"He looked like a prairie dog on speed." -- Alan Simpson, former U.S. senator, on Howard Dean's boisterous pep talk to supporters after a third-place finish in the Iowa caucuses In November, when San Diego's Idec Pharmaceuticals merged with Biogen in Cambridge, Mass., they pledged to find $475 million in savings by 2007. That didn't keep Biogen Idec (BIIB), as it's now called, from splurging on housing for commuting execs. The $2 billion company recently shelled out $5.1 million for three Boston-area luxury condos. They're to be used by execs from Idec: Chairman William Rastetter, Chief Operating Officer William Rohn, and Executive Vice-President Nabil Hanna.
The new digs should provide some solace in bitter Boston winters. Two are near Copley Square, Boston's premier shopping area. The three-bedroom, three-bath condos spread across 2,154 square feet. The third -- a two-bedroom, 2,150-sq.-ft. penthouse -- is in Cambridge, close to headquarters. "It probably doesn't make investors feel warm and fuzzy to see that expenditure right out of the box," says Patrick McGurn, special counsel at Institutional Shareholder Services. Amy Ryan, a Biogen Idec spokeswoman, says the condos are an investment. The company first studied what others did in similar situations and found such arrangements "pretty standard," she says. In other words, everyone else is doing it -- still. What's the next battleground for Internet search companies? It's the ability to include local ads next to search results. In October, Google quietly launched a pilot program across the U.S. It won't say how the program has fared or when it will become widely available. But Google won't be alone for long. BusinessWeek has learned that Yahoo! (YHOO) will offer a competing service "in the coming months."
How does it work? A computer's Internet address carries geographic data. Google breaks the U.S. into 210 regions to match the Web address with a local ad. When a Seattle resident types "Italian restaurant," the results include ads for local eateries instead of national chains that may or may not be in Seattle. All told, the market for local ads could top $2.5 billion in five years, says researcher The Kelsey Group. Yahoo won't discuss details but confirms it's developing this capability.
While still in its early stages, the program has sparked some interest. Limo service Boston Chauffeur says the ads grab people who don't put a location in their query. "We get about 60% of our customers from Google," says manager Mark Kini. Now, surfers can search globally, and clients can advertise locally. It's going to be a long time before governance reforms break Corporate America of one of its worst habits. The Sarbanes-Oxley Act, signed into law in 2002, prohibits public companies from making new loans to top officers. But The Corporate Library, a governance watchdog, says 63% of companies still have loans outstanding to execs, down from 75% a year ago. Now loan-free are American Express (AXP) and Cisco Systems (CSCO), among others. But a typical company still has $1.9 million in loans on the books, a drop of only $140,000 since last year.
There's a lot of cleaning up to do. At Union Pacific (UNP), top execs, including CEO Richard Davidson, were on the hook for a staggering $40 million in stock-purchase loans made in 1999, two-thirds of which were forgiven last year when performance goals were met. Spokes-woman Kathryn Blackwell says the loans, now down to $8 million, were designed to give execs "skin in the game" and boost the stock. She expects most of the money will be repaid by Jan. 31. Other companies, including Sun Microsystems (SUNW), Electronic Arts (ERTS), Reebok (RBK),and Wyeth (WYE), made new loans in the four months before the ban took effect. Not exactly what lawmakers had in mind. Since nearly one-third of Americans are obese, some companies see a growth opportunity in the seriously overweight. Steelcase (SCS), for example, makes a desk chair that can hold 500 pounds. Goliath Casket offers triple-wide coffins. Next up: a rocking chair/recliner big enough to hold a small family. When it goes on sale in April, the chair, made by Morristown (Tenn.)-based Berkline, will measure four feet across, hold 600 pounds, and include a motorized lift. The company already has a big seller in a recliner that can hold 375 pounds. Here's hoping Berkline doesn't need to expand its line of recliners much further. General Electric (GE) has won the 2004 Catalyst Award for promoting women. And who is beaming with pride? Jack Welch, who didn't have a woman on his senior staff when he retired as chairman in September, 2001.
Welch says the pipeline was filling. From 1998 to 2003, women in GE's top 173 posts rose from 5% to 13% -- good, but under the 15.7% average. "I worked very hard on that," he says. Welch credits successor Jeff Immelt for pushing change: Two women are now among GE's top 25 execs. Looks like GE is shedding its rep as an old boys' club. In the 1990s, the stock boom and Dell's generous options created "Dellionaires" all over Austin, Tex. But the run-down east side of town didn't benefit. Former Dell CFO Thomas Meredith, 53, is out to change that. He's co-founder of the Austin Idea Network, which focuses on quality of life. He has paid $2 million for 30 vacant acres in east Austin and plans to fill the space with homes, non-profits, cultural amenities, and local businesses.
That puts the former Wall Street favorite in front of another tough audience: east Austin leaders. They say they've been burned before by others with grand plans. Meredith says he only wants his investment to break even.
Meredith, who held $150 million in Dell stock and options prior to stepping down in 2000, says he'll stick to a plan created by the community four years ago. "Our goal is to breathe life into the plan." To help, he has enlisted volunteer architects, investors, and planners. Maybe options aren't such a bad thing. Securities lawyers increasingly face new, sophisticated lead plaintiffs in class actions: public pension funds. The funds, representing city, state, and other unionized employees, led 56 such suits in 2002, up from four in 1996, says a study by Pricewaterhouse- Coopers. And they're having an impact on settlements.
Why the new activism? Steven Skalak, a co-author of the study, attributes it in part to a 1995 law that makes a company's largest financial stakeholder the default lead plaintiff in a class action. Pension funds often fit the bill. And the recent spate of corporate wrongdoing has spurred funds to join suits. "Part of it is outrage that many institutional investors feel," says Joseph Grundfest, a Stanford Law School profess-or. If institutional investors keep throwing their weight around, he says, they'll affect settlements and legal strategies.
The presence of pension fund litigants has resulted in governance measures being sewn into settlements. Apparently, there's no fury like an institutional investor scorned. Bedbugs are making a comeback. The bloodsucking parasites all but disappeared from the U.S. after the 1950s, thanks to the now-banned pesticide DDT. But they reappeared in the late '90s, first in hotels, then in college dorms. Pest-control outfit Orkin says the number of bedbug reports it receives jumped 300% in 2001, then rose 70% in both 2002 and 2003. "We've gotten calls of infestations in more than 30 states now," says Orkin entomologist Frank Meek.
Don't assume bedbugs lurk only in fleabag joints. Manhattan's Helmsley Park Lane Hotel is being sued by a Mexican guest alleging he was attacked by bedbugs while staying there. Helmsley lawyer Steven Eckhaus, who insists the hotel is bedbug-free, says: "I'm sure that this case will be dismissed."
The icky little critters, officially known as C. lectularius, are the size of an apple seed and can consume three times their weight in human blood in 10 minutes. They are wingless and hang out in mattresses and wall cracks, waiting for food. Although they don't carry disease, they leave itchy bite marks.
It's unclear why the menace is spreading. International travel is often blamed, since bedbugs are common in many countries and can hitchhike in luggage or clothes. Meek says the switch to insect-specific pesticides may be a factor; poisons that kill cockroaches, say, may not harm bedbugs. Not that you want cockroaches between the sheets, either.