Totally Random CEO
Some of you might think I make this stuff up as I go along. But actually, I do a lot of reading that never even makes it onto the blog. After the Krugman/SPECTRE story below, I spent a little time researching the question, “How rich is the Queen Of England?”. Interesting stuff.
That lead me to a Forbes’ story on the World’s Most Powerful Women. (Queen Elizabeth is #23.) That’s where I bumped into Patricia Russo. She was rated #10 as the CEO of Alcatel-Lucent.
A piece of info you need to notice about the story is that it’s from August of 2007. Lehman Brothers collapsed in September of 2008. The music had already stopped playing when this story was written. The economy was already headed down. Most of us just didn’t know how far down it was headed. You have to wonder if the 10th most powerful woman in the world knew where it was heading. I’m guessing not.
The reason Ms. Russo caught my attention was that -- once upon a time -- Lucent was a really hot stock. I had a controller friend that had some. She was really excited about it. We had lots of controllers that were really excited about a lot of stocks. I, having a regular pension under CSRS, wasn’t that interested in the stock market. The younger controllers, being put into FERS, were literally betting their retirement on the stock market. They had been told it was a safe bet. It had sparked the day trader in some of them. Some did really well. Some did not. Some lost their retirement. Then the stock market crashed. Which brings me back to Ms. Russo.
She became CEO of Lucent in 2002 and became CEO of Alcatel-Lucent when they merged in 2006. She “stepped down” in 2008.
Here’s what Lucent stock looked like. You can plug the dates in for yourself.
From Forbes:
”Russo has reaffirmed Alcatel-Lucent's forecast of $819.5 million in pretax cost savings in 2007, in line with its target of $2.32 billion within three years. Russo also cites as a point of progress the fact that the company to date already has cut 30% of its targeted 12,500 jobs over three years.”
From Wikipedia:
”Alcatel-Lucent shares lost more than 60% of their value in the year preceding her departure.”
The stock was at $3.07 today. It peaked at $84.87 in September, 2000.
I wake up every day and thank my lucky stars I have a regular pension. For now. At least until John Boehner & Co. come after it.
Just a thought -- in case it has never occurred to you. Uncle Sam, the nation’s biggest employer, has its employees drop a lot of money in “the market” every two weeks. You might want to wonder where that money went before FERS came along in 1986.
Oh yeah, back to Ms. Russo.
”TOTAL COMPENSATION $6.76 mil”
I wonder how those 12,500 people she was going to “downsize” made out? Probably about as well as Lucent’s investors.
One more thing you might want to know about Ms. Russo.
”On July 23, 2009 General Motors announced that Russo would be a member of the company's new Board of Directors.”
That would be the General Motors that you helped bail out.
Don Brown
December 14, 2010
P.S. The Queen of England is worth about $450 million. But, it’s complicated.
Comments
Who told them it was safe? I was there, I don't remember that. I do remember that the TSP handbook clearly outlined the risks involved with each fund. Anyone who would "bet" their retirement, or for that matter any money that they can't afford to lose, on the market is a fool.
www.tsp.gov/PDF/bulletins/oc08-13.pdf
www.tsp.gov/investmentfunds/fundsoverview/fundManagement.shtml
The G Fund is guaranteed and has never lost money. The F Fund does have some risk but has only lost money in two years since 1988.
What kind of nest egg would one have today if they had invested the max allowable in the G Fund? What about the C Fund which does have risk?
"You might want to wonder where that money went before FERS came along in 1986."
I think that money went (and still goes) into guaranteed gov't securities - just like the G Fund.
"I, having a regular pension under CSRS, wasn’t that interested in the stock market."
Tragedy avoided or opportunity lost?
Even the "fools" of my generation still have their pensions.
I haven't set any rules for the comments section (yet). I didn't even activate it for years, simply because I answered mail with AVweb for years and knew how time consuming it could be for a person with my personality (disorder?). But I thought, what the heck, I'll give it a whirl.
Please don't make me regret that decision.
And just on general principles, I like it when people use their real names. It gives me something to call them.
Please feel free to disagree with me. Lots of my friends do.
Thanks for reading.
Don Brown
I have no idea how Ms. Russo was selected. I found all that information while I was researching something else. I just found it interesting. I thought it noteworthy to step back and see how the hype played out. Not to mention, it fits in with my observation that the CEOs always seem to win, even when they lose. It doesn't seem to work that way for workers.
Thanks for reading.
Don Brown