Investigating Enron Life After Enron and Sarbanes-Oxley by ujl89480

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									                                                                        Enron Chronicles




                                                                        Investigating Enron
                                                                        Life After Enron and Sarbanes-Oxley
                                                                        (Sometimes History is Our Best Teacher)
                                                                        BY   GARY     M.   BROWN




                                                                        W
                                                                                                hen I accepted the position as special counsel
                                                                                                (minority) to the U.S. Senate Governmental
                                                                                                Affairs Committee (GAC) in the Enron
                                                                                                investigation, I was excited despite not
                                                                                                knowing exactly what was in store for me.
                                                                        GAC had launched a wide ranging investigation into the causes of
                                                                        the collapse of Enron, then the seventh largest corporation in
                                                                        America. Enron was the largest (until WorldCom) and remains the
                                                                        most complicated business failure in U.S. business history. Enron’s
                                                                        collapse devastated thousands of its employees and investors. Its
                                                                        downfall was shocking due to its size, the apparent speed with which
                                                                        it happened, and because it appeared that it could be traced to
                                                                        widespread fraud at the company. The collapse and revelations that
                                                                        followed, coupled with other corporate scandals, triggered a crisis of




                                      KRT PHOTOGRAPH BY CHUCK KENNEDY
                                                                        confidence in U.S. capital markets that continues today.




28   SUMMER 2003   OWEN @Vanderbilt                                                                                                        29
Did Attitude Get Us Here?                    answered that from what we had seen at        upfront with our clients—that’s why in                                                                              informed: “No. Even                           “… reputational risk (i.e. aid/abet
Alan Greenspan, who coined the               that point, “No.” As we learned later,        our prospectus we clearly state that our                                                                            after adding that on,                      Enron income stmt [statement] manipu-
phrase “irrational exuberance” to            not only was there a failure of various       investment advice is often self-                                                                                    Enron was still an invest-                 lation …”
describe the booming stock market of         parties to do their jobs, there was wide-     interested or deceitful and may work to                                                                             ment-grade company.”                          Obviously, the risk was not great
the ’90s, when asked about corporate         spread failure to grasp basic legal princi-   a client’s disadvantage. We think you                                                                               The bankers seemed                         enough—the transaction was executed
scandals that seemed to emerge from          ples and principles of right and wrong,       deserve to know that.”                                                                                              oblivious that the trans-                  as planned. Following our hearings in
this period said, “The historical            coupled with what some would term                 Sound funny? Let’s go to July 23,                                                                               lation of that comment                     late July, we met with representatives of
guardians of financial information were      “Wall Street arrogance.”                      2002, day one of a two-day hearing                                                                                  was, “You don’t have to                    the SEC and the Enron Task Force to
overwhelmed.” The guardians he refers            Many times when confronted with           before the PSI. Bob Roach, chief coun-                                                                              tell investors the truth as                brief them on our observations and find-
to are independent boards of directors       troubling situations or facts, witnesses      sel for Senator Carl Levin (D-Michi-                                                                                long as you think it’s a                   ings. The evidence we revealed in our




                                                                                                                                                                                                          KRT US NEWS ENRON PHOTOGRAPH BY CHUCK KENNEDY
and auditors, both of which were found       responded, “It was in accordance with         gan), then subcommittee chair, and I                                                                                good deal.”                                hearings was referred to both the SEC
by GAC and its Permanent Committee           GAAP,” or “The lawyers approved it.”          had presented staff testimony in a hear-                                                                               As to “reputational                     and the Department of Justice. On
on Investigations (PSI) to have failed       Technical compliance was stressed over        ing entitled “The Role of the Financial                                                                             risk,” on the second day                   March 17, 2003, the SEC announced
miserably with respect to Enron.             all else (although many times there was       Institutions in Enron’s Collapse.” The                                                                              of PSI hearings, repre-                    that it had settled charges with Merrill
GAC’s investigation also addressed the       not even technical compliance). No            staff testimony, coupled with testimony                                                                             sentatives of Merrill                      Lynch that it had aided and abetted
roles of other guardians in the collapse,    one ever seemed to ask, “Does this            from representatives of Moody’s and                                                                                 Lynch appeared to                          Enron’s earnings manipulation during
including                                    work?” or “Is this appropriate?” When         S&P, and that of Lynn Turner, former                                                                                defend, among other                        1999 through participation in the
                                             concerns were raised (such as when one        chief accountant to the SEC, had                                                                                    things, the “Nigerian                      Nigerian barge deal and one other
◆ credit rating agencies that contin-        bank raised “reputational risk”), they        painted a picture of major financial                                                                                barge deal.” We                            energy trade. The fine—$80 million.
     ued to rate Enron as an investment                                                                                                  Senate Governmental Affairs Committee Chairman Joseph                 suggested that Enron had                      And the final words in the SEC’s
                                             were quickly dispensed with, many             institutions assisting Enron in mislead-
     grade credit until days before its                                                                                                  Lieberman (D-CT), left, and Senate Permanent Subcommittee             pressured Merrill at the                   announcement—“The Commission’s
                                             times with the “almighty dollar” being        ing public investors by manipulating its
     bankruptcy;                                                                                                                         on Investigations Chairman Carl Levin (D-MI) hold a press
                                             the determining point. Greed and self         financial results. Representatives of                                                                               end of 1999 to purchase                    investigation into Enron is ongoing.” As
                                                                                                                                         conference January 2, 2002, to announce their plans to
◆ securities analysts that continued to      interest appeared the overriding govern-      three prominent Wall Street firms were        investigate the recent collapse of Enron Corporation.                 an interest in three                       well it should be.
     recommend that the public buy the       ing principles.                               to appear.                                                                                                          Nigerian power barges
     securities of various companies             It reminds one of a recent Saturday           After hours of testimony about trans-     enue] or (better yet) bury it in their              from an Enron subsidiary for a price that                    It Was More Than Enron
     (including Enron) until just prior to   Night Live skit featuring an investment       actions that these financial institutions     trading liabilities.” As Enron began to             allowed Enron to record $28 million in                       (And That’s Why There’s
     their collapse;                         advisor informing a group of investors        had structured and executed in a man-         unwind in late 2001, one e-mail                     revenue and $12 million in pretax prof-                      Sarbanes-Oxley)
                                             that he had gotten out of the stock mar-      ner that allowed Enron to materially          expressed alarm about a series of trans-            its. Despite Merrill’s denials, documents
◆ financial institutions that struc-                                                                                                                                                                                                                      Although in early 2002 there were
     tured and executed transactions         ket “three years ago [1999] and had not       misstate its financial position to the        actions known as “prepays,” which in                indicated there was an understanding                         numerous calls for accounting reform, as
     used by Enron to manipulate its         followed the market since.” The time is       public, the following exchange took           essence were disguised loans. “Five [bil-           that Enron would arrange for the barges                      time progressed the calls subsided.
     financial results; and                  late 2002:                                    place between Senator Levin and David         lion] in prepays!!!!!!!!!!!!!!!!” The               to be repurchased from Merrill within                        There was much discussion that perhaps
                                                 Advisor: “You see, around that time,      C. Bushnell, managing director, Global        reply? “Shut up and delete this email.”             six months at a specified rate of return,                    Enron was just “one bad egg.” By early
◆ government agencies charged with           we at Global Century became                   Risk Management, Citigroup/Salomon                Another investment bank had done                all of which occurred as scheduled. This
     oversight of Enron, such as the                                                                                                                                                                                                                      May, many, including former SEC
                                             convinced that stocks were headed for a       Smith Barney:                                 its own internal analysis of Enron and              made the substance of the transaction at                     chairman Arthur Levitt, predicted that
     SEC, the CFTC, and the Federal                                                                                                      concluded that there were billions more             best a bridge loan because true owner-
                                             crash, and bonds were the safer bet. We           Sen. Levin: “But would you agree                                                                                                                           accounting reform would not become
     Energy Regulatory Commission.                                                                                                       in debt than was reflected on Enron’s               ship of the barges did not pass to Mer-
                                             were right. My own bond portfolio is up       that you have a responsibility not to                                                                                                                          law. The press lamented the “shelving”
   The Sarbanes-Oxley Act of 2002            nearly 30 percent.”                           participate in a deception?”                  books or known by credit rating agen-               rill. This, in turn, made recordation of                     of the Sarbanes accounting reform bill.
addressed many of the failures of these          Investor: “But, if you were moving           Mr. Bushnell: “It depends on what          cies. This particular institution was mar-          the revenue and profit by Enron                              Senator Jon Corzine remarked that it
“guardians.” The Act focused on audi-        out of stocks and into bonds three years      the definition of deception is.”              keting securities, with proceeds going in           improper because the transaction was                         was “unlikely that we will get strong
tors through direct regulation, and on       ago, why were your brokers telling peo-          Is this really different from the Satur-   part to reduce the Enron credit exposure            not a true sale.                                             reform unless there is a new event that
directors (indirectly) through audit         ple like me to do the exact opposite?”        day Night Live skit? Do we really believe     of its commercial banking affiliate. Pre-               We felt, given the background, that                      captures the [public’s] imagination.”
committee independence and responsi-             Advisor: “Well, if you think as we did    that investor confidence will return if       sentation materials for these transac-              Merrill entered into the transaction                             Well, they got it. The “one bad egg”
bility and conduct of officers over whom     that stocks are headed down and you           this is the prevailing attitude on Wall       tions prepared by the bank touted the               solely to ingratiate itself with Enron in                    argument began to fall on deaf ears as
directors were supposed to exercise          want to unload them before a crash, you       Street?                                       fact that no disclosure of details about            order to garner a larger portion of the                      one after another high profile account-
oversight.                                   have to convince someone out there to            Consider other facts. One banker’s e-      the underlying transactions would have              enormous investment banking fees that                        ing scandal emerged. Every morning,
   “Did anyone do their job?” That was       buy them; that’s just common sense.”          mail said, “Enron loves these deals as        to be made to credit-rating agencies.               Enron generated. Significantly, one of                       GAC staff received an e-mail of the
a question posed to me early in the              Investors thank the advisor for his       they are able to hide funded debt from            When asked about these matters and              the executives involved in the transac-                      Washington Morning Update, a
investigation by Senator Susan Collins       “honesty” and the skit concludes,             their equity analysts because they (at        whether additional disclosure in offering           tion wrote this about the transaction in                     description of newsworthy items that
(R-Maine), now chair of GAC. I                   Advisor: “We like to be completely        the very least) book it as deferred [rev-     documents was warranted, we were                    late 1999:



30                                                                                                                    SUMMER 2003        OWEN @Vanderbilt                                                                                                                                      31
could affect investigations or legislation      The adage that those who                     discretion. Many if not all of these                                                             line of credit used in what was termed        of interest that allowed cor-
pending before Congress. When I first                                                        “intrusions” can be traced directly to the                                                       an “ATM approach,” repeatedly draw-           porate officers to reap multi-
                                              forget history are doomed to
joined the GAC staff, one section each                                                       perceived failings of the boards of direc-                                                       ing down the line and repaying it with        million dollar windfalls led
day was “Enron News.” During May, the             repeat it still applies.                   tors of Enron and other corporations                                                             Enron stock ($77 million dollars sold to      to Section 406’s disclosure
header changed to “Corporate Scandal                                                         that experienced high profile failures.                                                          the company during a 12-month period)         requirements concerning
News,” reflecting the growing number         Act created the Public Company                                                                                                                   with board members disavowing moni-           codes of conduct for senior
of corporate improprieties (e.g., Adel-      Accounting Oversight Board and                  Consider                                                                                         toring responsibilities, led to Section       financial officers and waivers
phia, Tyco, ImClone).                        requires registration of auditing firms              Conflicts of interest and lack of                                                           402’s ban on personal loans from public       of those codes.
    These events provided the impetus        that audit public companies. The seem-          independence of boards and audit com-                                                            corporations to their executives.                  The perceived failings of
for the Sarbanes bill to be reported out     ing inability of the auditing profession        mittees, as well as audit committees’                                                                 Lay’s repayment of his company           the lawyers handling failed
of the Senate Banking Committee in           to police itself led Congress to impose         failure to interact appropriately with                                                           credit line with stock in a manner that       or deceptive transactions led Fred Thompson, ranking member of the Committee on Gov-
late June on a 17–4 bipartisan vote.         direct regulation, through the SEC and          auditors and to have effective mecha-                                                            avoided prompt disclosure of these dis-       to Section 307’s requirement ernmental Affairs, and Gary Brown, Vanderbilt law alumni,
Majority Leader Tom Daschle initially        the PCAOB, of the auditors of public            nisms for “whistleblowers” (i.e. Sherron                                                         positions at the same time he urged           for “up the ladder” reporting confer in a Senate hearing on the Enron collapse.
indicated that the earliest the Sarbanes     companies and to restrict the relation-         Watkins) led to Section 301’s require-                                                           employees to continue to buy Enron            as well as the SEC pro-
bill could go to the Senate floor was        ships of auditors with those companies          ments that the stock exchanges require                                                           stock and trading by executives, while        nouncement that the organization,                  Senate hearings have revealed
September. The usual result of such a        in an effort to restore auditor indepen-        listed companies to have independent                                                             lower level employees were prohibited         rather than management, is the attor-         financial irregularities of large New
delay is the death or, at minimum, sub-      dence.                                          audit committees, with broad powers                                                              by plan “black out” restrictions led to       ney’s client to which the attorney’s loy-     York banks, their executives, affiliated
stantial weakening of legislation. On           Much of the rest of Sarbanes-Oxley           and responsibilities in respect to the                                                           Sections 306 and 403, which required          alties are owed.                              securities companies, and Wall Street
June 25, it was reported “the only thing     addressed the perceived failure of inde-        audit function and engagement and                                                                rules to prohibit trading by executives                                                     investment bankers.
that’s going to get this ball [accounting    pendent directors. It did this indirectly       oversight of auditors, the ability to                                                            during such blackout periods, and accel-       Most if not all of the new laws                  Leading Wall Street investment
reform] moving again is another major        through focusing on the independence,           engage outside advisors, and the respon-                                                         erated and closed certain “loopholes”                                                       banks are under fire for their lending
accounting scandal.”                                                                         sibility to institute internal complaint
                                                                                                                                                                                                                                             and regulations adopted over
                                             power, and authority of audit commit-                                                                                                            with respect to prompt public disclosure                                                    and investing practices, including trans-
    Again, they got it. The very next        tees, and on certain actions of corporate       procedures. Pending rules from the                                                               of stock dispositions by executives.                the past year can be                    actions designed to allow companies to
day, as if on cue, front pages of every      officers over whom directors had failed         exchanges also would require indepen-                                                                                                             summarized in very simple                  misstate their financial results. Private
                                                                                                                                                                                                  The perceived inattention by boards
major newspaper reported that World-         to exercise appropriate oversight. The          dent nominating and compensation                                                                                                                                                             side deals and tax avoidance have
                                                                                                                                                                                              and audit committees to excessive com-        principles: Do your job and do
Com had misstated billions of dollars of     Act “federalized” and some would argue          committees and that a majority of the                                                                                                                                                        evoked much criticism of executives
                                                                                                                                                                                              pensation linked to short term stock
expenses in what might be one of the         “intruded” upon what generally were             board members be independent.                                                                                                                     the right thing. When one                  and their corporate activities in banking
                                                                                                                                                                                              price appreciation (that in turn was
largest accounting deceptions ever.          state law concerns, namely corporate                Excessive loans to executives, for                                                                                                                                                       and commerce.
                                                                                                                                                                                              linked to “high risk” accounting prac-          examines the Enron collapse
Daschle accelerated the timetable, call-     governance and other matters that tra-          example, Ken Lay’s $4 million                                                                    tices and extensive off-the-books trans-          and host of other recent                      The problem—all of the above that
ing for a July vote on the bill. The final   ditionally had been matters of board            (increased to $7.5 million) company                                                              actions) and other financial measures,                                                      appear to be headlines of 2002 actually
Senate vote on the bill took place on                                                                                                                                                                                                       corporate scandals, it is easy to
                                                                                                                                                                                              and the perceived failure by Enron’s                                                        are the findings of a 1932 Senate com-
July 15. The vote was 97–0, a rare show
                                                                                                                                                                                              board and audit committee to under-            conclude that no one adhered                 mittee that investigated the 1929 stock-
of unanimity in an extraordinarily short
                                                                                                                                                                                              stand (or attempt to understand)                                                            market crash. The energy company was
time period on what has been termed                                                                                                                                                                                                            to these simple principles.
                                                                                                                                                                                              Enron’s complex financial structure                                                         not Enron; it was Insull. The bankers
the most sweeping changes to securities
                                                                                                                                                                                              contributed to the Act’s requirement                                                        were not J.P. Morgan Chase or
laws since the passage of the Securities
                                                                                                                                                                                              that CEOs and CFOs personally certify         So—Have We Learned                            Citigroup, but their direct corporate
Act of 1933 and the Securities                                                                                                                                                                                                              Anything?
                                                                                                                                                                                              the company’s financial statements and                                                      predecessors. Obviously, the adage—
Exchange Act of 1934.
                                                                                                                                                                                              public reports and attest to the              Consider the following:                       those who forget history are doomed to
                                                                                                                                                                                                                                                Americans have become suspicious
                                                                                                                                          KRT US NEWS ENRON KRT PHOTOGRAPH BY CHUCK KENNEDY




                                                                                                                                                                                              effectiveness of their internal controls,                                                   repeat it—still applies.
So What Did Sarbanes-                                                                                                                                                                         Section 304’s bonus forfeiture require-       of banking practices that, in the public
Oxley Do?                                                                                                                                                                                                                                                                                 Consider further the following
                                                                                                                                                                                              ments, Section 401’s requirements for         view, have undermined the prosperity of       comments:
The final Sarbanes-Oxley Act, while                                                                                                                                                           rules relative to disclosure of off-balance   the past decade.                                 “The anxieties created by the …
requiring studies about several “watch-                                                                                                                                                       sheet transactions and “pro-forma”                Congressional investigations have         Act—among men and women of
dogs” (e.g., securities analysts, credit                                                                                                                                                      reporting, and Section 407’s disclosure       exposed cases of double-dealing in the        utmost good faith—have been … with-
rating agencies, and investment banks),                                                                                                                                                       requirements concerning whether a             securities business. Self-dealing and out-    out equal. This consternation can be
focused on two “Greenspan guardians”                                                                                                                                                          company has a “financial expert” on its       right fraud (not the least of which           attributed, in significant part, to the
that arguably had the greatest culpabil-                                                                                                                                                      audit committee.                              involved a gigantic, rapidly growing          spectre which some commentators have
ity in the Enron collapse—independent
                                                                                                                                                                                                  The Enron audit committee’s per-          energy operation) have become associ-         raised of exposure to [SEC] enforcement
auditors and independent directors. The      Former Enron CEO Kenneth Lay takes the Fifth.
                                                                                                                                                                                              ceived failures in its waivers of conflicts   ated with erosion of the stock market.        action, and perhaps criminal liability, as

32                                                                                                                     SUMMER 2003                                                            OWEN @Vanderbilt                                                                                                                  33
a result of technical and insignificant        SEC’s policy statement indicated that         lant directors may eliminate some
errors in corporate records or weak-           these developments, rather than the           opportunities, but if the past is any indi-
nesses in corporate internal controls.”        provisions of the FCPA, were the “most        cation, greed and self interest will rise to
                    ***
                                               effective antidote” to the conditions         the occasion. Perhaps now, however,                                                  Enron Chronicles
                                               that led to the questionable practices        with the stakes higher, top executives
   “The existence of a pattern of ques-        that, in turn, led to passage of the          will think twice before succumbing to
tionable [activities] by prominent             FCPA. The two leading “antidotes”:            temptation.
American corporations … —often in                                                               Indeed, when one examines the
bold headlines—shook faith and trust in        ◆ Increase in the number and respon-
                                                  sibility of independent directors; and     stacks of new laws and regulations that
the integrity of the corporate sector.                                                       have been adopted over the last year,
This reaction became part of a rising          ◆ Effective audit committees                  most, if not all, can be summarized in
tide of public skepticism and served to           composed of independent directors.
                                                                                             very simple principles: Do your job and
further undermine the traditional              The Lesson                                    do the right thing. When one examines
American consensus that business con-          The newly appointed chairman of the           the Enron collapse and host of other
ducts itself and reasonably pursues its        SEC, William Donaldson, recently indi-        recent corporate scandals, it is easy to
own economic interests in a manner             cated that the public trust in financial      conclude that no one adhered to these
consistent with the standards and              markets will not return so long as execu-     simple principles. Directors must
expectations of the larger society.”           tives use the limits of the law as the test   understand the operations of the com-
                                                                                             panies on whose boards they sit and
                    ***
   “Statute or no, these are, of course,
inherent obligations of the stewardship
                                               of right and wrong. Donaldson called on
                                               corporate America to put honesty and
                                               integrity at the heart of every business
                                                                                             must insist on a higher standard of
                                                                                             personal conduct from corporate
                                                                                                                                            Surviving Enron:
                                               decision. As we have seen, neither the        executives. Those executives must be
of a public corporation. The standards
embodied in the Act’s … provisions are,
                                                                                                                                            Turning Shattered Innocence
                                                More transparent accounting and more vigilant directors may
in effect, the cardinal principles of man-
aging a business enterprise. Among               eliminate some opportunities for fraud, but if the past is any                             into Resolve for Better
many members of the business commu-
nity, few would dispute that acceptable
                                                  indication, greed and self interest will rise to the occasion.                            Corporate America
management cannot be achieved absent           Perhaps now, however, with the stakes higher, top executives will
such records and controls. In that sense,                                                                                                   BY   STEPHEN        PLAUCHE
                                                        think twice before succumbing to temptation.
this is hardly the stuff of radical legisla-
tion.”




                                                                                                                                            M
                                               Securities Act of 1933 nor any of the         prepared to “take the fall” for errors,
                    ***                        other statutes of the ’30s (e.g., the Secu-   particularly those in judgment or
                                                                                                                                                                 any things, good and bad, have been
                                               rities Exchange Act of 1934, the Trust        integrity. This standard will not be                                written about Enron Corp. over the
    These comments, however, are not
in reference to the Sarbanes-Oxley Act         Indenture Act, the Investment Com-            met by technical compliance within a                                last five years. Once thought to be a
of 2002; they are in reference to the          pany Act, and the Investment Advisors         corporate environment that does not                                 shining example of the 21st century
accounting provisions of the Foreign           Act) eliminated fraud and wrongdoing.         otherwise foster integrity. Directors
                                                                                                                                                                 business model, Enron will now and
Corrupt Practices Act of 1977. And             Neither did later statutes, such as the       and senior management must make
                                               Foreign Corrupt Practices Act.                clear what is expected, then reward            forever stand as the poster child for greed run amok and
what engendered those provisions?
What was termed “the most devastating              Likewise, neither Sarbanes-Oxley          those who conform and perform, and             the absolute failure of the corporate governance system
disclosure”—“the fact that, and the            nor any of the host of rules promulgated      hold accountable those who do not.             in the U.S.
extent to which, some companies have           following its passage will eliminate          Only then can we avoid the failures of
falsified entries in their own books and       fraud. New and enhanced civil and             the past.
records.” These comments in the SEC’s          criminal penalties, however, have raised
                                               the stakes for those who participate in       Gary Brown, L’80, adjunct law professor
Statement of Policy Regarding the For-
                                               corporate wrongdoing. For example, the        and member of the Nashville firm of Dins-
eign Corrupt Practices Act of 1977 were                                                      more & Shohl, LLP, served as Special Coun-
accompanied by a statement acknowl-            penalty for wire and mail fraud has
                                                                                             sel in the Senate Investigation of Enron.
edging certain developments then being         increased from five to 20 years. More
made in corporate accountability. The          transparent accounting and more vigi-


34                                                                                                                       SUMMER 2003        OWEN @Vanderbilt                                             35
M
            y employment with Enron         “pay for performance” that he               interviewed with Andrew Fastow,
             began as a financial analyst   instituted the now-infamous “yank and       CFO, for an analyst position in his           I will always be tormented by thoughts of what could have been
             on June 30, 1997. Exactly      rank” performance review process            financing group, nicknamed the LJM               for me and thousands of my former colleagues had Enron’s
five years, one promotion, eight busi-      whereby the bottom 10 percent of the        group. The acronym stood for the first
                                                                                                                                         executive management acted more ethically and honorably.
ness units, and one massive bank-           employees in the normal distribution        letter of the first names of Fastow’s wife
ruptcy later, I left the firm on my own     were sent packing twice a year. People      and two children. The group’s main
accord, having weathered the storm of       commented that his ruthless behavior        responsibility was to structure Enron’s      in-the-money options jump                    greed, pride, and envy. Third, it is of    suspicious than I once was, and find
massive layoffs and corporate malfea-       often mirrored that of Louis XIV, him-      off-balance sheet financing transac-         nearly $13/option in one-trading              paramount importance that every-          myself much more reticent to give peo-
sance. How did the experience change        self a master of power, control, and pol-   tions, those designed primarily to help      session because Scott Nealy, CEO                  one in corporate America do all       ple the benefit of the doubt. Perhaps
me as a person and what personal            itics. For example, at one point it was     fuel the firm’s stratospheric growth         of Sun Microsystems, appeared at                    they can to ensure that the best    because I loved my company too much,
impressions or scars remain? More           reported that Skilling felt his position    rate. My friend related that during the      a press conference where Skilling                   people sit on their firm’s board    my most lasting impression is the pain
important, what insights can I share        as front-runner for the position of CEO     interview, it became apparent that           and Lay formally announced                          of directors. Board members are     of betrayal I felt when the truth
with the Owen community that will           was threatened by two other top execu-      much of the group’s activity revolved        Enron’s entrance into the broad-                   the last line of defense for         surfaced regarding just how wrong
make us all better corporate citizens       tives in the firm. What did he do? He       around highly questionable business          band and Internet markets; hearing                deviant manager behavior and          Enron’s executives had acted in their
and more aware of the potential haz-                                                                                                 Skilling call a respected Wall Street             corruption. They are charged          attempt to fatten their own wallets at
ards facing managers today in the              Once thought to be a shining example of the 21st century                              equity research analyst an “asshole”             with the ultimate responsibility       the expense of many of the firm’s
global business community?                                                                                                           under his breath while on a confer-              of keeping the weights of all firm     stakeholders.
    When I arrived on the Enron “cam-
                                             business model, Enron will now and forever stand as the poster                          ence call explaining the firm’s seem-            stakeholders balanced over time.          I urge tomorrow’s leaders to learn
pus” in 1997, I was the epitome of the          child for greed run amok and the absolute failure of the                             ing web of financial statements;                  With this awesome power comes         from the mistakes of yesterday’s lead-
young and green “eager beaver,” ready                                                                                                listening to Ken Lay describe in                  awesome responsibility. With-         ers. Don’t let hubris and your personal
                                                        corporate governance system in the U.S.
to conquer all, make money, and do                                                                                                   agonizing pain that the firm would                 out a strong board dominated         desire for riches turn you into monsters
whatever it took to make Enron the          promoted both of them to the position       practices. When my colleague asked           be forced to merge with Dynegy                     by unbiased outsiders, no com-       who lead more by fear and intimida-
best energy trading company in the          of vice chairman and nominated them         Fastow what Skilling thought of the          Corporation in order to survive;                   pany is impervious to a similar      tion than by example, inspiration, and
world. What I quickly discovered was        for seats on the Enron Board of Direc-      group and its place in Enron’s future,       and ultimately witnessing as thousands      Enron calamity.                             admiration. Wake up every morning
that outside of the fast-paced trading      tors. Skilling, following the example of    Fastow replied, “Skilling loves the deal     of my co-workers watched their com-           My thoughts on this subject appear        hungry and humble, ready to take on
floors and serene corporate finance         the “Sun King,” was “keeping his            flow we bring into Enron. Its like           puter screens go blank and hearing the                                                  the challenges of the new day in a
floors, few Enron employees were satis-     friends close, but his enemies closer.”     cocaine to him—he can’t get enough.”         voice of an HPD officer telling them to       Wake up every morning                     moral and ethical manner. Above all
fied with their position in the firm.       Over the next year, supposedly, he          Given the debt level associated with         pack their bags and vacate the building     hungry and humble, ready to                 else, think for yourself and make deci-
Nearly everyone I met wanted to be a        gave one of these directors a new busi-     LJM-related transactions and the             in a half hour’s time on Monday,                                                        sions you will be able to live with later
                                                                                                                                                                                 take on the challenges of the
“commercial guy”—the people who cut         ness unit to manage that he thought         effects they had on Enron’s ultimate         December 3, 2001, the day after the                                                     in life. Don’t be lemmings, allowing
the deals, traded the positions, made       would ultimately fail. It did. The sec-     demise, it appears that this was a habit     firm filed for bankruptcy protection.         new day in a moral and                    personal relationships and peer pres-
the money, had all the respect, and         ond executive lasted longer but ulti-       that maybe should have been kicked.          Although this day gratefully didn’t               ethical manner.                       sure to persuade you to throw your
could basically do no wrong. After a        mately left the firm in frustration.           I have numerous other anecdotes           mark the end of my tenure at Enron,                                                     weight and vote behind potentially
few months on the wholesale commod-         Unfortunately, Enron lost two of its        from my time at Enron. Some of the           this day did mark the end of my inno-       to be cynical, but it cannot be helped; I   unlawful and fraudulent activities. If
ity desk, I found that this mind-set        finest and most admired leaders:            more memorable ones include watch-           cence forever as a trusting and loyal       am a product of my environment and          we can rise above at least a few of
permeated from the top of the organi-       Rebecca Marks, also a Harvard MBA,          ing former NBA-great Clyde Drexler           employee of corporate America.              the pain of the experience is now a         humankind’s basest emotions, maybe
zation and was most clearly manifested      and Joe Sutton, a former high-ranking       play a pick-up game of basketball with           What are my recommendations and         firmly entrenched part of my nature. I      we can avoid another string of corpo-
by Jeffery Skilling, a Harvard MBA,         U.S. military officer. When you posed a     Ken Lay in front of the company’s HQ         takeaways from this experience for the      wouldn’t give up my 5-year Enron            rate scandals that have had such a per-
who had left McKinsey & Company to          threat to Skilling, the gloves came off.    during lunch hour; sitting in the field      Owen community? First, if something         experience for anything, but I will         manent effect on our country’s stability
start up Enron’s wholesale gas trading          It seemed that Skilling’s lust for      boxes watching the Astros play the           in corporate America appears too good       always be tormented by thoughts of          and outlook on life.
business.                                   power was matched only by his greed         New York Yankees in the first baseball       to be true, it probably is. Second, never   what could have been for me and thou-
   Skilling was a hard driver. Case in      and burning desire to prop up the stock     game at the stadium formerly known as        put anyone you work for or with on a        sands of my former colleagues had           Stephen Plauche, a former Enron employee,
point: He was such an avid believer in      price. Case in point: A close friend        Enron Field; watching the value of my        pedestal, no matter how respectable,        Enron’s executive management acted          is a second-year student.
                                                                                                                                     honest, and smart they appear to be.        more ethically and
                                                                                                                                     Every person is susceptible to the          honorably. I am less
                                                                                                                                     basest of human emotions including          trusting and more




36                                                                                                                SUMMER 2003        OWEN @Vanderbilt                                                                                                              37
INSIDE business




                                                                                                                                                                                                                                                                                                                 INSIDE business
                                                                                                                                                                     What Makes a Great Business Lawyer?

                                                                                                                                                                     G            reat business lawyers have at
                                                                                                                                                                                  least 10 traits in common. A
                                                                                                                                                                                  great business lawyer obvi-
                                                                                                                                                                                                                    done is the ability to work with other
                                                                                                                                                                                                                    business lawyers. To do that success-
                                                                                                                                                                                                                    fully, a lawyer needs respect, and
                                                                                                                                                                                                                                                                  tion, to property, to anti-trust. Since
                                                                                                                                                                                                                                                                  lawyers also get sick and take vaca-
                                                                                                                                                                                                                                                                  tions, a lawyer needs to be backed up




                                                                                                                                                     DANIEL DUBOIS
                                                                                                                                                                     ously has much knowledge and experi-           respect from other business lawyers is        by other great business lawyers who
                                                                                                                                                                     ence in corporation, limited liability         impossible for someone who can’t              can step in when necessary.
                                                                                                                                                                     company, and partnership law. But              draft with precision. Read a lawyer’s            Which leads to the last attribute of

                  Nashville                                 landscape. The maxim “bigger is bet-
                                                            ter” also does not hold water when
                                                                                                        but to my business. For example, I just
                                                                                                        hired a Bosnian baker, which helps me
                                                                                                                                                                     also essential is an understanding of
                                                                                                                                                                     where securities law problems may lay
                                                                                                                                                                                                                    letters. If they are awkward or stilted,
                                                                                                                                                                                                                    you can be sure the lawyer can’t draft
                                                                                                                                                                                                                                                                  a great business lawyer. He or she is
                                                                                                                                                                                                                                                                  available. If that isn’t possible, a first-
                  Holds Key to                              looking at the high entrepreneurial
                                                            growth compared to Nashville’s rela-
                                                                                                        to make a diversity of products that
                                                                                                        appeal to a diversity of people.”
                                                                                                                                                                     buried. Securities law is so
                                                                                                                                                                     intertwined with other
                                                                                                                                                                                                                                  worth beans.
                                                                                                                                                                                                                                     A lawyer can have all
                                                                                                                                                                                                                                                                  rate stand-in will be available. And, in
                                                                                                                                                                                                                                                                  any case, the client’s work gets done
                  Start-Ups                                 tively small size. Condra says that “it’s
                                                            easy to get connected in Nashville
                                                                                                           How do these entrepreneurs
                                                                                                        become and remain strong business
                                                                                                                                                                     business law, they are
                                                                                                                                                                     really parts of the same
                                                                                                                                                                                                                                  the right skills and still be
                                                                                                                                                                                                                                  lousy without the proper
                                                                                                                                                                                                                                                                  in a timely manner. Otherwise, what
                                                                                                                                                                                                                                                                  good to a client is the best lawyer in
                                                            because of its size, and that is key to     leaders? Nashville-area entrepreneurs                        whole. A lawyer who can’t                                    approach to certain busi-       town?


                  O           wen’s increased emphasis
                              on entrepreneurship is a
                              natural considering
                  Nashville’s business history. Ranked in
                  the top 20 cities to start and grow a
                                                            starting up a company.”
                                                               “It’s in the city’s genes,” he contin-
                                                            ues, in explaining Nashville’s entre-
                                                            preneurial spirit. Joe Maxwell,
                                                            ’94, CEO and founder of Invest-
                                                                                                        have a long list of resources at their
                                                                                                        disposal including the TennesSeed
                                                                                                                   Fund, the Technopreneurial
                                                                                                                    Leadership Center (TLC),
                                                                                                                     the Venture Capital Forum,
                                                                                                                                                                     guide you through the
                                                                                                                                                                     minefield of securities law
                                                                                                                                                                     may well get your busi-
                                                                                                                                                                     ness killed sooner or later.
                                                                                                                                                                         A great business lawyer
                                                                                                                                                                                                                                  ness situations. There are
                                                                                                                                                                                                                                  two aspects to this ques-
                                                                                                                                                                                                                                  tion of approach. A lawyer
                                                                                                                                                                                                                                  must be able to adjust to a
                                                                                                                                                                                                                                  business client’s risk toler-
                                                                                                                                                                                                                                                                                        –Larry D. Soderquist

                                                                                                                                                                                                                                                                  Larry D. Soderquist is a Vanderbilt law
                                                                                                                                                                                                                                                                  professor and director of the Corporate
                                                                                                                                                                                                                                                                  and Securities Law Institute, and of
                  company (Inc, December 1, 2000),          ment Scorecard, interprets Con-                          and the FastTrac program.                       will have a practical feel                                   ance. Some clients enjoy        counsel to Dinsmore & Shohl LLP in
                  Nashville not only is still turning the   dra’s statement literally: “Many                         However, you’ll likely hear                                                                                                                  Nashville. He has written a number of
                                                                                                                                                                     for your business. A                                         operating on the edge of
                                                                                                                                                                                                                                                                  books on corporation and securities
                  heads of potential and existing entre-    entrepreneurs start here, and                           entrepreneurs talk about                         lawyer doesn’t need to be Soderquist                         every risk. Others want to
                                                                                                                                                                                                                                                                  law, as well as two mystery novels set
                  preneurs across the nation, but getting   their children may then join the                 their customers as their greatest                       an expert in the business, but does            stay as far from risk as possible. It’s       on a university campus, the most recent
                  noticed by those in the larger business   family business or are more                    resource. When it comes to creating                       need to understand what makes the              their choice. Great lawyers never for-        being The Iraqi Provocation.
                  community as well. More recently,         apt to start their own.”                     a new product, Paiva turns to the                           business go and what will cause it to          get who makes these decisions.
                  Entrepreneur, in association with Dun        Legacy may be a reason                   bakery’s neighborhood: “I have an                            stall. Often what is necessary is com-            Great business lawyers are also
                  and Bradstreet, ranked Nashville the      for some to pave their                      Italian cake and a Hispanic cake side                        mon sense, and all great business              nonadversarial in their general
                  ninth best city for entrepreneurs         own business path, but                      by side because of the community’s                           lawyers have a full measure of that.           approach to other lawyers and to
                  (October 2002). A more detailed           not all entrepreneurs                       rich input.”                                                     If your lawyer simply says “No” to         people with whom their clients
                  review ranks Nashville third by popula-   spring from the                                Maxwell credits the entrepreneurial                       something you desire, your lawyer has          deal. There are occasions for a
                  tion group (750K-1 million) in high-      same source. “Last                          community for giving him “lots of                            a problem, save on rare occasions.             junkyard dog performance by a
                  growth entrepreneurial companies          week, I sat down                            advice from different business angles,                       Great lawyers may have to tell you             lawyer, but they are rarely found in
                  (National Commission on Entrepre-         with an entrepreneur                        which has helped to make things run                          something can’t be done, but they              a business practice. Other busi-
                  neurship, July 11, 2001). In that year,   straight out of Owen Business School        smoothly.” Tidwell adds that                                 almost never leave their answer at             ness lawyers don't like to be
                  Nashville had a whopping number of        and then another who was wholly self-       although others in your field are com-                       “No.” Great lawyers look for ways to           mauled by junkyard dogs, and
                  1,465 high-growth companies.              educated,” says Sheila Tidwell, part-       petitors, “it doesn’t seem like it                           fulfill a client’s wishes, by roundabout       the client of such a lawyer
                     Nashville’s entrepreneurial spirit,    ner of Nashville Advertising                because we share knowledge.”                                 means if necessary. They look behind           will pay, sometimes with a
                  strangely but fittingly enough, has       Promotions.                                    Throughout the years, Nashville                           the client’s questions to discover what        busted deal. Great business
                  grown out of its defiance of “big time”      Entrepreneurship also thrives on         has used an unmarked entrepreneurial                         the client really wants, and then find         lawyers can slip into an
                  business trends. David Condra, presi-     Nashville’s open-minded and friendly        frontier to its advantage. It is up to the                   ways to accomplish it if at all possible.      effective adversarial mode
                  dent of the Nashville Technology          environment. “I have lived in Sri Lanka     entrepreneurs to continue their dis-                             Skill as a drafter is found in all great   when needed. What’s impor-
                  Council, points out that Nashville        and Quebec, and when I came to              coveries and demonstrate their cre-                          business lawyers. This skill is as impor-      tant is to know when it’s
                  never produced its own staple indus-      Nashville, I was surprised at how this      ative punch. And Nashville will be                           tant to lawyers as are cutting and             needed and how to do it.
                  try, like Detroit did with automotive     city embraces so many different cul-        waiting…not for its own defining                             suturing skills in a surgeon, because             There are no legal Jacks or Jills-of-
                  manufacturing or Pittsburgh with          tures,” says Patricia Paiva, who            industry but for fresh starts that will                      it's often through drafting that a             all-trades, and so a business lawyer
                  steel. Therefore, Nashville was more      started Aurora Bakery with friends in       define the city as a ready progressive.                      lawyer accomplishes the client’s goals.        needs to have on call lawyers in
                  receptive to a fertile business           1999. “This is not only an asset to me,     —Hayne Barnwell, A’02                                        Just as important to getting the job           many specialties, from tax, to litiga-


                  38                                                                                                              SUMMER 2003                        OWEN @Vanderbilt                                                                                                                       39
OWEN in the news



                   H E A D L I N E S
                   FROM           AROUND
                   (Full text for these and other stories is on Owen’s Website,
                   “Owen Media Mentions.”)
                                                        THE     WORLD
                                                                                                                                                       facultyNEWS                                                               annual meeting in Los Cabos,
                                                                                                                                                                                                                                 Mexico, in June. The paper,
                                                                                                                                                                                                                                 which estimates that mutual
                                                                                                                                                                                                                                 fund trading costs increased
                                                                                                                                                                                                                                                                        University, Babson College, Uni-
                                                                                                                                                                                                                                                                        versity of Connecticut, the
                                                                                                                                                                                                                                                                        Cardiff Business School Re-
                                                                                                                                                                                                                                                                        search Event, Norwegian School
                                                                                                                                                                                                                                 significantly following the            of Management, and the Univer-
                                                                                                                                                       Bruce Barry, Brownlee O. Cur-         Award. He recently organized a      switch in the U.S. to decimal          sity of Mainz, Germany.
                   Will Services Go Manufacturing’s              need at all, according                                                                rey Associate Professor of Man-       NextGen meeting featuring a         pricing of stocks, received cov-
                   Way?                                           to an academic study.                                                                agement, published an article         biomedical engineering re-          erage in Barron’s on March 3.          Mark Cohen, professor, pre-
                   For years, manufacturing bore the             The Japanese system,                                                                  on intrapersonal decision mak-        searcher discussing how to use      Another paper, “Does Net Buy-          sented two papers—“An Eco-
                   brunt of companies’ efforts to control        which has traditionally                                              assistant        ing in the Journal of Behavioral      light to discern healthy and dis-   ing Pressure Affect the Shape of       nomic Approach to Crime: Bal-
                   costs. Now, it’s the service sec-          allowed doctors to pocket the                                       professor of         Decision Making (with co-authors      eased tissue, and panel discus-     Implied Volatility Functions?”         ancing the Costs and Benefits”
                                                                                                                                                       from five other universities),        sions on venture capital and        (with Robert Whaley) has been          and “Corporate Criminal Liabil-
                   tor’s turn. Amid a weak                  difference between the wholesale                                 finance, Nicolas
                                                                                                                                                       and another paper on ethics in        “How to Identify a Good Busi-       accepted for publication in the        ity and Punishment: An Eco-
                   global economy and                       and recommended retail price of a                           Bollen, and co-author
                                                                                                                                                       conflict resolution in Internation-   ness Idea. He and Bruce             Journal of Finance.                    nomic Approach”—at a confer-
                   intense pressures from                   drug, has skewed prescription                         Jeffrey Busse, estimates trading     al Negotiation (Barry and co-au-      Lynskey, clinical professor, or-                                           ence at the University of War-
                   investors to boost share-                decisions and fostered collusion                  costs have increased by as much as       thor Robert Robinson were             ganized a meeting of successful     Ruth Bolton, professor, pub-           saw sponsored by the U.S.,
                   holder returns, service busi-            between doctors and pharmaceutical            1-2 percent of assets annually for active    guest editors of the journal’s        entrepreneurs, who developed a      lished the following papers in         British, and Dutch embassies.
                   nesses, too, have been merging            companies, says Toshiaki Iizuka, a           managers.                                    special issue on this topic.).        set of recommendations for          2002: “Modeling the Effect of          The proceedings will appear in
                   and are shipping jobs over-               Vanderbilt University professor and          —Barron’s Online, March 3                    Barry was an invited panelist at      Governor Phil Bredesen on           Customers’ Emotional Respons-          the Polish journal Ius et Lex of
                   seas to boost profits by                 author of the paper.                                                                       a session on ideological, ethnic,     making Tennessee a better           es to Service Failures On Their        which Cohen serves on the in-
                   slashing costs even fur-                 —Financial Times, May 27                      As Easy as 1,2,3                             and value-based conflict at the       place for entrepreneurship.         Recovery Effort Evaluations and        ternational board. He also is on
                   ther. Ron Masulis, pro-                                                                Taking care of the basics out of order       annual Academy of Manage-             They also organized a confer-       Satisfaction Judgments,” (with         the advisory board of the
                   fessor of finance at                     An Educated Consumer                          can wreak havoc on your business             ment meeting in Denver, and in        ence on “Launching the Ven-         A.K. Smith), in Journal of the         Benchmark Survey of Global En-
                                                                                                                                                       a symposium on power and              ture” last fall.                    Academy of Marketing Science, 30;      vironmental & Social Reporting,
                   Vanderbilt University’s Owen             Almost everybody knows that car prices        before it gets off the ground, or at the
                                                                                                                                                       emotion in negotiation at the                                             and “How Marketing Actions             and has been awarded a Lever-
                   Graduate School of Management,           are negotiable. But many don’t know           very least cost you in money, time, and
                                                                                                                                                       annual meeting of the Society         Nicolas Bollen, assistant pro-      Affect the Value of Customer As-       hulme Visiting Professorship at
                   comments.                                that they can bargain with a dealer over      frustration after it’s already up and        for Industrial and Organiza-          fessor, presented his paper         sets,” (with P. Berger, D. Bow-        the University of York (U.K.).
                   —Barron’s Online, June 25                the finance interest rate. Research con-      running. Like parenting, what to do—         tional Psychology in Orlando.         “Common Cents? Tick Size,           man, E. Briggs, V. Kumar, A.           His paper, “Determinants of
                                                            ducted by Vanderbilt University econo-        and when to do it—is a learned skill in                                            Trading Costs, and Mutual           Parasuraman, and C. Terry), in         Environmental Innovation in
                   Where Will Carly Fiorina Take HP?        mist Mark Cohen is mentioned.                 starting a company. “Once you’ve             Germain Böer, professor, re-          Fund Performance” (with Jef-        Journal of Service Research, 5. Dur-   U.S. Manufacturing Industries”
                   In 1996, Carly Fiorina vaulted into        —Forbes, May 23                             done it three, four, or five times, every-   ceived the 2003 Tennessee             frey Busse) at the University of    ing 2002, she also made presen-        (with Smita Brunnermeier) ap-
                   the spotlight by helping to                                                            thing’s just automatic,” says Bruce J.       Small Business Administration         Colorado in April, and at the       tations at Ohio State University,      peared in Journal of Environmental
                   make Lucent Technologies the                    Key IPO Market Observer Not            Lynskey, a professor at the Owen Grad-       Research Advocate of the Year         Western Finance Association’s       University of Minnesota, Emory         Economics and Management.
                   year’s most successful IPO.                      Satisfied with Market Reform          uate School of Management at Vander-
                   Now, four years into her                          The IPO market’s top acade-          bilt University in Nashville, Tennessee,     BÖER NAMED TN SBA RESEARC H ADVOC ATE OF THE YEAR
                   tenure as CEO of Hewlett-                          mic researcher thinks Wall          as well as an entrepreneur who has
                   Packard, Fiorina has been                          Street still has its work cut out   started six technology companies.
                   the most watched woman in
                   business. Fiorina’s gender is
                                                                       for it in reforming the IPO
                                                                       process. University of Florida
                                                                                                          —Entrepreneur, February 19
                                                                                                                                                                                                                     P    rofessor Germain Böer is the inaugural recipient of the Tennessee
                                                                                                                                                                                                                          Small Business Administration Research Advocate of the Year Award
                                                                                                                                                                                                                      for his work through the Owen Entrepreneurship Center that he
                   becoming a sidebar to the                           finance professor Jay Ritter       Managing in a Slow-Growth
                   central debate over whether                        presented a report on the           Economy                                                                                                     founded.
                   she has the right vision for                       issue at a two-day conference       No matter what your industry is, or                                                                            Criteria for the award include the development or implementation of
                   the Silicon Valley legend she                    in Nashville, sponsored by Van-       what your company’s 2002                                                                                    curricula to study small business or entrepreneurship. Böer has
                   now controls. “Mercifully, the                 derbilt University’s Owen Gradu-        performance was, or whether or not                                                                          developed innovative coursework at Owen, and conducted outreach to
                   discussion has turned to more sub-       ate School of Management’s Financial          you believe the Bush administration’s
                                                                                                                                                                                                                      entrepreneurs at the Biz Tech incubator center in Huntsville, Alabama.
                   stantive issues,” says Donna Hoffman,    Markets Research Center.                      economic plan ultimately will be suc-
                   professor of management at Vanderbilt    —Dow Jones Newswire, April 15                 cessful, 2003 cannot be a year of busi-                                                                     He also has organized leading edge conferences and seminars targeting
                   University.                                                                            ness as usual. Jim Bradford, former                                                                         entrepreneurs statewide.
                   —Business Week, May 29                   Decimals Make You Pay                         president and CEO of United Glass                                                                              “We’re interested in helping our students and other entrepreneurs cre-
                                                            It’s widely believed that stock-market        Corp., and now associate dean and                                                                           ate wealth, and we’ve had quite a few success stories,” Böer notes.
                   Over-Prescription Adds $3.5 Billion      liquidity has dried up since decimals         clinical assistant professor of manage-                                                                        “Böer represents the ideals that have inspired and motivated students
                   to Drugs Bill                            came along, but what has been the             ment at Vanderbilt University’s Owen
                                                                                                                                                                                                                      and entrepreneurs for many years,” says SBA District Director Phil
                   Japanese doctors, many of whom dis-      effect on mutual funds? “Common               Graduate School of Management,
                   pense drugs directly to patients, rou-   Cents? Tick Size, Trading Costs, and          comments.                                                                                                   Mahoney. Böer has assisted the SBA in such ways as welcoming the
                   tinely prescribe overly expensive        Mutual Fund Performance,” a new               —Industry Week, February 13                                                                                 organization to Owen conferences and seminars, allowing them direct
                   medicines or ones that patients do not   study by a Vanderbilt University                                                           Böer                                                           interaction with the entrepreneurs and an opportunity to talk about SBA
                                                                                                                                                                                                                      programs and services.

                   40                                                                                                               SUMMER 2003        OWEN @Vanderbilt                                                                                                                              41
                                                                                                                                                                                                                                                                facultyNEWS
Bruce Cooil, associate profes-      Hong Kong, and currently is            hosted by the UK Office of          gave a keynote address at the




                                                                                                                                                                                                                                                                                                        NEIL BRAKE
                                                                                                                                                                 CLEARING THE AIR
sor, recently published “Pre-       studying conflict management           Fair Trading in April, and the      American Marketing Associa-
dictors of Aortic and Coronary      and negotiation in China. His          Canadian Competition Bureau         tion EXPLOR Forum, and
Artery Calcification on a
Screening Electron Beam
Tomography Scan,” (with P.
                                    paper (with Simon Tidd)
                                    “Conflict Style and Coping
                                    with Role Conflict: An Exten-
                                                                           in May. The course applies
                                                                           quantitative economic models
                                                                           to competition issues, espe-
                                                                                                               served as a judge for the Elec-
                                                                                                               tronic Frontier Foundation
                                                                                                               Pioneer Awards. Hoffman
                                                                                                                                                                 I t’s a growing trend—even companies not usually
                                                                                                                                                                   thought of as “green,” GM and Shell Oil
                                                                                                                                                                 included, are increasingly disclosing environmen-
Raggi, A. Hadi, A. and G.           sion of the Uncertainty Model          cially those arising with merg-     co-directs the new Vanderbilt
Friede), in the March issue of      of Work Stress” was published          ers of competitors. Much of         University Sloan Center for
                                                                                                                                                                 tal performance information. In 2002, 45 percent
American Journal of Cardiology. A   in International Journal of Conflict   the course material was based       Internet Retailing that she                       of the 250 largest global companies produced
paper on “Using the Condi-          Management.                            on joint research with Vander-      and Professor Tom Novak                           corporate responsibility reports. But what does
tional Grade-of-Membership                                                 bilt math faculty members           recently launched with a                          such information really mean, are metrics consis-
Model to Assess Judgment            Luke Froeb, the William C.             Steven Tschantz and Philip          grant from the Alfred P. Sloan
Accuracy” will appear this fall     and Margaret W. Oehmig                 Crooke.                             Foundation.                                       tent, and how can one company’s information be
in Psychometrika.                   Associate Professor of Entre-                                                                                                compared to another’s?
                                    preneurship and Free Enter-            Donna Hoffman, professor,           Michael Lapré, assistant pro-                         Such are the concerns of the Global Reporting
Ray Friedman, associate pro-        prise (with Gregory Werden,            recently had papers related to      fessor, published “Learning
                                                                                                                                                                 Initiative, an institution that is developing and dis-
fessor, this year taught a new      senior economic counsel at             online consumer behavior and        Across Lines: The Secret to
course—Doing Business in            the Antitrust Division of the          digital commerce accepted in        More Efficient Factories” in                      seminating global sustainability reporting guide-
China. He also presented            U.S. Department of Justice),           Marketing Science, Information      Harvard Business Review, Octo-                    lines for firms that wish to report on their triple
papers at Hong Kong Univer-         held a two-day course for the          Systems Research, Journal of Con-   ber 2002 (with Luk Van                                                                                   Cohen
                                                                                                                                                                 bottom line (economic, environmental, and social
sity of Science and Technol-        competition authorities of the         sumer Psychology, and Journal of    Wassenhove). He and Profes-
                                                                                                                                                                 performance) that goes missing from many annual reports.           rights, worker safety, and community development. GRI at
ogy, and City University of         United Kingdom and Canada,             Public Policy and Marketing. She    sor Gary Scudder presented
                                                                                                                                                                     “GRI’s purpose is to increase transparency and                 present is voluntary, but France recently required all of its
                                                                                                                                                                 understanding of company performance in these areas,”              publicly traded companies to report on social and environ-
FREQUENT FLYER POINT S




                                                                                                                                                 DANIEL DUBOIS
                                                                                                                                                                  says Professor Mark Cohen. “GRI is a positive development,        mental indicators, and other governments are considering
                                                                                                                                                                 because previously it was difficult to even know what toxic        similar requirements, Cohen says.
N     ote to airlines on the verge of bankruptcy:
      quit slacking off.
    So might airline executives infer from the study
                                                                                                                                                                 pollutants a company emitted.” A member of GRI’s stake-
                                                                                                                                                                 holder council, Cohen long has conducted research on the
                                                                                                                                                                                                                                       “There’s also a growing interest in environmental and
                                                                                                                                                                                                                                    social responsibility in boardrooms. Companies want to por-
                                                                                                                                                                 relationship of a company’s environmental performance to           tray a positive image, to show the world what they do and to
“Airline Performance Improvement Paths: Linking
                                                                                                                                                                 firm behavior and financial performance.                           be honest about it. That doesn’t negate the profit motive,
Trade-Offs to Asset Frontiers,” by operations fac-
                                                                                                                                                                     GRI reporting encompasses a wider range of categories          however. Companies are incorporating social responsibility
ulty Michael Lapré and Gary Scudder, a paper
                                                                                                                                                                 (energy usage, water consumption, ecological effects, etc.)        into their strategy in order to make a profit. Bad social perfor-
that recently landed the pair the Wickham Skin-
                                                                                                                                                                 than EPA reporting, which just requires disclosure of chemi-       mance can kill a firm.” —Beth Matter
ner Award for Best Paper, presented by the Pro-
duction and Operations Management Society at                                                                                                                     cal pollutants. It also includes such categories as human
its annual meeting in Savannah, Georgia.
    Building on a 1996 paper by Harvard
researchers on how organizations improve, they
                                                                                                                                                                 the paper “Airline
                                                                                                                                                                 Performance Improvement
                                                                                                                                                                                                 published “Trading Activity
                                                                                                                                                                                                 and Stock Price Volatility: Evi-   newFACULTY
asked the question—should an organization first                                                                                                                  Paths: Linking Tradeoffs to     dence from the London Stock
                                                                                                                                                                 Asset Frontiers” at the POMS    Exchange” (with Roger              • Mara Faccio, assistant professor of finance, a Ph.D.
improve quality or lower costs, or do both at             Scudder and Lapré                                                                                      (Production and Operations      Huang) as the lead article in        graduate from Catholic University in Milan, Italy, will
once? To answer the question, they studied the                                                                                                                   Management Society) meeting     the May issue of Journal of          teach International Corporate Finance and Corporate
U.S. airline industry, using data collected since 1988 by the         passenger complaints—Eastern and Pan Am—ceased opera-                                      in Savannah, Georgia, and       Empirical Finance. His presenta-
                                                                      tions during the next two years. But the most successful air-                              received the Wickham Skinner    tions have included “Venture         Financial Policy. She most recently taught at Notre
Department of Transportation.
    Their conclusion: It depends on the amount of slack in            lines have improved quality unabated. Southwest—with                                       Award for Best Paper at this    Capital Investments by IPO           Dame.
                                                                                                                                                                 meeting. Lapré also presented   Underwriters: Certification or
an airline’s operations. Airlines with a lot of slack, or lower       little slack—faced an initial trade-off, improving quality                                 this research at INSEAD in      Conflict of Interest?” (with Xi    • Jacqueline Conrad, assistant professor of marketing,
utilization of planes, can improve quality and reduce costs           while temporarily increasing already low costs.                                            Fontainebleau, France, and      Li) in November at Notre             comes to Owen from Duke University, where she re-
at the same time. Those with less slack often face a trade-off        Subsequently, Southwest translated excellent quality into                                  taught a three-day course on    Dame, and again in April at
                                                                                                                                                                                                                                      ceived her Ph.D. and served as an instructor. She will
                                                                                                                                                                 operations management at        Tulane, the University of New
in improving quality over cost.                                       even lower costs. Alaska—initially with a lot of slack—simul-                                                                                                   teach marketing management.
                                                                                                                                                                 ESC (Ecole Superieure de        Orleans, Vanderbilt Law
    “Successful firms in almost every case improve quality            taneously improved quality and cost. Alaska’s quality                                      Commerce) Rouen in France.      School, and the FMRC annual
first and cost second,” Lapré says. Historical data back this         improvements were initially larger than its cost                                                                           conference. Masulis, also in
                                                                      improvements. —Beth Matter                                                                 Ronald Masulis, Frank K.        April, presented “Dilution of
up: In 1989, the two airlines with the highest number of
                                                                                                                                                                 Houston Professor of Finance,   Corporate Control and Cash


42                                                                                                                             SUMMER 2003                       OWEN @Vanderbilt                                                                                                               43
                                                                                                                                                                                                                                                                     Financial




                                                                                                                                                                                                                                                                                                    ALUM profile
                                                                                                                                                                                                                                                                     Futures
                                                                                                                                                         classACTS
Financing of European M&A”           Monetary Research, the Inter-                        HYER RECEIVES
(with Mara Faccio) at the Uni-       national Monetary Fund, and
versity of Miami, the University     Goethe University in Germany.
                                                                                          SHINGO PRIZE
of Pittsburgh, and at Owen.

David Parsley, associate pro-
                                     Fred Talbott, clinical professor
                                     of management communica-
                                                                                          Professor Nancy Lea
                                                                                          Hyer received the Shingo
                                                                                                                                                                                                                                                                     W        ere there any real-
                                                                                                                                                                                                                                                                              ity to “success by
                                                                                                                                                                                                                                                                      association,” Jeffrey P.
fessor, recently won the 2002        tions, teamed with Patsy Moore                       Prize Research Award
Best Paper Award (fixed income       Talbott to present a teambuild-                      for her new book (with
                                                                                                                                                         PLEASE                                                                                                       Davis, ’82, jokes that his
                                                                                                                                                                                                                                                                      educational history pre-
category) from the Financial         ing workshop for the faculty
Management Association for           and staff of the West Maui
                                                                                          Urban Wemmerlöv)
                                                                                          Reorganizing the Factory:
                                                                                                                                                         NOTE:                                                                                                        dicted his present. “In the
“News Spillovers in the Sover-       (Hawaii) Carden Academy in                                                                                                                                                                                                       Delaware public school
                                                                                                                                                         Class Notes appear only in
eign Debt Market,” (with Owen        January. He and Professor Bob                        Competing Through Cel-                                         the printed version of this                                                                                  system, I attended Alfred
colleague Amar Gande). Recent        Blanning presented “Creating                         lular Manufacturing. The                                       publication.                                                                                                 I. Dupont Elementary,
publications include “Exchange       and Sustaining Trust—The                                                                                                                                                                                                         Henry B. Dupont Middle
                                                                                          Shingo Prize for
Rate Pass-Through in a Small         Foundation of Effective Com-
                                                                                          Research and Profes-                                                                                                                                                        School, and Alexis I.
Open Economy: Panel Evidence         munication” at the Association
from Hong Kong,” in Interna-         for Business Communication                           sional Publication                                                                                                                                                          Dupont High. After
                                                                                                                                                                                                                                Davis
tional Journal of Economics and      Spring Convention in Toronto                         recognizes and promotes                                                                                                                                                     undergraduate school at
Finance; and “Pricing in Export      in April. This summer he
                                                                                          research and writing regarding new knowledge and                                                                                       Duke, I went on to get an MBA in finance from Vanderbilt.
Markets,” in Review of Interna-      launches his new business                                                                                                                                                                   There’s this old, wealthy, eastern family history somehow
tional Economics. He also recently   humor book, JJ’s Business                            understanding of manufacturing. The book is available
                                                                                                                                                                                                                                 inadvertently attached to my life,” he says with a laugh.
was an invited fellow/scholar at     Bullets—Volume 1.                                    at productivity.com.
the Hong Kong Institute of
                                                                                                                                                                                                                                    The pattern continues. Davis is now CIO of Rockefeller
                                                                                                                                                                                                                                 & Co., founded in 1892 by John D. Rockefeller Sr. to man-
NO CODES, NO REDEMPTION , NO DICE                                                                                                                                                                                                age his oil money and interests. Today Rock & Co. employs
                                                                                                                                                                                                                                 150 people and serves as investment manager for wealthy

C      onsumers ready to make an online purchase may sud-
       denly abandon their shopping carts if asked for a pro-
motion discount code they do not have—a significant problem
                                                                                        consumers who were either “codeless” or did not have the
                                                                                        means to obtain a code do not finish their transaction.
                                                                                           The study participants shopped at a fictitious Web site,
                                                                                                                                                                                                                                 families and individuals, endowments, foundations, and phil-
                                                                                                                                                                                                                                 anthropies. Davis oversees the investment functions of port-
                                                                                                                                                                                                                                 folio managers, investment analysts, economists, and bond
for retailers since each such abandonment (occurring as often                           ToyMart.com, offering a product, “Cuddles Baby,” and were                                                                                managers whose job it is to keep the money multiplying.
as 25 to 75 percent of the time) costs an average of $175 in                            divided into three groups: those with a promotion code, those                                                                               In the U.S., and worldwide, the responsibility of investing
lost revenues, according to a recent study by Mikhael Shor,                             without a code, and a control group, which had no code field                                                                             in today’s markets is difficult—even for Davis, who left com-
assistant professor of business and economics, and Richard L.                           on the Web site.                                                                                                                         panies like PanAgora Asset Management, eight times richer
Oliver, Valere Blair Potter Professor of Management.                                       Those most likely to purchase, with a 77 percent purchase                                                                             in the four years he served as portfolio manager in interna-
   Unlike regular paper coupons, online promotion codes                                 probability, were consumers with a code, followed by the con-                                                                            tional investments.
require keying in a series of numbers or letters to receive a dis-                      trol group. “Those without a code were the least likely group                                                                               Over the years, he has developed an investment specialty
count on a purchase. The study showed a majority of                                     to complete the purchase, with a 19 percent probability,                                                                                 in international equities and currencies, particularly in
                                                                                        because they perceived that others were getting a better deal                                                                            emerging markets. On the day of this interview, for example,
                                                                        DANIEL DUBOIS




                                                                                        on the product,” Oliver says.                                                                                                            he was on the phone with clients in Saudi Arabia discussing
                                                                                                                                                                                                                                 their allocation to stocks, the situation in Iraq, and “whether
                                                                                           The study also showed that the amount of time spent look-
                                                                                                                                                                                                                                 they should be shifting out of the US to Euros.” While most
                                                                                        ing for online coupons was directly related to a consumer’s
                                                                                                                                                                                                                                 investors with Rock & Co. are U.S. based, a significant for-
                                                                                        technical expertise. “Unlike traditional coupons, the time
                                                                                                                                                                                                                                 eign faction exists.
                                                                                        involved in searching for promotion codes varies greatly with                                                                               “I had no intention of getting into international
                                                                                        the skill of the computer user,” Shor says.                      Know a Good MBA Candidate?                                              business,” Davis reminisces. “In class, I would listen to
                                                                                           The researchers also proposed what they see as a better                                                                               Dewey Daane, a wonderful professor, and think: Gee, this is
                                                                                                                                                         Refer them to Owen’s MBA Admissions Office or the Owen EMBA
                                                                                        alternative to entering codes at checkout: sending an email                                                                              really interesting, but can I ever get into this? But my degree
                                                                                                                                                         Office. In addition to saving the candidate the $100 application fee
                                                                                        promoting the use of a special discount that would link to the   (only for students referred by members of the Owen community            did open the door.”
                                                                                        retailer’s site and acknowledge receipt of the coupons. “Spe-    prior to submitting an application), referrals can help to improve         Additionally, he credits his experience hosting a jazz show
                                                                                        cial Web pages won’t eliminate equity and satisfaction issues    the size, quality, and diversity of the applicant pool.                 for Vanderbilt’s radio station and his job programming films
                                                                                        entirely,” Shor says, “but it’s one way to maintain the tradi-   Refer MBA students online at mba.vanderbilt.edu/mba/index.cfm;          for Sarratt Cinema for some of his success. “Watching a
                                                                                        tional retail experience in an online environment—and attempt    EMBA students at emba@owen.vanderbilt.edu.                              multitude of foreign films helped me to develop sensitivity to
Shor and Oliver                                                                         to keep the consumer happy.” —Susanne Loftis                                                                                                                                     (Continued on page 52)


44                                                                                                                                     SUMMER 2003       OWEN @Vanderbilt                                                                                                                     45
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                                                                                                                                                                                                                                        ALUM profile
   Lifelong Alumni Career Services
                                                                   STEVE GREEN




                                                                                               Janes

                                                                                               Lessons in Leadership
                                                                                                                                             eralizable into other opportunities in        proach where my skills were relevant,”
                                                                                               M      ichael Janes, ’84, speaks admir-
                                                                                                      ingly of leaders—innovative indi-
                                                                                               viduals with whom he’s worked, whom
                                                                                                                                             quality improvement, new service de-
                                                                                                                                             velopment, international marketing,
                                                                                                                                                                                           he recalls. “Marketing interested me be-
                                                                                                                                                                                           cause of its direct reflection of a busi-
                                                                                               Janes describes as not only creating a        and even new businesses like electronic       ness. At day’s end, you get direct feed-
   Suzanne Scott-Trammell critiques a resume for Scott Davis,                                  company, but an entire industry: Fred         commerce,” he points out. “The back-          back. Did the dogs eat the dog food?”
   E’02, one of the many career services now available to alums.                               Smith founder of Federal Express; Jim         ground gave me hooks on which to                 It’s clear Janes loves the challenge
                                                                                               Barksdale, COO at the same company,           hang new data and make good deci-             and responsibility of innovative and
   Looking to change jobs or switch careers? Alumni have a
   powerful new tool to assist in this process. Owen now offers free                           who later became CEO of Netscape;             sions.”                                       fast-moving companies, and working
   lifelong career resources that allow alumni to search job postings                          and Steve Jobs co-founder and CEO of              Janes spent his first year, post gradu-   with the pioneers who founded them.
   for experienced MBAs, post and store resumes online, access                                 Apple.                                        ation, with an investment banking firm        So in 1998, when an opportunity pre-
   online guides detailing specific companies and industries, review                              But our story begins with Janes’ first     in Memphis. But with a “lot of Owen           sented itself to work with the passion-
   online professional career topics and services, and obtain one-on-                                                                        friends” at Federal Express, he soon          ate team at Apple Computer as VP of
                                                                                               day at Vanderbilt, assembled with other
   one career counseling and resume services. The OwenNet site also
   has financial reports and links to business publications to enable                          students in the auditorium, listening to      joined that company. He began in en-          Electronic Commerce, and wanting to
   you to stay abreast of current business conditions and maintain                             another man Janes admires—Dean Sam            try-level marketing and never looked          return to the West coast, Janes and his
   your career marketability.                                                                  Richmond. “I was extremely im-                back. Through his 14 years at FedEx,          family jumped at the chance. Today he
       In addition, alums can obtain Owen’s discounted rate for such                           pressed,” Janes recalls. “I’ll never forget   Janes changed positions nearly every 18       serves as VP of the Online Worldwide
   premium services as CareerLeader, one of the most widely used                               his comment that ‘Everything we teach         months, holding such titles as manager        Apple Store.
   career tools that measures candidates’ interests, abilities, and
                                                                                               in the next two years is going to be ob-      of New Products for the U.S., director           Unshaken by cycles in the IT indus-
   values to match them with potential careers.
       Since the program launched in January, more than 500 alumni                             solete quickly. But we’re here to pro-        of Worldwide New Product Develop-             try, Janes keeps his attention on the
   have signed up for one or more of these services. For more infor-                           vide you the framework to be an effi-         ment, director of International Market-       business basics of creating products and
   mation, log onto http://mba.vanderbilt.edu/alumdev/career.cfm.                              cient absorber of experience.’ In retro-      ing, and VP of Electronic Commerce.           services of value to the customer at
                                                                                               spect, the Dean was absolutely right.”            While Janes describes the FedEx op-       prices that allow a company to likewise
                                                                                                  Janes learned his lessons well. Grad-      portunity as “serendipitous,” it was his      profit. “The fundamentals of business


    Got the Edge?
    If not, send your email address to start receiving the Vanderbilt
                                                                                               uating from Central Washington Uni-
                                                                                               versity with a B.S. in finance and a
                                                                                               B.A. in economics, he carried those
                                                                                               studies forward into a finance and ac-
                                                                                                                                             ability to apply established business
                                                                                                                                             principles to new situations that took
                                                                                                                                             him from finance and accounting to
                                                                                                                                             marketing. “The field was undergoing a
                                                                                                                                                                                           remain the same,” he reminds. “Only
                                                                                                                                                                                           now, the cycles of change are faster.”
                                                                                                                                                                                           He appears to be at full stride in the on-
                                                                                                                                                                                           going, break-neck race of improve and
    MBA Edge, Owen’s bimonthly electronic newsletter, for updates                              counting major at Owen. “My broad             transition from mass marketing to a di-       innovate. “There is no finish line.”
    on alumni and schools news. alum@owen.vanderbilt.edu.                                      MBA education was immediately gen-            rect, data-driven, more quantitative ap-                               —Carol Wissmann


   46                                                                            SUMMER 2003   OWEN @Vanderbilt                                                                                                                  47
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               Camp $tart-Up                                                                                                                                             Rebuilding From Ground Zero




                                                                                                                                                         JEAN LAISE




                                                                                                                                                                                                                                                                                                              ALUM profile
ALUM profile




                                                                                                                                                                                                                                                                  television, and in the print media.
               N      ow that we have completed our
                      MBAs, we have a good idea of                                                                                                                       L    ike many New Yorkers on that
                                                                                                                                                                              fateful September 11 morning,
                                                                                                                                                                         Amy Ryan, ’86, FVP Prudential Secu-
                                                                                                                                                                                                                                                                      But when the chance came to help
                                                                                                                                                                                                                                                                  Alger regain its footing, she didn’t hes-
               what it takes to start and run a com-
               pany. How many of us, however, could                                                                                                                      rities, Inc., watched in horror as the                                                   itate. The rebuilding was easier than
               have thought the process through as                                                                                                                       second plane flew into the World                                                         most might think, she said, because
               teenagers?                                                                                                                                                Trade Center. Stuck in a cab in stand-                                                   Fred Alger, after the 1993 WTC
                  Last summer, I worked as a coun-                                                                                                                       still traffic on the Brooklyn Bridge, her                                                bombing, worried that more terrorism
               selor at Camp $tart-Up in Fairfield,                                                                                                                      thoughts hung on her clients and                                                         might be on the horizon and opened a
               Connecticut, on the campus of Sacred                                                                                                                      friends housed in the WTC and how                                                        facility in Morristown, New Jersey,
               Heart University. With another coun-                                                                                                                      they would get out alive. Unfortunate-                                                   where everything was backed up, but
               selor, I taught 11 teenage girls about                                                                                                                    ly, many didn’t.                                                                         which sat idle for nine years. “When
               marketing, finance, accounting, and                                                                                                                           What she didn’t realize until that                                                   the offices were destroyed, he still had
               sales, among other business topics. At                                                                                                                    night was that her former employer,                                                      an intact facility, to which we com-
               the end of the 12-day session, two                                                                                                                        Fred Alger Management, was now also                                                      muted for six months.”
               groups presented business plans to a                                                                                                                      housed on the 93rd floor of One                                                              Through it all, Fred Alger made the
               large audience of family, local media,                                                                                                                    World Trade Center, just two floors                                                      transition easy, coming out of retire-
                                                                                                                                                                                                                     Ryan                                         ment to retake the reins of the com-
               and women entrepreneurs.                                                                                                                                  below where the first plane hit. In the
                  The girls, ranging from 13 to 17,                                                                                                                      next few days, it was confirmed that all    not very many people would give you          pany he had founded and handed over
               wanted to learn about business,                                                                                                                           36 of the 55 Alger employees in the         that opportunity.”                           to his younger brother, she said. “It
                                                          Campers at a woman-owned physical therapy center.
               although few knew what business really                                                                                                                    office that day, including David Alger,        Straight out of Vanderbilt, with her      couldn’t have happened without him.
               entailed when they arrived. In addition    their businesses. We went to a bank to                                                                         its charismatic CEO, perished in the        BS/MBA degree, and 21 years old, she         He is very strong. You have to admire




                                                                                                                                                            JEAN LAISE
               to business basics, the curriculum also    find out how to obtain a small business                                                                        attack.                                     worked as an accountant for Arthur           someone who is such a good role
               included time management, ethics,          loan, and even took a day to go into                                                                               Before the month was out, Ryan re-      Young in Chicago for a year before           model.”
               and sales presentations. The girls spent   New York City. After all, you can’t                                                                            signed her position with Prudential,        heading to New York to work for Al-              Some feared that clients would bale
               several hours each day in a classroom,     work all the time!                                                                                             and like a handful of other Alger           ger. During her six years there, she         on Alger after the attack, “but almost
               and in group meetings, where they             I wanted to participate in the camp                                                                         alumni, returned to the firm to help in     rose from research associate to senior       all of the clients we had in September
               worked to develop a feasible business      because I thought teaching the next                                                                            the rebuilding process. “I’m back to        analyst reporting to Fred Alger.             ’01, we have now.” On top of the
               plan from the ground up.                   generation of business leaders would be                                                                        stay,” she said in a recent phone inter-       Wanting to move to the sell side of       tragedy, Alger had it doubly hard in
                  The groups started by assigning         a great capstone to my Owen educa-                                                                             view. “It is good to be back home.”         the business, she switched to Pruden-        2002 because of its focus on invest-
               company roles: president, VP of mar-       tion. As I worked to define ‘equity’ to                                                                            Ryan, like many others who have         tial in 1992, where she covered the          ment in rapidly growing companies
               keting, etc. In my group, the girls        the girls, I became more familiar with                                                                         passed through Alger’s ranks, had re-       specialty retail sector, rising to senior    and the downturn in the economy.
               decided to develop a business plan for a   the topics myself. After all, conven-                                                                          mained loyal to the unusually close-        retail trade analyst and first vice presi-   “But the future is only sure to get
               summer camp. Because they didn’t           tional wisdom says the best way to                                                                             knit company through the years.             dent. There, she twice received the          brighter with the amount of money on
               need a VP of engineering, Rebecca          learn something is to teach it. We take                                                                        “They gave me an opportunity,” she          Wall Street Journal All-Star Award for       the sidelines waiting to be invested in
               ended up with a title worthy of the        a lot of knowledge for granted at                                                                              said in a Newsday article last fall.        stock picking and once for earnings es-      the market and used by corporations,”
               1990s…VP of creative possibilities.        Owen, but I could not do that with                                                                             “When you look like you are 14 and          timate accuracy, and often was fea-          she says.
               The groups worked to define target seg-    these girls and had to pare each con-                                                                          are trying to get a job on Wall Street,     tured on CNBC, CNNfn, Bloomberg                                         —Beth Matter
               ments, build a budget, and conduct         cept to its core. At the same time, I was           Powell, top, and one of the campers.
               market research to determine the           able to mentor them and help them
               needs of their future customers. My        understand that they could start their              potential to be successful in business
               group struggled with the need to pro-      own businesses, of any size.                        reinvigorated my own passion for busi-
               vide entertainment to 260 campers,            It is our responsibility to guide the            ness. —Kimberly Powell
               while the other group tried to fit into    generations that follow us. Certainly
               the crowded teen apparel world with        we feel some pressure to help current               Kimberly Powell, a 2002 Owen graduate,
               custom-made clothing.                      Owen students in their job searches,                is database marketing manager for
                  Between group meetings and class-       but it goes beyond that. Teaching these             United Way of Metropolitan Nashville.
               room sessions, we visited local women      amazing girls, from diverse
               entrepreneurs to learn how they started    backgrounds, that they each had the



               48                                                                                                                          SUMMER 2003                   OWEN @Vanderbilt                                                                                                              49
classACTS                                                                                                                                                                                           classACTS

        ights! a
        L Cmera! Action!
                                                                                                                     6.




                                                                                                                                 7.
                                                                                           3.




                                                                                                                                      8.
                                                                                                         4.
                                                                       1.
   A      lums were caught on tape at the Hollywood-themed
          Homecoming/Reunion ExtraVUganza last fall.
       The event, combining Homecoming and Reunion for the
   first time, cast alums in leading roles, featuring those from
   classes ending in 2 and 7 enjoying numerous activities: a cyber                                                                                                                                1). Dave, ’97,
                                                                                                                                                                                                  and Nancy Windley with
                    café (hands-on demonstration of wireless tech-
                                                                                                                                                                                                  Dean Bill Christie. 2). Amy
                     nology and student-guided tour of Management                                                                                                                                 Jorgensen Conlee chaired her
                     Hall’s latest renovations); Dean’s Cocktail Recep-                                                                                                                           Class of ’77 Reunion. 3).
                      tion; and a dinner/dance under the Big Tent.                                                                         Enjoying Reunion fun: left to right, sitting: Christopher Smith, ’97, Jeff Whitney,
                            Those reuniting also had the chance to par-               2.                        5.                         ’97, Merrie Whitney; standing: Staci Lieuallen, Dennis Lieuallen, ’97, Rita
                        ticipate in wider University events including a                                                                    Smith, Bethany Malakelis, Jim Malakelis, ’97, Nancy Windley, and David
                         campus walking tour, golf tournament, and                                                                         Windley, ’97. 4). Amy, Allison, and Manuel Delgado, ’97, enjoy dinner and
                         numerous educational events, including “The Challenges of                                                         music under the Big Tent. 5). EMBA alums gathered for dinner and a program
                                                                                                                                           on Tennessee’s economic development during ExtraVUganza at Loew’s
                 Ethics in an Ever-Changing Business Environment,” led by Bart
                                                                                                                                           Vanderbilt Hotel last year, thanks to the EMBA 2002 class gift. The class wanted
   Victor, Owen’s Cal Turner Professor of Moral Leadership.                                                                                to benefit both alumni and the School by establishing an annual alumni networking
       This year’s sequel is October 10-11, with classes ending in 3 and 8 as the                                                          event. 6). Bill and Kelly Christie with Yariv Lipshitz and Stuart Sechrist, both
   stars. To help organize a class party or to find out about scheduled activities,                                                        class of ’97. 7). Larry Kugelman and David Jensen, from Owen’s first graduating
   log onto http://mba.vanderbilt.edu/dar/reunion2003/savedate03.cfm.                                                                      class in 1972. 8). Students were on hand to demonstrate Owen’s wireless
                                                                                                                                           technology to alumni during the Cyber Café.




   50                                                                                      SUMMER 2003        OWEN @Vanderbilt                                                                                             51
classACTS

                                   David Kloeppel—
                                   2003 Distinguished
                                   Young Alumnus
                                   David Kloeppel, ’96, EVP and CFO
                                                                                                                                                             Get connected today
                                                                                                                                                                                                             Owen’s new online community is
                                                                                                                                                                                                             a one-stop shop serving alumni
                                                                                                                                                                                                             needs and interests.
                                                                                                                                                                                                                                                         !
                                   for Gaylord Entertainment, is
                                   Owen’s newest Distinguished Young                                                                                                                                         • Alumni Directory
                                   Alumnus, it was announced at
                                   Commencement. Kloeppel graduated                                                                                                                                          • Alumni Career Services
                                   with honors and went to New York
                                   City, where he worked for Deutsche                                                                                                                                        • Class Notes Posting Site
                                   Bank as an investment banker before
   returning to Nashville and Gaylord. Kloeppel has strengthened the re-                                                                                                                                     • Faculty-managed Knowledge Portals
   lationship between Owen and Gaylord by encouraging the company
   to hire Owen students and to establish two Gaylord scholarships at                                                                                                                                        • Discussion Forums
   the School. He and his wife, Ann, ’96, are also involved as alumni:
   Ann serves on the Owen Alumni Association Board of Directors,
   and David serves on Owen’s Campaign Steering Committee.


                                                                                                                                                                        http://online.mba.vanderbilt.edu
                                                                                                                                                                                                        To access the site:
                                                                                                                                                                                                          Username: FirstInitialLastnameFourdigityearofgraduation
                                                                                                                                                  http://online.mba.vanderbilt.edu                           (e.g., LTate1999)
                                                                                                                                                                                                          Password: lastfourdigitsofyourSSN (e.g., 1234).



                                                                                                                                           BOARD OF DIRECTORS 2003-2004
                                                                                                                                           Donald E. Townswick, ’92       F. Norfleet Abston, ’89          Ann Kloeppel, ’96             Mark Tillinger, ’82
                                                                                                                                           President                      Old Waverly Investments LLC                                    Accenture
                                                                                                                                                                                                           Bruce Lynskey, ’85
                                                                                                                                           Aeltus Investment
                                                                                                                                                                          Todd Barth, JD/MBA’88            Owen Graduate School of       Brent Turner, ’99
                                                                                                                                           Management
                                                                                                                                                                          LB Capital, Inc.                 Management                    Avenue A, Inc.
                                                                                                                                           Sara Gates, ’96
                                                                                                                                                                          Allen Brown, ’78                 Geoffrey P. Mavar, ’90        Keith Turnipseed, ’86
                                                                                                                                           Vice President
                                                                                                                                                                          Metro Bank                       Green Square Capital          Chatham Partners
                                                                                                                                           Waveset Technologies
                                                                                                                                                                                                           Management
                                                                                                                                                                          Virginia Carter, ’02                                           Smoke Wallin, ’93
                                                                                                                                           Jeffrey J. Kudlata, E’96
                                                                                                                                                                          CarterRollins GROUP              Heiki Miki, ’96               eSkye Solutions, Inc.
                                                                           Futures continued from page 45                                  Secretary
                                                                                                                                                                                                           JFE Steel America, Inc.
                                                                                                                                           Verizon Communications         Joe Chatman, ’01                                               Christopher Ward, ’02
                                                                           what other cultures might be thinking,” he says.                E. Renee Franklin, ’89
                                                                                                                                                                          FedEx                            Steve Riddell, ’95            GE Medical Systems
                                                                              His radio experience proved particularly valuable in his                                                                     Gulf Stream Asset
                                                                                                                                           Ex-Officio                     West Cook, E’01                                                Bradford J. Williams,
                                                                                                                                                                                                           Management, LLC
                                                                           earlier position as CIO for a division of State Street Global   Ford Motor Co.                 Cook & Company                                                 JD/MBA’94
                                                                                                                                                                                                           Catherine Rowbotham, ’03      Goldman Sachs & Co.
                                                                           Advisors. “Here was a company that became the fifth largest     Kevin Crumbo, E’96             Jack Driscoll, ’00
                                                                                                                                                                                                           GE Commercial Finance
                                                                           investment manager in the world, but no one knew they           (Development Co-Chair)         GE Financial                                                   Kimberly G. Windrow, E’99
                                                                                                                                           Kruse Advisory Group                                            Craig Savage, ’98             The MONY Group
                                                                           existed,” he recalls. So Davis became a commentator on                                         Marc Fortune, ’76
                                                                                                                                                                                                           Goldman Sachs & Co.
                                                                           CNN, NBC, and “Wall Street Week,” helping to bring a            Stephen S. Mathews, ’74        Century II Staffing, Inc.
                                                                                                                                           (Development Co-Chair)                                          Jackie Shrago, ’75
                                                                           higher profile to the firm.                                                                    Chris Garrison, E’03
                                                                                                                                                                                                           Think-Link-Learning
                                                                                                                                           Nancy Abbott, E’91             Universal Support
                                                                              “I would have been surprised my second year at Vander-
                                                                           bilt to know that I ended up here,” Davis says. But maybe he
                                                                                                                                           (Executive Programs Chair)
                                                                                                                                           GE Capital
                                                                                                                                                                          Services, Inc.                   David Stringfield,’95
                                                                                                                                                                                                           Cresa Partners
                                                                                                                                                                                                                                         OWEN ALUMNI
                                                                                                                                                                          Robert Henry, E’95
                                                                           really wouldn’t have been surprised. “You use your senses,      Steven Summers, ’99            American Endoscopy               Anne Taylor, E’84              ASSOCIATION
                                                                           and the world shows you how it all comes together. As Dr.       (Student Life Chair)           Services Inc.                    Grubb & Ellis/Centennial
                                                                           Seuss says, ‘Oh the places you will go.’ ” —Carol Wissmann      Deloitte Consulting




   52                                                                                                                     SUMMER 2003
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