye to questionable company investments. This has the effect of increasing stock price. The heavy hitters at the top can unload tracts of stock at a very large profit. The small stockholders feel good temporarily because the stock is high. But that feeling does not last. The true value of the company becomes obvious with time and the stock loses the greatest part of its value. The stock drops and the top managers again issue themselves options. If the value ever comes back they can they can pick up the stock at those same low prices.

The extreme case of stealing the company would be for the higher echelons to decide that the only thing of value is their service. The corporate decision makers could then just divide up the assets of the company among themselves and let the stock go to zero. The Securities and Exchange Commission would probably have something to say about that. But they have been edging up on doing just that little by little by issuing themselves bigger and bigger rewards and by manipulating the auditors. They steal the financial futures of the stockholders and the employees and until now the law has little it can say. And in many companies have management that is following just that sort of strategy.

So what can you do? I would like to say just choose stock carefully and know the management of the companies you buy stock in. That is excellent advice except for the fact it is totally impossible. How do you do it? Maybe eventually the FTC will move in and limit the powers of these people. Until then the abuses will probably have a chilling effect on the stock market. Whom can you trust when the CEO and the directors can find legal ways to divide a company up among themselves. Till now what has stopped them from doing that is ethics and the threat of a bad reputation. Accounting firms have lived in fear of tarnishing their reputation. Today's accounting firms and high executives seem to have discovered that those are hollow threats of the possible and money in the hand is very immediate. The most successful strategy is to take the money and run. [Note: this editorial was written while I was on vacation in early July. Since then it has become even more timely than it was then. The President is starting to make sounds like he will be looking into corporate problems. I am not sure I believe it, but we shall see.] [-mrl]

THE CHRONOLITHS by Robert Charles Wilson (Copyright 2001, Tor, HC, $23.95, 301 pp., ISBN 0-312-87384-0) (book review by Joe Karpierz):

I remember reading the first reviews of THE CHRONOLITHS in Locus last year and thinking to myself that it sounded like a good book, and that I should pick it up at some point.

Then I never got to it - it always works that way. I read one or more reviews of a novel and decide to buy it and read it, and never get to it unless it's nominated for a Hugo.


Even though it was only three years ago, I vaguely (the mind is the second thing to go, and I forget the first) remember really enjoying DARWINIA, the last novel Wilson wrote that was nominated for a Hugo. So I went back and reread my review, and by gosh, I did like that book.

I haven't gotten to this book yet, have I?


This book started out so well, and ended in such a boring fashion that I really am severely disappointed.

Our protagonist is Scott Warden, and he's a computer programmer of sorts. He's also a derelict slacker (is that redundant?). He's in Thailand with his wife and daughter, whom he basically ignores in favor of plain old having a good time. His life is changed one day when he is on hand for the arrival of the first Chronolith, a large monument from the future to a conqueror by the name of Kuin.

From then on, his entire life in influenced by the fact that he was present at the first Chronolith appearance. He loses his job because of it; gets the next one, working for a scientist who is intimately involved with studying and understanding the Chronoliths (first for the government, and later for her own reasons) because of it; meets his next wife because of it - well, you get the idea.

Throughout the way, there is the usual stuff concerning radical groups springing up worldwide both "for" and "against" Kuinism, weird science dealing with something called tau turbulence, dealing with the temporal and causal effects of the Chronoliths, and the final "climactic" battle with the future.

I went into this one with high hopes, and it started off okay, but once again I ended up being disappointed with the direction the story took as well as the ending that was chosen. It's not that it was anti-climactic, there just wasn't any climax at all. I looking forward to at least one encounter with Kuin, and although it's hinted that we did indeed have several encounters with him, I found that hint to be a cheat. I wanted to go to the future and see his world and what it was like to have him be the conqueror - instead, he remained a mysterious figure that was completely uninteresting to me.

The good things about the story were the characters and the writing. I do enjoy Wilson's writing style, and the characters in this novel were well developed. Unfortunately, they weren't enough to carry the story.

Two down, and I still haven't found a winner. On to COSMONAUT KEEP. [-jak]

                                          Mark Leeper

Quote of the Week:

           Vision without action is a daydream.  Action with 
           without vision is a nightmare.
                                          -- Japanese Proverb

Go to my home page