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Category: Corporate Law

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On National Ice Cream Day, Thanks Dairy Queen

DQIn honor of National Ice Cream Day (July 20), here is a brief celebration of Dairy Queen, an institution of American culture—entrepreneurial, legal, literary, and familial—that helped put this cold concoction on the national calendar. I developed these reflections when researching my upcoming book, Berkshire Beyond Buffett: The Enduring Value of Values (Columbia U. Press 2014), which provides deep looks at the corporate culture of Berkshire Hathaway’s fifty-plus subsidiaries, including Dairy Queen.

While full treatment must await publication of the book (which can be pre-ordered now), here are a few passages along with many outtakes—i.e., sections that did not make it into the final book because they are too technical, but may appeal to readers of this blog interested in the history of franchising businesses and intellectual property rights.

Dairy Queen’s roots date to 1927’s founding of Homemade Ice Cream Company by John F. (“Grandpa”) McCullough (1871‒1963) and his son Alex near the Iowa-Illinois border. Innovative ice cream makers, they experimented with temperatures and textures and eventually pioneered soft ice creams. One discovery: ice cream was frozen for the convenience of manufacturers and merchants, not for the delight of consumers.

At first, the McCulloughs were unable to interest any manufacturer in building the necessary freezers and dispensers to serve soft ice cream. Luckily, however, Grandpa happened to see a newspaper ad in the Chicago Tribune describing a newly-patented continuous freezer that could dispense soft ice cream. Grandpa answered the inventor/manufacturer, Harry M. Oltz, and the two made a deal in the summer of 1939.

The McCullough-Oltz agreement entitled Oltz to patent royalties equal to two cents per gallon of soft ice cream run through the freezer; the agreement also granted the McCulloughs patent licensing rights in the Western U.S., while Oltz retained them for the Eastern part of the country. The agreements that McCullough and Oltz made with licensees seemed to cover only the patent, rather than the DQ trademark, and contained few quality controls.

After World War II, DQ stores hit their stride, drawing lengthy lines of increasingly loyal customers enjoying the cooling effects of soft ice cream all sultry-summer long. The customer throngs at one store in Moline, Illinois caught the attention of Harry Axene. An entrepreneurial farm equipment salesman for Allis-Chalmers, Axene wanted to invest in the business. He contacted the McCulloughs and acquired both the rights to sell the ice cream in Illinois and Iowa as well as an interest in the McCullough’s ice cream manufacturing facility. Read More

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Truth, Candor, and Crisis at Yeshiva University

Among universities in trouble, the darkest cloud hangs over Yeshiva University, a venerable Jewish institution founded in New York in 1886. The University acknowledges huge economic losses and failed investment policies and is taking extraordinary steps to balance its books, including ceding control over its one-time crown jewel, Albert Einstein College of Medicine, which has close friends of its law school, Benjamin N. Cardozo School of Law, very concerned.  Critics, moreover, see a death spiral and question the leadership’s candor.

Amid calls for the resignation or dismissal of Yeshiva’s president, Mr. Richard M. Joel, he says the University will no longer engage with the media on fiscal questions. The Wall Street Journal reports that the University has hired the crisis-management communications firm, Kekst & Co., but any benefits from that hiring are not yet obvious.sunlight

In a familiar pattern facing other organizations in crisis, what both sides miss in this dangerous heightening of tensions is the importance of trust to any institution’s health. To resolve this crisis, as always, the institution’s leadership must regain trust by explaining how its current fiscal stewardship advances the institution’s mission. Critics must not rush to judgment and hear the leadership out on what it has learned from recent problems and plans for the future.

Like other investors, part of Yeshiva’s problems are due to the financial collapse of 2008, but its roots are a bit deeper and offer broader lessons. Since at least 1993, the board of trustees oversaw Yeshiva’s endowment and made investment decisions. University policy permitted trustees to invest endowment in funds the trustees managed, despite conflicts of interest, so long as they made full disclosure.

During the early 2000s, the trustees increasingly allocated endowment to their own hedge funds, which were heavily weighted in risky securities. By 2008, the endowment, valued at more than $1 billion, held riskier investments than those of peer institutions. The financial upheaval of 2008 thus hit Yeshiva even harder than most peers, shrinking its endowment by more than $300 million, including $100 million due to the Ponzi scheme of Bernie Madoff, whose top victims also included a Yeshiva trustee.

While it appears that the trustees and the administration acted in good faith, even if no laws were broken, poor judgment abounded. The loose conflict-of-interest policy certainly was a mistake, as a trustee’s personal involvement skews his judgment. Reputable and durable institutions scrupulously avoid the remotest appearance of impropriety. For stalwarts like Yeshiva, this principle of integrity, coupled with an ethic of prudence, should govern investment decisions.

The University learned its lesson from this calamity and has adopted new policies that may serve as a model for other endowments. It created a professional investment office to set strategy, updated oversight protocols, and established a rigorous conflicts policy. While thus implicitly recognizing earlier weaknesses, the University has not offered a mea culpa nor has it identified particular past faults—whether sins of omission or commission, of process or substance, or whether the product of mere haplessness or of actual chicanery. That reticence allows unimpressed critics to overlook the significance of these reforms.

It is hard to measure objectively the exact economic costs of Yeshiva’s policies or market onslaughts from which it has suffered. One result of this difficulty is wildly different numbers being reported by the University and critics—ranging from $300 million to a staggering $1.3 billion. However, it is less important to achieve consensus on financial figures than to find common ground on productive next steps.

At stake is advancing the institution’s core mission, which is not to maximize endowment or earn a profit but to promote knowledge and teach students. The fiscal drama becomes a superficial distraction from fundamental academic judgments about the relation among current and future pedagogical, scholarly, scientific, cultural and religious needs and resources.

Constituents would rightly like to know more about Yeshiva’s finances as well as the academic thinking behind decisions concerning building or closing facilities and forming or ending joint ventures and programs. For example, when Yeshiva recently ceded managerial control over Einstein College of Medicine to another institution to cut costs, it did not publicly detail the educational rationale. Critics jumped on the move, assuming and asserting that it was a sign of distress rather than a shrewd maneuver that promotes the University’s goals.

When institutions are imperiled in this way, the best course of action is to make certain that the operative facts are publicly known, to identify lessons learned, and to act on them. In that spirit, the University might do well to form an independent task force with unlimited access to University information charged to report a public assessment of where things stand and where they are going. Lifting the cloud over this 128-year old bastion of Judaism, such a look would enable Yeshiva University to move forward with its important business of education.

Lawrence A. Cunningham, a graduate and former faculty member of Yeshiva University’s law school (Cardozo), is a professor at George Washington University and the author of the forthcoming book, Berkshire Beyond Buffett: The Enduring Value of Values.

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What Berkshire Hathaway Teaches About Hobby Lobby

Eleven years ago tomorrow, the abortion issue led Berkshire Hathaway, the huge conglomerate Warren Buffett built and now owned by one million different shareholders, to end its shareholder-directed charitable contribution program. Under the program, Berkshire’s board earmarked an amount for charitable giving and then let the company’s class A shareholders designate the charities to which their share went. In twenty-two years, the program distributed $197 million to thousands of different charities.

Berkshire terminated the program on July 3, 2003 because activists boycotted products of one of its subsidiaries to protest giving to organizations they opposed on religious grounds: some designated Planned Parenthood, which facilitates a woman’s choice to abort an unwanted pregnancy, while others gave to Catholic Social Services, which opposes abortions.

Berkshire stood for neither position, of course, because it is a business organization whose mission is to increase its intrinsic economic value, which has nothing to do with religion. Berkshire’s board chose to terminate the program because the boycotts hurt Berkshire’s business and its personnel while offering shareholders only a slight convenience and tax advantage.

The scenario speaks to the debate that erupted this week between foes in the abortion debate thanks to the Supreme Court’s decision in the Hobby Lobby case. The issue in that case, narrower and more technical than accompanying rhetoric suggests, was whether the word persons in a federal statute about religious freedom includes corporations owned by a small number of people with a specific set of religious beliefs. If so, then regulations implementing Obamacare cannot require them to fund birth control devices in conflcit with their religious beliefs.

A majority of the Court concluded that closely-held corporations are persons for the purpose of the statute because they are readily seen as merely a convenient legal form through which individuals do business. The dissent complained that only individuals can have religious beliefs and therefore corporations, whether closely held or otherwise, aren’t persons for purposes of the federal law.

The Berkshire example is instructive on both opinions. Buffett has always boasted that Berkshire, though using the corporate form, adopts a partnership attitude. The shareholder charitable contribution program epitomized this attitude. It gave the decision to the owners, as is done in partnerships and closely held corporations, not the board, the practice in public corporations. Those owners, moreover, were the class A shareholders, a subset of Berkshire’s shareholder body made up of people with larger and older stakes—including hundreds who really were Buffett’s original partners.

Berkshire shareholders, class A and class B, readily agree on a wide variety of business and ownership topics. For example, in a vote earlier this year on the company’s dividend policy, 98 percent ratified the existing—and unusual—no-dividend practice. But put a question about hot-button religious or political  issues of the day such as abortion and expect deep divisions.

Berkshire’s shareholders may be able to act like partners or closely-held shareholders on business issues while the charitable giving program proved they were unable to do so on others. For the Court in Holly Lobby, this perspective supports the majority’s holding about the nature of close corporations while validating the dissent’s appetite for a sharp boundary between them and the typical business organization.

Lawrence A. Cunningham is the author of the upcoming Berkshire Beyond Buffett: The Enduring Value of Values and editor of The Essays of Warren Buffett: Lessons for Corporate America. He teaches business-related courses at George Washington University Law School.

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Campaign Finance Reform and Corporate Law

I just returned from the ALI’s Annual Meeting, and I wanted to post about an interesting hypothetical that was raised in the course of the discussions.

Suppose Delaware passed a statute providing that no company incorporated there could give money to political campaigns.  (A more modest version of this statute would be that any new corporate charters would contain such a limit.)  Would this be unconstitutional under Citizens United?

1.  Yes, because a state can ban corporations entirely or impose all sorts of other regulatory limits, but not a rule that restricts corporate speech.

2.  No, because a firm can choose to incorporate in another state that would not impose such a limit.  In other words, federalism gives states broad authority over the corporate form, and the burden on free speech is incidental if you have to incorporate in, say, Ohio, instead of Delaware.  So long as some states (or even one state) permitted unrestricted campaign contributions by its corporations, then there is no First Amendment problem.

Which is the better answer?

 

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What Everyone Should Remember about Buffett’s Views on Executive Compensation

Intelligent and well-meaning as they are, critics of Warren Buffett’s decision to have Berkshire Hathaway abstain from voting as a shareholder of Coca-Cola on the latter’s executive pay proposal suffer from two problems.  Some, like Joe Nocera of the New York Timesseem to believe that, since Buffett is powerful and historically a strong vocal critic of executive compensation, he is obliged to cast Berkshire’s vote against it.  When he explained last weekend that directors may not always vote against proposals with which they disagreed others, including Vitaliy Katsenelson at the Institutional Investor, lamented that directors may not always stand up for what they believe.

These positions are a combination of misreading history and naïve. Buffett has always stressed that, as costly to shareholders as executive compensation may be, in raw amounts and in terms of conflicts of interest, they pale in comparison to the vastly larger costs to shareholders of other conflicts between executives and shareholders, especially on acquisitions.  No rational investor should believe that directors are unabashed devotees of the shareholder interest at every turn.  Here is an excerpt from remarks Buffett made as discussant at a Cardozo Law School conference I hosted in 1997, the themes of which he has repeated for two decades:

As a stockholder, I’m really only interested in the board accomplishing two ends. One is to get a first class manager and the second is to intervene in some way when even that first class manager will have interests that are contrary to the interests of the owners.

I think there are great difficulties in achieving both of those ends. I’ve been a director of, counting them up, seventeen publicly owned companies, not counting ones which we control (which probably shows a very dominant, masochistic gene) (laughter). But over that time I’ve wrestled with just these couple of problems and there may be processes that would improve them.

The first one: getting the first class manager. I have never seen in those seventeen cases – and I’m not aware of it in other cases – where a question of mediocrity or worse and the evaluation of change has been made in the presence of a chief executive. It just doesn’t happen. So, I think absolutely to have any chance of having that one solved, you have to have regular meetings of evaluation of chief executives, absent that chief executive. If they are rump meetings or something of the sort – if they’re not regularly scheduled – there is just too much tension created. Because a board may be a legal creation, but it’s a social animal. It is very difficult for a group of people without a very strong leader to all of a sudden, spontaneously decide that they’re going to hold some meetings elsewhere and discuss whether this person who may be a perfectly decent individual, really should be batting clean-up.

So, I think there should be a lot of emphasis on process in terms of evaluation of a CEO. I don’t know how you create a greater willingness on the part of directors to really bounce somebody that they would bounce if they owned 100% of the company or if their family was dependent on the income from the business and so on. I just have not seen it in corporate America.

If you get that first class chief executive – which is a top priority – he doesn’t have to be the best in the world, just a first class one. And I may agree with Jill to some extent – you may be able to turn a five into a five-and-a-half or something by having him consult with lots of other CEOs and get a lot of advice from the board. But my experience is that you don’t turn a five into an eight. I think you’re better off getting rid of the five and having him find something else to do in life and going out and acquiring an eight.

The second problem is: even a first class chief executive has some interests that are in conflict with the shareholders. One is his or her own compensation. The second one gets into the acquisition category. There are psychic benefits to an executive of running a bigger show or just having more action or whatever that can be in conflict with the shareholders, even though that executive may be first class in other respects. The nature of acquisitions is that they get to the board at a point where if you turn them down you are rejecting the chief executive, you are embarrassing him in front of his troops, you’re doing all kinds of things. So, it just doesn’t happen.

I have seen board after board approve deals that afterwards the board members say, “you know, I really didn’t think it was a very good idea but what could we do about it?” And there should be a better mechanism. But I’m not sure what it is. There should be a better mechanism, though, for a board to make those important decisions where a first class chief executive can have an absolutely different equation than the shareholders, weighing all of the personal economic and non-economic considerations. There should be a mechanism that enables the board to bring independent judgment on those in a way that doesn’t put the CEO in a position virtually where he or she has to resign or is embarrassed in front of the troops. And I would welcome any discussion on those matters.

The compensation question where the first class executive could be in conflict with the owners, I think it gets abused some but I don’t think that it amounts to that much when compared with the other two questions – getting the right one and also the question of acquisitions. I think it costs shareholders some money that’s unnecessary, and I think that a lot of the compensation schemes have been quite illogical, but I don’t think that they are overwhelming in terms of evaluation.

On compensation, I can turn purple in meetings. But in the end, the big, dumb acquisitions are going to cost shareholders far, far more money than all of the other stuff.

 

 

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Buffett’s Evolution: From Stock-Picking Disciple of Ben Graham to Business-Building Devotee of Tom Murphy

While everyone knows that Warren Buffett modeled himself after Ben Graham for the stock picking that made Buffett famous in the latter 20th century, virtually no one knows a more important point for the 21st century: he has modeled himself after Tom Murphy in assembling a mighty conglomerate.   Murphy, a legendary executive with great skills in the field of acquisitions that resulted in the Capital Cities communications empire, engineered the 1985 $3.5 billion takeover by Capital Cities of ABC before selling it all to to Disney a decade later for $19 billion.  You did not hear that explicitly at Saturday’s Berkshire Hathaway annual meeting, but Warren mentioned it to me at brunch on Sunday and, when you think about it, it’s a point implicit deep in the meeting’s themes and many questions.

In fact, Berkshire mBBB COvereetings are wonderful for their predictability.   Few questions surprise informed participants and most seasoned observers can give the correct outlines of answers before hearing Buffett or vice chairman Charlie Munger speak. While exact issues vary year to year and the company and its leaders evolve, the core principles are few, simple, and unwavering.  The meetings reinforce the venerability and durability of Berkshire’s bedrock principles even as they drive important underlying shifts that accumulate over many years.  Three examples and their upshot illustrate, all of which I expand on in a new book due out later this year (pictured; pre-order here).

Permanence versus Size/Break Up. People since the 1980s have argued that as Berkshire grows, it gets more difficult to outperform. Buffett has always agreed that scale is an anchor. And it’s true that these critics have always been right that it gets harder but always wrong that it is impossible to outperform.   People for at least a decade have wondered whether it might be desirable to divide Berkshire’s 50+ direct subsidiaries into multiple corporations or spin-off some businesses.  The answer has always been and remains no.  Berkshire’s most fundamental principle is permanence, always has been, always will be. Divisions and divestitures are antithetical to that proposition.

Trust and Autonomy versus Internal Control. Every time there is a problem at a given subsidiary or with a given person—spotlighted at 2011’s meeting by subsidiary CEO David Sokol’s buying stock in Lubrizol before pitching it as an acquisition target—people want to know whether Berkshire gives its personnel too much autonomy. The answer is Berkshire is totally decentralized and always will be-another distinctive bedrock principle. The rationale has always been the same: yes, tight leashes and controls might help avoid this or that costly embarrassment but the gains from a trust-based culture of autonomy, while less visible, dwarf those costs.

Capital Allocation: Berkshire has always adopted the doubled-barreled approach to capital allocation, buying minority stakes in common stocks as well as entire subsidiaries (and subs of subs).  The significant change at Berkshire in the past two decades is moving from a mix of 80% stocks with 20% subsidiaries to the opposite, now 80% subsidiaries with 20% stocks.  That underscores the unnoticed change: in addition to Munger, Buffett’s most important model is not only Graham but Murphy, who built Capital Cities/ABC in the way that Buffett has consciously emulated in the recent building of Berkshire.

For me, this year’s meeting was a particularly joy because I’ve just completed the manuscript of my next book, Berkshire Beyond Buffett: The Enduring Value of Values (Columbia University Press, available October 2014). It articulates and consolidates these themes through a close and delightful look at its fifty-plus subsidiaries, based in part on interviews and surveys of many subsidiary CEOs and other Berkshire insiders and shareholders.   The draft jacket copy follows. Read More

The Care/Profit Tradeoff in Health Care

The tradeoff is an old theme here, and of continuing relevance.  Via Yves Smith, news of a settlement related to investors’ role in pushing for quick gains in a firm:

As Hospira was promising to address issues raised by the U.S. Food and Drug Administration following inspections, the plaintiffs said the company was “making the problems worse by gutting quality control efforts through cost cutting aimed at boosting short-term profitability.” The lawsuit said those cost-cutting moves stemmed from a March 2009 initiative called “Project Fuel” intended to increase shareholder value by eliminating underperforming . . . units and reducing its global workforce.

The goal of immediate maximization of “shareholder value” is increasingly under attack,  even by its ostensible masters.  Add “Project Fuel” to that fire.

 

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Liquidity and Control at Buffett’s Berkshire Hathaway

Warren Buffett’s ownership of Berkshire Hathaway is skewed heavily towards commanding greater voting power rather than a larger slice of the economic interest. He values control more than liquidity and is delighted to have shareholders who prefer liquidity to control to stake their money accordingly.   It is interesting to see the corporate governance tools used to create this structure and precisely how the voting power and economic interests are determined. 

Berkshire Hathaway, like many other corporations, has multiple classes of stock with different economic and voting rights. Berkshire’s Class A has 10,000 times the voting power as its Class B and 1,500 times the economic interest.  All shares are eligible to vote on most shareholder voting matters and there are no further distinctions as to economic rights, such as dividends or liquidation payments. Market prices generally reflect the economic rather than the voting ratio: the Class A shares recently traded at $170,000 per share while the Class B trade at $113 (very close to 1500-to-1).

Many stockholders, including Buffett, own some Class A and some Class B, in part because they exercised the right to convert A to B to give gifts and otherwise manage estate planning.   It is easy to see what portion Buffett or another shareholder has of each Class, simply his number of shares of a Class divided by all shares of that Class. Buffett, for example, owns about forty percent of Berkshire’s Class A shares and a small number of the Class B.

It is more important to know what percentage of the aggregate voting power and economic interest any given shareholder’s stake represents.  So: what percentage of the aggregate voting power and economic interest does Buffett command?  For Berkshire, the answer can be computed using the following formula that reflects the relative weight of the A compared to the B in votes and payouts:

 

Voting Power    =

Number of A Shares Owned + Number of B Shares Owned / 10,000

Total A Shares Outstanding + Total B Shares Outstanding / 10,000

Economic Interest =

Number of A Shares Owned + Number of B Shares Owned / 1,500

Total A Shares Outstanding + Total B Shares Outstanding / 1,500

 

Applied to Buffett (using the most recent proxy statement figures for share information):

 

          Buffett’s Voting Power =

    350,000 + 3,525,623 / 10,000      

892,657 + 1,126,012,136 / 10,000

= 34.9%

 

Buffett’s Economic Interest =

      350,000 + 3,525,623 / 1,500

892,657 + 1,126,012,136 / 1,500

= 21.4%

 

Conversion charts can be created to show the voting power and economic interest of given levels of A and B share ownership.  The following assume the same figures stated above, which can change from time to time as Class A shares are converted into Class B shares or other capital shuffles occur.

 

Class A Power

Shares % ofClass VotingPower EconomicInterest
  250  – 0.04 0.02
  500 .056 0.05 0.03
1000 .112 0.1 0.06
2000 .224 0.2 0.12
3000 .336 0.3 0.18
4000 .448 0.4 0.24
5000 .550 0.5 0.30
6000 .662 0.6 0.36
7000 .784 0.7 0.42
8000 .892 0.8 0.48
9000 1.00 0.9 0.54
10,000 1.12 1.0 0.60
15,000 1.68 1.5 0.91
30,000 3.36 3.0 1.82

                                                                                                 Class B Power

(shares in millions)

Shares % ofClass VotingPower EconomicInterest
  1 0.1 0.04 0.01
  5 0.4 0.20 0.05
10 0.9 0.42 0.1
20 1.8 0.82 0.2
30 2.7 1.22 0.3
40 3.6 1.62 0.4
50 4.4 2.02 0.5
60 5.3 2.42 0.6
70 6.2 2.84 0.7
80 7.1 3.24 0.8

 

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Of Wolfs, Wall Street, Art, and Poser Populists

I was not planning on seeing The Wolf of Wall Street but may have to after reading an op-ed by Christina McDowell, the daughter of Tom Prousalis who was a lawyer in the pump and dump schemes portrayed in the movie. She makes the argument that the film and especially the film makers, Scorsese, DiCaprio, and Winters, have glorified these tactics:

So here’s the deal. You people are dangerous. Your film is a reckless attempt at continuing to pretend that these sorts of schemes are entertaining, even as the country is reeling from yet another round of Wall Street scandals. We want to get lost in what? These phony financiers’ fun sexcapades and coke binges? Come on, we know the truth. This kind of behavior brought America to its knees.

And yet you’re glorifying it — you who call yourselves liberals. You were honored for career excellence and for your cultural influence by the Kennedy Center, Marty. You drive a Honda hybrid, Leo. Did you think about the cultural message you’d be sending when you decided to make this film? You have successfully aligned yourself with an accomplished criminal, a guy who still hasn’t made full restitution to his victims, exacerbating our national obsession with wealth and status and glorifying greed and psychopathic behavior. And don’t even get me started on the incomprehensible way in which your film degrades women, the misogynistic, ass-backwards message you endorse to younger generations of men.

On the one hand, I think McDowell is suggesting that these “liberal” film makers are what I like to call poser populists; lots of lip service to certain ideals but not much beyond that. Maybe that is so. Some artists and writers were horrible in private life but wrote works that capture and celebrate humanity. Do we stop reading them? No. When the opposite is true, however, we may indeed pass up the work. On the other hand, there is the film by itself. Is it that bad?

With McDowell’s critique, I find I may have to see the blasted thing to determine whether it is as lacking substance as it seems. The trailers made the film seem pretty much as McDowell describes. And I happen to find the Scorsese and DiCaprio combo flat film-making. But these images and perspectives of how to conduct one’s life come up in both business associations and professional responsibility. While I believe people should make what they wish for film, T.V., books, etc., if those works become popular, I find I want to know them so I can counter-punch the message or give some context to what students see. Thus I agree with McDowell that creators can exercise judgment in what they make, but once the thing is done, blast it all, I may have to dive in if I want to say “Not for me” and back it up with why.

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Executives Say the Funniest Things

The now week-old expose of disarray in the front-office of the Seattle Mariners contains many great tidbits.  From the discussions of nitpicking the fonts in a powerpoint deck, to the puffery about sabermetrics, it suggests that baseball teams’ front-offices look very much like the rest of corporate america.  And here’s the anecdote to prove it:

“[Team manager Eric] Wedge described how, starting in 2011, [team President Chuck] Armstrong would visit his office and gravely say things like: ‘Howard [Lincoln, the Mariner's CEO] sent me down here and … we’ve got to win.’

Wedge would shrug in agreement, telling him he wanted to win every night. But he’s like, ‘No, we’ve really got to win. We’ve got to go 5-2 on this trip. We’ve got to win tonight.’”

We’ve really got to win.  Most of the time, it’s more or less optional! Needless to say, in a universe where success is determined by quarterly returns and flexible GAAP accounting, this is exactly the kind of direction that leads to cooking the books.  Sadly for the Mariners, their success was harder to manufacture.