In the December Executive RoundTable Meeting, a survey indicated 1998 as a better year than 1997 and more of the same for 1999. Sixteen Executives indicated that sales and profits in 1998 exceeded their 1997 performance, and it was unanimous for 1999 to be even better than 1998. On balance, the size of the companies falls between zero and ten million in sales. Half the group in attendance has International sales and International competition. This is an evolution that has occurred over the last five years.

Shorter time to market for products and services is becoming more and more important in all market segments represented by the group. My conclusions were that the biggest impact on how to do business in the past year was utilization of the Internet. And to think three years ago hardly anyone in the group was utilizing E-mail. Now most have their own Web page. Little commerce is being done so far with the greater usage of the Web page for marketing support.

The group hasn’t overwhelming solved the year 2000 problem. In fact there is still some confusion as what yet to do or understanding its potential impact.

Question. How much has the lowest Federal estate tax increased since its beginning?
Answer. 3600% from a 1% rate in 1916 to the recent 37%.

Question. What was the Social Security tax when first imposed in 1937?
Answer. 1% paid on the first $3,000. It will be 7.65% on the first $72,600 in 1999.

Scented Fabric developed in Asia is now being taken to Europe. In Japan fabrics have been scented like pizza, coffee, and cola. Aren’t these the smells we try to get out of clothing?

Don’t expect to see much of this in the US. With all the allergies and the lawyers just waiting to pounce and sue, we are probably spared the invasion.

1200 baby boomers polled had 2 of 3 say they will work till they croak – and most said the money won’t be as important as staying alive.

There is so much going on in the world today, and with the potential exciting future, more and more people want to live longer.

Will The Real Inventory Please Stand Up and Be Counted.

Any money received for my books before January 31, 1999 will be contributed to Orange County Works, a non-profit organization dedicated to helping children when they are ready to leave the Foster Child Program and go out on their own.

Both books are offered at $15.00.
Call 949-643-1859 to order, or Fax 949-643-3725.

Who Needs it? I notice that Bob Dole has been hired as a spokesman for Pfizer, Inc., to raise awareness about impotence. Of course their Viagra can solve the problem. You can bet Bill Clinton won’t be offered a job like this. Apparently he is the last guy in the world who needs Viagra.

By the way, is the trial with the Government suing Microsoft still on? Maybe the Government will try to impeach Bill Gates from Microsoft.

If Exxon and Mobil merge their total assets will be $10.57 billion – with Exxon’s being 90% of the number.

Of course, Bill Gates had to be in the list with Nabisco, Good Morning America, and Nike. How about the National Basketball Association also?

My latest computer came with 128 MB of RAM – I am reminded again back in the dark ages that when I worked for Burroughs one of the leading scientists said – "I can’t imagine needing more than 4k memory in a computer.

Disney says fixing the Y2K bug will cost $261 million to fix its computer systems.

Time to sign up a collection firm? It’s reported Ted Turner has fallen behind on his pledge to give the UN a billion dollars. He only scrounged up $75 million against the $100 million pledged this year. Perhaps, the problem is that his Braves failed to reach the World Series.

Question: How many wages and salary workers were doing paid work at home in 1997? Answer: 3.6 million, up from 1.9 million in 1991.

Question: How many electric vehicles have been registered in California in two years? Answer: About 1,000 of the more than 3,000,000 trucks and cars registered.

In the 288 games cancelled through December 15, players have lost $478 million in payroll. Seems to me with the season in jeopardy they don’t seem to be concerned financially or they would have settled by now.

  Editorial Response

Dick:

I disagree with your premise that "the American business system allows the majority to rule and, therefore, places no requirement for the values and integrity of those in a position of power." We all know that corporate officers and directors owe the shareholders a fiduciary duty. However, the law also imposes upon the majority shareholders a fiduciary duty owed to the minority.

A fiduciary duty has two parts (1) a duty of due care; and (2) no self dealing. The duty of due of care imposes upon those in control of the corporation, (be they officers, directors or the majority shareholder) the duty to make prudent business decision and to exercise due-diligence in looking after the affairs of the business and to avoid waste of corporate resources. The second fiduciary duty is one of no self-dealing. This means that the majority cannot take benefits themselves, without providing proportionate benefits to all minority shareholders.

A minority shareholder may bring legal action against the majority shareholder(s) by way of a "derivative" lawsuit to compel the majority shareholders to cease engaging in self-dealing and to return to the corporation the amount wrongfully taken. This included the benefits of business opportunities, which rightfully belonged to the corporation. "Derivative action" lawsuits mean that the minority shareholder is bringing the lawsuit in the name of the corporation (i.e. derivatively) because the majority (for obvious reasons) won’t bring the lawsuits themselves. If the minority shareholders prevail, the minority shareholders may be entitled to reimbursement of their attorney’s fees in bringing the action. A derivative action is an action in "equity", which means that there is no right to a trial by jury. Rather, all the issues are to be decided by a judge. The California Corporations Code grants to the judge enormous powers to fashion any remedy to the corporation or the minority shareholders that are fair and equitable.

In summary, minority shareholders do have rights, and the majority shareholders do have obligations. Our business system does not allow the majority to rule in such a way that is unfair to the minority. The law most certainly does place the requirement of fairness and integrity upon those in power.

I am not encouraging lawsuits. I do think, however, that it is wise to communicate and educate those shareholders that have a majority not to abuse the power. They may be subject to personal liability for their own breach of fiduciary duty to the corporation and the minority shareholders. When abuses do occur, the mechanism (lawsuits) does exist to prevail a remedy to the wronged minority. I personally have litigated these kinds of lawsuits and have prevailed. Note:

Although there are many vagaries in the legal system (and some outright absurdities), my experience has been that our legal system often tends to do that which is fair and reasonable. The law regarding wrong to the minority’s shareholders, is a case in point.

Jack Smart

Executive Roundtables: 3rd Tuesday of each month:
Tuesday, January 19, 1999; February 16, 1999; March 16, 1999
Time: 10:30 a.m. - 1:30 p.m.
Agenda: To be announced

Audio Tape Program - The Laws of Management Physics.
The Book – The Laws of Management Physics: A Handbook for Hands-On Managers.
The Book – "Will the Real Inventory Please Stand Up and Be Counted!"

If you would like more information on any of the above, please call (949) 643-1859
or Fax (949) 643-3725, RJD Associates, Inc.