Because the David Calhoun case is not isolated

Since a few weeks, the case David Calhoun, a former Vice-President of the giant General Electric, rocked the American business world. Regarded as one of the best leaders in the United States, promised to the direction of one of these companies of the Dow Jones to the turnover of several tens of billions of dollars, it preferred to leave this summer the prestige of Wall Street to take the direction of UNV, the group that owns the Nielsen pollster and just be removed from the rating by a group of investors in the non-coté.

Previously at the head of a set of activities of aircraft engines, trains, turbines of reprocessing plants weighing more than 47 billion dollars of sales, David Calhoun now reigns over an empire to the same dimensions not equivalent to a tenth of that amount.

In finance, industry and even in the administration, one wonders how Wall Street could well lose as much of its luster to the booming of the non-coté world. Because the David Calhoun case is not isolated. Estimated to 100 the number of the leaders of very high level in some listed companies to have ceded to the sirens of the "private equity" on the occasion of takeovers of companies by their management.

The new power of attraction exercised by the non-coté leaders is exacerbated in the United States by local phenomena, say experts. The power of activists in companies listed, investors who challenged the directions of the managements, there is indeed first stronger that elsewhere, as evidenced by rebellions in Disney or Time Warner. The boards of Directors did not free hand when they fix the salaries of leaders. That might make David Calhoun ranging in UNV is estimated at more than 100 million in just a few years. Even if the American "OEB" of listed groups are very well paid, is rarely reached these levels.

It is estimated in America that, in a LBO, the managements account for 5 to 7 of the increase in the value of the company to the unwinding of the transaction and that one-third of this percentage goes to the CEO. 9-Digit earnings are therefore rare step, even if, recalled Josh Lerner, Professor of finance at Harvard, "they are not guaranteed as they depend to a very large part of the assessment of the development of the company".

More than margins of manoeuvre

In a country still affected by the Enron and WorldCom scandals at the time of the collapse of the dot-com bubble, it wondered also on the arsenal of tools, including the famous Sarbanes-Oxley implementation Act to restore confidence in the capitalist system. More that elsewhere, the return of regulatory stick has been severe in the United States. "Many leaders like to have more margins of manoeuvre in the non-coté and much more real opportunities to create value," says Josh Lerner.

The power of the non-coté in any case is such that the sector is starting to be the subject of some criticism. They accused in particular managers and investors to arrange the accounts in their group to minimize the value of their the LBO group or the maximize the reversion to the rating. It also accuses them of a certain hypocrisy when they justify a MBO by embarrassment there to manage markets very short-term monitoring, and return unbuckle the operation by reintroducing in the stock market some time after. "It is true that there was abuse, particularly when reintroductions in the stock market took place three years after," said Josh Lerner. That said, there are also these reintroductions in the stock market displayed superior performance to those of the average of the stock warnings.