News Analysis

Some of you, dear readers, have asked me to write about the ongoing Occupy movement. This blog is about how you and I can impact our personal spheres of influence, not about collective action or political affairs. Allow me to make an exception.

I think that the Occupy movement has achieved its foundational goals. It has posed serious questions on the socio-economic inequalities in our societies. Motivated by a sense of helplessness and resentment towards the financial establishments in the United States, the Occupy movement has brought to public attention some themes that are worthy and germane.

So what’s next? This effort to occupy urban space for demonstrations is inspired by the “Arab Spring” uprisings in Egypt and other countries. The direct demands of those dissent movements were somewhat straightforward, viz. the end of the political regimes in their countries. On the contrary, the themes broached by the Occupy movement are far-reaching.

If the Occupy movement is about change, what is the nature of this change? The movement should focus less on what it does not want, and more about what it does want. Beyond proposals to minimize the immediate difficulties of “the 99%,” if our hypotheses about how to operate a healthy society are wide of the mark over the long term, how can we reform the prevailing capitalist democracy-based social order? Can we merely reconcile to some degree of government-interventionist capitalism, regulate businesses further, and increase taxes? How do we develop social welfare programs that truly benefit the deserved and the underclass? How do we continue to uphold individual responsibility and reward the most productive people in proportion to their contributions to the society?

As anticipated, Airbus announced a new A350 XWB (Xtra Wide Body) family of aircrafts at the Farnborough International Airshow on Monday. The family includes the A350-800 (270 seats in 3-class configuration), A350-900 (314 seats), ultra-long range A350-900 (314 seats), A350-900 freighter and A350-1000 (350 seats). The new aircrafts will feature a new fuselage that can accommodate nine-abreast seating and promise better operating economies than the Boeing B787 and B777 families. Illustrations released by Airbus indicate that the A350 may resemble the B787!

Interestingly, Airbus announced no aircraft for the 200 to 230 seat market. Airbus will discontinue the A310 from mid-2007 and its smallest wide-body is the popular A330-200, which can set 250 seats in 3-class configuration. So does not offer a competition for the B787-800, which has captured 281 of the 404 orders for the B787 thus far. If Airbus expects few other airlines to order aircrafts of this size in the next few years, it can shrink the A350-800 at a later date to cater to this market whenever demand arises.

Clearly, the new fuselage and cockpit sections are a break from the Airbus tradition of sub-system commonality. Towards 2010 or so, I expect Airbus to announce discontinuation of its A330 and A340 families in favor of the A350 family that will directly compete against Boeing’s B787 and B777 families. The A350 is an enhanced replacement for the twin-engine A330 and the four-engine twin-aisle market seems to have dried-up as poor sales of the A340 in the last two years have indicated.

On the eve of Home Depot’s [HD] annual shareholders’ meeting, a front-page article in the New York Times estimated CEO Bob Nardelli’s compensation at $245 million since 2001. The article presented ties among board members and pointed to most of the compensation committee being active/former chief executives. Investors had been increasingly upset about Bob’s and other executives’ compensation vis-à-vis the poor performance of the company’s stock.

Media outlets reported that none of the directors of the company except for Bob Nardelli attended the shareholders’ meeting and that Bob did not allow for detailed comments: microphones were shut off after the one-minute restriction for investors’ comments! A follow-up article [$] in the New York Times quoted frustrated investors describing their experience as “appalling,” “disgraceful” and “arrogant.”

The company later stated that most of the company’s directors were in Atlanta (where Home Depot is headquartered) on other company business. In my opinion, the Board is essentially a group of trustees who represent shareholders’ interests and interface with the management. Given these responsibilities, what other than attending the annual shareholders’ meeting could constitute important business? As expected, the entire Board had attended last year’s shareholders’ meeting.

The company can do a better job with respect to governance. I hope Home Depot takes appropriate steps to connect executive compensation with stock performance and financial performance, better representation of investors’ concerns and requiring that the entire Board attend shareholders’ meetings.

In March, Fortune magazine ranked Home Depot 13th among America’s most admired companies; it will be interesting to see if Home Depot drops in next year’s ranking.