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Closing Bell: OfficeMax

Can a corporate crimefighter tame the Homeland Security Dept.? President Bush hopes so. On Jan. 11, he tapped U.S. Circuit Appeals Court Judge Michael Chertoff, onetime head of the Justice Dept.'s Criminal Div., as Homeland Security Secretary.

It's not Chertoff's first time fighting terror: At Justice, he made crucial decisions on detaining illegal immigrants suspected of involvement with September 11. That and his work on the Patriot Act drew a caution from the ACLU, while Democrats remember his role as chief counsel on the Whitewater probe. Still, Chertoff, 51, is likely to win easy Senate confirmation: Even Senator Hillary Clinton (D-N.Y.) vowed to give him "careful consideration." The tough part will come later, when Chertoff -- who hasn't run anything bigger than the Criminal Div. -- tries to unsnarl two-year-old Homeland Security, where 180,000 workers in 22 agencies lack a common computer system and answer to dozens of Capitol Hill barons.

Social Security isn't the only retirement system in disrepair, the Bush Administration acknowledged this week. On Jan. 12, Labor Secretary Elaine Chao put forth a plan to shore up the Pension Benefit Guaranty Corp., the government-supported insurer of private pension plans. With these plans now underfunded by an estimated $450 billion, and with two of the largest and most troubled air carriers terminating their pension plans, the emphasis is on getting more money into the PBGC both by upping insurance premiums from $19 a head to $30 and by requiring more funding by struggling employers. Yet the PBGC already has a $23 billion deficit. Now it's up to Congress, which has typically vacillated on pension reform, to hammer out a plan.

When Motorola (MOT) tapped Ed Zander (above) of Sun Microsystems (SUNW) in 2003 to replace Christopher Galvin as CEO, operations chief Mike Zafirovski was expected to leave after being passed over for the top job. Only now has he decided to resign, announcing on Jan. 12 that he will move on at the end of the month. Zafirovski, 51, stayed to perk up execution, boost profitability, and help Zander spin off the semiconductor unit and merge five other divisions into four. With Motorola set to report its fourth consecutive quarter of solid earnings on Jan. 18, Zafirovski is hunting for a CEO opportunity. Motorola has no plans to name another operations chief.

A dozen executives at Nortel Networks (NT) will give back $8.6 million in bonuses based on faulty accounting. The givebacks, announced on Jan. 11 after Nortel restated results for 2001 to 2003, are part of a massive cleanup at the phone-equipment maker. As a result of an internal probe of bookkeeping, five directors are leaving and two new ones are being named. Such givebacks are rare, but that may change. The Sarbanes-Oxley Act requires execs to fork over bonuses or stock profits that result from accounting restatements. Already, Fannie Mae (FNM) has come under fire for deferring expenses in 1998, making top execs eligible for nearly $6 million in bonuses. And HealthSouth (LSH) is going after payments received by former Chairman Richard Scrushy. The message for CEOs? Don't cash that bonus check too soon.

The man who engineered the largest dividend payout in history will soon be history himself at Microsoft (MSFT). Chief Financial Officer John Connors said on Jan. 11 he will leave by spring to work as a venture capitalist with Ignition Partners of Bellevue, Wash. Connors, a favorite of Microsoft CEO Steven Ballmer, will best be remembered for overseeing a $32 billion special dividend payout in December. But Connors also watched Microsoft shares slide 74% during his five-year CFO tenure, compared with a 44% decline in the NASDAQ.

Corrections and Clarifications

In "Microsoft's CFO will split" (In Business This Week, Jan. 24), we failed to factor in Microsoft Corp.'s February, 2003, 2-for-1 stock split in our calculation of the stock's performance during John Connors' five-year tenure since January, 2000, as chief financial officer. Microsoft shares declined 51%, not 74%.

-- GM (GM) will sell its locomotive manufacturing unit to two investment firms.

-- SBC (SBC) and Hewlett-Packard (HPQ) will jointly develop and market products and services.

-- Economist and Worldly Philosophers author Robert Heilbroner, 85, died on Jan. 4

OfficeMax (OMX) shares fell 4.7% on Jan. 12 after the company said its new CFO had resigned and it wouldn't release earnings until it got results of a previously reported internal accounting probe. The Itasca (Ill.) company said it has found problems with vendor payments.

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