Chapter 6 - Davos, January 26-February 1, 2000 - Episode 2Listen to podcast
Thursday is the first day of the conference. Well-instructed and reasonably well-rested, Larry and Louise climb the hill to the Conference Center wearing their boots and identity tags and carrying their inside shoes and the programs in which they’ve circled the sessions they want to attend. The streets and sidewalks have been swept of the previous night’s snow, but it is cold and light and it swirls back in a sparkling dust which crunches slightly underfoot.
On the way, they see an outdoor platform where MSNBC is doing interviews.
“Want me to call Eve and see if she can get you on?” asks Louise.
“Yeah, sure,” says Larry. “What the hell. Might as well give it a try. Actually, she shoulda thought of making press appointments. Give her our password to the conference website and she can find out what other press is here.”
“Yes, sir,” says Louise.
“Please,” says Larry magnanimously.
Security works. No lines, but everyone is identified, scanned, cleared. Inside there are bags to put boots in before checking them with coats. First disappointment is session tickets. Larry’s first choices and second choices — mostly technical but one on the tulip bulb bubble — are all filled. So he decides not to go to any. Louise had a more eclectic choice — art, philanthropy, health — but doesn’t get her choices either. Patiently, she makes more choices until she’s filled her whole dance card. She does get into a talk by the inventor of Dolly the Sheep and another on how to minimize jet lag.
“That’s Yasser Arafat,” Larry almost shouts.
The grubby man in a dirty suit with his trademark four-day stubble is just a few feet away from them. There is no noticeable security. There are no crowds of sycophants around him or the other somewhat less-celebrated celebrities the Lazards begin to identify. It does seem, however, that there is a rule that all celebrities know all other celebrities at least well enough for cheek kissing.
“There must be a lotta other places where they hang out together,” Larry guesses.
The Europeans are very fond of Bill Clinton. The French, in particular, feel that the Monica Lewinsky affair was unfair, yet another example of America’s lack of civilization. Of course, he has a mistress. He is a man of power; all men of power have mistresses. They manage to say this slightly out of earshot of their wives. And this George W. Bush; he is not a sophisticated person. He is a Texan, a cowboy, the worst kind of American. He may not ever have been to France. Probably doesn’t have a mistress either. They are looking forward to Clinton’s keynote. They are regretting that he won’t be back as President next year.
But a terrible thing has happened. There is an article in the Wall Street Journal accusing Klaus Schwab of having guided World Economic Forum contracts to companies in which he, personally, had an interest. Clearly the article must have been written by a reporter who was disappointed not to be invited to Davos and is taking revenge in print. Look at the timing. There must be a good explanation. And, of course there is. Herr Klaus practices what he preaches. These are excellent entrepreneurial companies. He has invested in them and mentored them to help them. He has steered contracts to them for the same reason: they deserve help and they are good at what they do. What could be more consistent? We shouldn’t get distracted by this when there is great work to be done in making the world a better place.
Larry is leading a luncheon discussion at a hotel a cab ride away from the Congress Center; he is one of two males not wearing a suit or a sports coat. The subject is the role of the Board of Directors. Attendees include a Belgian hotelier, the Queen of a tiny European principality, a French government official, a Japanese software entrepreneur, an Israeli electronic hardware entrepreneur (also in shirtsleeves), an American telecommunications executive, Louise Lazard, a British financial journalist, and a well-known Italian author of children’s books who is there, however, as a spouse. There is also an expediter from WEF to tell them what to do. It is not clear whether she is supposed to have a speaking role in the discussion. It is possible that she was cloned from Magdala.
Two excellent wines are served. The continental Europeans smoke while they eat, which makes the asthmatic Japanese cough and sneeze which is a cultural embarrassment to him.
“It’s pretty simple to us,” says Larry, who is supposed to kickoff the discussion, as they say in the United States. “The Board represents the shareholders, the owners of the company. Before you go public — before WE went public — those were the VCs — I mean venture capitalists — and founders who owned the company. The most important thing is that they represent the owners.”
“Our view is much less limited,” says the Frenchman. “In our view it is the role of the Board to represent ALL the stakeholders. This includes the owners, of course; but equally important are the employees and the community in which the company operates as well as the government, of course. I myself serve on several boards for just these reasons.” He lights another French cigarette.
“We had union representatives on our Board once,” says the American telecommunications executive. “They were arrested for trading on insider information.”
“What about customers?” asks Larry.
“What about them?” asks the Belgian.
“Are they stakeholders who get a seat on the Board?”
“I wouldn’t want to be on a Board,” says the Queen, who unfortunately sprays when she talks. “I am a customer and I don’t want to be on a board.”
“Typically, not,” explains the Belgian. “It is not the tradition.”
“And in Japan?” asks Larry.
The Japanese does not speak English well. It is even more difficult for him because his cough has worsened alarmingly. Although it is impossible to know exactly what he said, there is apparently an elaborate tradition of how Boards are constituted in Japan, with due consideration to creating the interlock necessary in order for keritsu to operate efficiently.
“That would never work in France,” says the Frenchman, creating yet more smoke.
“We’re with you Americans,” says the Israeli before being asked. “We practice American style capitalism; it works.”
France, Belgium, and the principality may be conducting their own boycott of Israel. They don’t appear to able to hear the Israeli although he doesn’t speak softly.
“We believe that the company belongs to its owners; it must be run in their interest,” says Larry. “Employees have to be treated well, so they’ll perform well, which is good for the owners. Good community relations are good for the owners, too, so it makes sense for companies to participate in local communities. But the owners are still the owners, so the Board oversees management to assure that all the owners’ interests are protected, that the company is NOT run just for the benefit of management.
“Now the interesting question is: WHICH owners is the company run for? Is it run for the stockholders who want to sell tomorrow? Is it run for the stockholders who have a medium-term view? A long-term view?”
No one except Larry (and possibly Louise, who is silent) seem to think this is an interesting question. Each person repeats what he or she has said before in slightly different words.
The Italian author is appalled to think that a company would be run just for its bottom line. “No wonder,” she says.
The British financial journalist clears his throat and proclaims the UK somewhere between the US and the continent on the subject.
The Israeli tactlessly points out the wealth being created by NASDAQ-listed companies both in the US and in Israel.
“The British system would not work in France,” says the Frenchman, who still cannot seem to hear the Israeli.
“If your Boards represent all these constituencies,” asks the indefatigable Israeli somewhat sharply, “who chooses them?”
“What do you mean?” asks the Belgian, shocked into recognizing Israel by the direct question.
“So,” says the Israeli: “It’s very simple. In Israel and the US, the Board represents the owners. So the owners, the shareholders, do elect the Board. If a French Board, for example, represents other stakeholders, who decides who should be on the Board representing the other stakeholders?”
The Frenchman still does not recognize Israel so the Belgian answers for him: “The Board does.”
“The Board elects itself?” asks Larry.
“Well, government may appoint its members,” says the Frenchman, “and management recommends its members; but the Board is in a position, as you would say, to best determine how other stakeholders are represented.”
“So the Board does represent no one but itself,” says the Israeli. His tone says “Q.E.D.”
Almost everyone manages to ignore this rude conclusion. Except for Larry, who says, tactlessly: “Good point.”
There is a long silence.
“Would anyone like to order desert?” asks the woman from the WEF. Most people would. The conversation becomes social and Larry, the moderator, makes no attempt to bring it back to business.
The Israeli buttonholes Larry as they leave the luncheon: “You are going back to the Congress Center.”
“Uh … yeah, my wife and I are.”
“So we’ll share a taxi.”
“Yeah, sure,” says Larry, not sounding sure. “This is my wife, Louise.”
“Hello, Louise,” says the Israeli. His name is Chaim Roslov, pronounced with a guttural like Chanukah.
The driver of their cab doesn’t speak English but the multi-lingual Israeli establishes Spanish as a lingua franca and directs him to the Congress Center.
“You certainly pointed out that Boards that are supposed to represent everybody really represent nobody,” says Larry after they’ve settled into the cab.
“Yes,” says Chaim. “They are Europeans. But I wanted to talk to you about something else.”
“You are Jewish.” It is not a question.
“Only half,” says Larry. “How do you know?”
“I know,” says Chaim. “Your mother was Jewish.” Apparently question marks are not in his English vocabulary.
“Right,” says Larry.
“Then you’re Jewish.”
“Right,” says Louise, amused.
“But I don’t practice,” Larry objects.
“I’m not asking you to synagogue,” says Chaim. “Practice does not matter. But you are a Jew.”
“You are free for breakfast tomorrow,” Chaim asserts.
“I think so,” says Larry. “For what?”
“There is an important meeting. Simon Peres is coordinating this. We must do something to create opportunity for Palestinians. There must be hope for them or there will be no peace. We have a plan; we want your help.”
“I don’t even know any Palestinians,” says Larry. “I don’t think I can help.”
“You can help,” says Chaim. “You must come to the meeting.”
“We will come,” says Louise.
“Only your husband may come.”
“Why?” asks Louise. “Are you orthodox? Are you afraid of women? I’m Jewish — all Jewish.”
“Your husband is the principal. It is he who must come. If you are the principal, you would come. It must be that way.”
“Why must it be that way?” asks Louise.
“It must,” says Chaim flatly.
The Lazards say nothing so he relents slightly.