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This is KZSU Stanford.

Welcome to entitled opinions. My name is Robert Harrison

and we're coming to you live from the Stanford campus.

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Those of you who follow this program with any regularity know where I stand when it comes to world communism.

In my lead-in to the Isaac Bible show back on February 14th, you heard me denounce communism as the greatest social, political, cultural, and ecological calamity to have befallen the 20th century, which was the century of all centuries when it comes to calamities.

That doesn't mean that I love Ronald Reagan or that I saw the collapse of the Soviet Union as an unambiguous victory of the forces of good over the forces of evil.

With the fall of the Berlin Wall in 1989, I was asking myself, what exactly won out over what?

And 17 years later, I'm still asking myself, what exactly won out over what?

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That's a very difficult, deeply vexed question. Was it the victory of freedom over tyranny of democracy over totalitarianism?

Of the dignity of the individual over course, collectivism? Yes, I suppose so, to one degree or another.

But most immediately and concretely it was the victory of capitalism over its principal ideological antagonist.

Capitalism had irreverently refused to obey the iron laws of history that the Marxists had posited as their founding dogma.

It showed itself to be ingeniously resourceful when it came to finding ways to evolve and adapt to changing circumstances.

After the collapse of communism, Francis Fukuyama declared that we had arrived at the end of history, by which he meant that liberal democracy,

let's call it democratic capitalism, had revealed itself to be the final goal or end point of the whole damn story, the final resolution of all the great conflicts of history.

It was a rash declaration to be sure and he got a lot of grief for it, but who knows? It may still turn out to be true or maybe not.

The problem I have with a debate about liberal democracy is the way so many of the ideologues here in America speak of democracy and capitalism in the same breath.

Or to be more exact, they speak of democracy when they really mean free markets.

Democracy is all too often just a euphemism for capitalism, but are the two so naturally entwined to the interests of capital naturally promote the cause of democracy, maybe, or maybe not.

One thing is sure, at the moment there are no counterforces that can effectively resist the global domination of capitalism.

That's good news for some, bad news for others, but the question here is, is it good news for capitalism?

Could capitalism in fact be more at risk now than it ever was, precisely because nothing stands in its way?

What if it turns out that the greatest danger to capitalism is not an external enemy, but as Marx himself predicted its own excesses?

Is it not the case that only capitalism has the power to destroy capitalism?

These are not questions I wish to engage merely in the abstract, already the term capitalism is hopelessly abstract.

But we are talking about when we talk about capitalism is basically a vast, diverse heterogeneous conglomerate of private and public entities, such as banks, corporations, and multinationals, with their attendant infrastructures.

Today, instead of talking about capitalism in the abstract, we are going to try to get inside the most basic unit of the capitalist system, namely the corporation, and to ask how corporations work, why they exist, what their moral and social responsibilities are, if any, and what kinds of challenges they face in their fierce struggle for survival.

Those of us in academia, especially those of us in the humanities and sciences, have very little idea about the external constraints or the inner workings of corporations.

And if you think that this is not a topic that should interest or concern you, think again.

Whoever you are, wherever you live, whatever your profession, your life is bound up with the fate of corporations.

Whether you are aware of it or not.

A non-profit organization like Stanford may be paying your salary or subsidizing your graduate school, but Stanford, like all other institutions in this country, is caught in the web of the corporate world.

Your pension plans are caught in the web of the corporate world.

Your health care and your parents' health care are caught in the web of the corporate world.

Your nation is caught in the web of the corporate world.

It is no exaggeration to say that these days the fate of human society as a whole, in one way or another, is bound up with the fate of corporations.

That's why I have invited to the show today a very special guest who knows the corporate world from the inside.

He's not a pinhead, like some of the rest of us, but an entrepreneur who has started and built several companies from the ground up.

His name is Drew Gibson, a principal of Gibson Spino, a real estate investment and investment company, which owned some 1,800 apartment units and has developed some 7,000 residential lots in the San Jose area over the past 8 years.

From 1973 to '85 Drew Gibson was president and managing partner of the coal companies in Northern California division, based in San Jose, which developed and managed over 9 million square feet of office.

A former Navy pilot, Drew, also serves as chairman of the San Jose water company, a publicly traded water utility listed on the New York Stock Exchange.

He's also director and co-owner of Celluphone, Inc., Los Angeles-based cellular agent, as well as a past director of America Bank, California and chairman of the Bank's Audit Committee.

A member of the world's president's organization, he was selected as the businessman of the year by Santa Clara County Magazine a little while back.

In addition to his capitalist credentials, I should also mention that Drew Gibson is a former chairman and current director of the board of the San Jose Museum of Art and a past member of the museum's collections committee.

He is a past recipient of the Community Service Award from the National Conference of Christians and Jews.

He is also served as a director and chairman of the San Jose Chamber of Commerce and has worked with many other nonprofit organizations.

Drew, that's quite a bio you have there. Welcome to our show. Thanks for everybody to be here.

Now you have an interesting and have had an interesting and somewhat unusual career here in Silicon Valley and elsewhere.

I didn't even mention that you remember the National Committee of the Whitney Museum of American Art, the Urban Land Institute, the American Leadership Forum, which was founded by John Gardner and many more other nonprofit organizations, two numerous to mention.

I think it's fair to say that you're a Bonafida capitalist with a concern for and commitment to the larger community.

I know how valuable your time is, so I really appreciate you're coming on the show to share with us your insider's perspective on corporations.

It's hard to know where to begin our conversation, Drew. Maybe we should begin with a statement by the great economist Adam Smith, who once declared,

I'm quoting, "capitalism needs a moral center and the rule of law if it is to thrive."

Just last week, as you know, the CEO of Enron, Ken Lay, and his associate's skill, were convicted of fraud and malfeasance for their role in the collapse of Enron.

In the case of Enron, at least it would seem that there was no moral center there, and that the rule of law failed to prevent the transgressions that led to the catastrophic meltdown of this company.

As a member of the corporate world and someone on the board of directors of various companies responsible for the governance of those companies, how do you feel about Enron?

Robert, I think you're like a lot of people in the business world. I'm angry. I'm very upset. I'm embarrassed. I'm embarrassed for the companies.

I feel very bad for the investors, but the people that learned their livelihood at Enron, I look at the utility paying customers, the state of California, and many other parts of the country that were duped by Enron and malfeasance and the way that they charge the states and different utilities for energy.

It's a problem that's not only Enron, it's a problem that's obviously by reading the papers. Several major corporations have been found guilty with their chief executive officer and their chairmen of being having a complete lack of moral direction, and certainly the rule of law failed.

The question there for us from the outside is Enron, what happened there? Is it a failure of the moral center or is it a failure of the rule of law?

Are these two things both necessary? Do they necessarily have to be co-present in order for corporations not to go over the deep end like that?

I think they both have to be present and clearly in the case of Enron and many other organizations that have come to light recently that they've lacked either one. The rule of law certainly failed the investors and the stakeholders and the companies in that they failed to notice what was going on and that the boards of directors of those companies were asleep at the wheel.

Clearly from a moral center, whether it starts at the top or the bottom, there was no moral direction to the company.

In your experience, Drew, do you think Enron, of course, is an exception of the magnitude of what happened there?

You were telling me off-mic that it's really an exception in the business world that you have this unraveling at the core of a corporation and that 90% or 95% of the corporations in America are not to be held up to the Enron example in their manners of procedure.

I'd like to ask you what is it in the 95% of the rest of the cases? What is it that keeps corporations on a steady queue?

I'd like to say that what happened in Enron was completely non-leaved but it certainly is not. I'm not going to hold up a flag that everyone is other than Enron is doing the right thing.

But I think generally people are honest, people are good, people care about the companies. They have a desire to make a company profitable but they also have a desire to make a company do well in their community and in their endeavors,

but they lost their way certainly in something like that. I think that when you have both a lack of appropriate application of the law as well as a lack of any moral direction whatsoever, you lose your lose fact and people were asleep at the wheel.

Here's a question that I'd like to take into this direction. A company like Enron or any company for that matter, what is its primary responsibility? Do you believe that a company's primary responsibility, if not sole responsibility, is to the shareholders?

Because it seems like that seems to be the governing dogma in business today. That the shareholders' king, the shareholders' interests is the only interest that really matters and all other considerations are irrelevant.

Robert, if you spoke to somebody on Wall Street today, they provided a great service in excess to capitalist and usual in this country, their eyes would glaze over if you spoke other than how fast it was growing, how big it was getting, how well they were doing.

What their return was, and not only in general, are a long life, they're very interested in what's going to happen next three months.

And that is driving, unfortunately, many companies to do things which are not necessarily the best interest, not only of their shareholders in my opinion, but they're not the best interest of other stakeholders like suppliers, customers, employees, etc.

And the communities that they work in LIVEN, and that's what's really saddening to me.

So do you think Wall Street has an inordinate influence? Obviously you do.

But can Wall Street really dictate what companies can do and can't do in their own governance and management?

I think the state to use a redictate, but in reality in many cases that is what's happening. We're in a world that's rapidly changing, we're not only in competition with maybe a sister company, a couple of states away,

companies are in competition throughout the world for what's going on. You see it in the automobile industry, you see it where else.

When Wall Street and the major banks tell you that if you don't grow at a certain percentage, if you don't get bigger, if you don't get better, if you don't keep going and produce good results, they're going to punish you.

And they're absolutely very, very efficient in punishing you. And unfortunately that's causing decisions to be made that affect not only the lives of the employees, but the lives of many people that are indirectly involved to make bad decisions.

In my opinion.

Yeah, you use the word stakeholder. Can you tell us what is the difference between a shareholder and a stakeholder?

Well, I don't think many people unfortunately own boards and in companies sometimes think in terms of stakeholders, but in addition to investors in the company, and most of these companies we're talking about are publicly held and they're traded on some exchange.

You have people that supply companies, goods and services. You have employees certainly that work there that are absolutely shareholders. I mean stakeholders, whether they're shareholders or not, through some type of pension plan, you have communities that companies reside, work in are perhaps areas where they're gaining natural resources. They're all stakeholders to a certain degree in corporate world.

Yeah, that's what I was trying to mention in my opening remarks. Even my majority of my listeners I imagine are not going to think that the corporate world affects them all that much.

But we are, I guess even here, a Stanford where stakeholders at a larger extent to what happens in Silicon Valley.

Well, absolutely, Robin. One of the things that I think people forget about whether or not you're working for a non-profit or you're working for a Stanford or you're working for the city of San Jose,

you're contributing probably to 401(k) plan or some other type of pension plan. Those organizations are choosing pension advisors to invest the money that's going to major companies that are doing things.

Who increase their return, but there seems to be a lack of empowerment on individuals to feel like they can have something to say about what's going on in certain organizations like CalPERS and CalSTRS are doing your relatively good job, but you look at some of the pension funds and some of the unions, etc.

They've done a very poor job and people are so focused on their return, they're not thinking about how the investment programs, in fact, are changing their own lives.

It's that focus on returns and as you were saying, even though it's not just the returns in a year or two, it's the next quarterly earnings in Wall Street and the expectation that there always has to be this continuous growth.

Is there anything you've been on the board of directors of many companies? Is there anything that a company can do or a CEO of a company can do given all this external pressure to gratify the interest of the company?

What can identify the interest of the shareholders, quarter in and quarter out? What kind of moral concerns can actually be cultivated and developed and elaborated when there's all this pressure brought to bear on the performance of companies?

Well, I may be somewhat of a loan voice, but I don't quite think so in this American leadership forum that you mentioned that was started by John Gardner that started Common Cause brings together corporate CEOs and nonprofits together to think about their community responsibilities.

I think it starts at the top perhaps and it sets a tone throughout a company, but you can do a lot of things. I think we are so narrow in our definition of success, including the quarterly reports that we forget what it takes to have a long sustainable company.

It used to be people would invest because a company was a good, solid, well-run company that would promise a reasonable safe return. Today people are investing how fast they can make a quick return that's higher than the normal.

What you can do, in my opinion, is you can encourage certain things such as community involvement. You can talk about green development, green resourcing. You can talk about the type of labor that's producing some of your goods and certain instances.

You can do a lot of things that give empowerment to your own stake holding group. You can source with your suppliers. You can certainly empower your own employees to get involved.

Not only perhaps dispersion, management decisions and involvement in the company to feel like they really are part of the organization rather than just dealing with a piece of paper or a job check every two weeks.

But I think they can really create a company that a long run will be a much more dynamic and probably much more profitable company on the long run and certainly more rewarding for all the stakeholders.

Despite the fact that the eyes on Wall Street glaze over when you talk about that.

It's a difficult thing to do, especially as a publicly traded company. Something you're starting to see now is more and more companies are starting to go private. They're actually buying themselves back to go private because they feel like they're pressured to make these quarterly decisions, which are not necessarily the best interest of the company and certainly all the stakeholders in a long term are being done correctly.

That's not always possible. It's very difficult to do and there are some great publicly traded companies that do that.

I think you have to have a lot of energy and one heck of a lot of brave got to be able to go to your shareholders and go to Wall Street and say we're going to make decisions based on the long term.

We're not going to make them in the short term as much.

In my parents' day, they would buy a stock primarily because it would not lose its value from that.

You gave me some materials to read up on because this is clearly not my field and I found this very fascinating document.

The Mike Thomas, the summary of a conference, this guy, Mike Thomas, who was speaking about the changing world of corporations and who comes out with recommendations for how the whole culture has to be.

The whole culture has to change from bottom up really and top down.

On page five, he says that we are in the last days of the industrial age that we are between a dying age and what is wanting to emerge in the corporate world.

He says that we are still clinging to highly mechanical concept of life, highly fragmented approach to living, namely specialization, a devastatingly narrow definition of success, individualism, consumerism, materialism, that faster is better, instant gratification, control mentality, that man has total control of everything.

Let's go through a few of these, especially the devastatingly narrow definition of success. Do you agree with that?

I absolutely do. I saw an ad recently from Vogue Magazine in a publication that it was saying instant gratification just got faster, a shop Vogue.

That the instant feedback, people are looking for bad expression, perhaps the fast buck, they are looking for a fast return, they want a 15% growth, they want a 15% return, they want to do better than the Fortune 500, they want to do better than this, and be 500, everybody is looking for a fast.

It grew up to this information age that you are seeing everything throughout the world instantaneously. You are having people, there is a lot of money, and a lot of money comes through the pension funds today, which no one is really determining perhaps how those funds should be invested.

But it is so narrow that definitely is success. No one is thinking about, is this a good company, is it a moral company? You do see some green investment for the first time in the last half a dozen years where some funds are specifically being raised to invest in what they would call green company.

Companies that really care about the environment, they care about what is going on, because we are using our natural resources at such a rate that is totally unsustainable, but no one is trying to focus on that. They are all looking for that quarterly return, unfortunately.

As a professor at Stanford, I also have a retirement plan. Should I know more about how my university invests its endowment and how my pension plan, what companies, my retirement plan is invested in?

Is there anything I, in other words, is there anything that I and my colleagues and even the students here at Stanford, for example, can do to influence the way all these investments are made on which we all depend?

Absolutely. I am very much a believer in the grassroots philosophy of management. That is where our country was founded on, and we have gotten away from that.

And that is why Wall Street has so much power today. That is why some of the major stock houses have so much power. The people doing all these funds. If individuals like you and others like you, that could be alums, that donates sums to the endowment of Stanford, it could be the students that are at stake holders.

It could be people certainly in the staff and administration of work here. That it could even be part of the community in the Surround's Stanford to ask questions about where and why and how are we investing in your funds.

I think Stanford actually has in some cases asked their funds not to, for instance, invest in South Africa a few years ago because of apartheid.

I think there is a lot to be done, but it is grassroots. You do need to come through and there is a matter of communications. That information is available to you if you would take the time to get together and say, "Hey, we want to hear from my representative of our investment group to tell us where you are investing the money and why." And ask the hard questions. I think it is very appropriate to do that and there is where the difference will truly be made where it will take some of the control out of Wall Street and put it more in the grassroots.

Of course, I have a certain cynicism about whether even my most morally committed colleagues when it comes to what we say would speak to an investment officer and hear from the investment officer that we are investing that money and your money in the place which is going to give us the greatest return on it as opposed to the ones that the companies that maybe have the money.

The most moral concerns, if it comes to choice between those two, is there something in human nature which will always opt for its own sort of, say, profane self-interest over the interest of the larger community.

This is a larger question I have asked you to do, which is how can a company negotiate these two interests?

It is obviously very difficult and I think there is always signways of changes of the way people invest and the way people do things. Why does somebody buy a prize today?

They spend more money than the car probably deserves and the standpoint of getting an immediate payback, doing it because they are making a statement.

They think long run, it is a better opportunity for the environment, so they make an individual decision.

Enough people buy the prize however and it will be produced at such a level that it will become work affordable and work better for the environment.

I think the same thing the companies can do, I think they can offer choices.

The dilemma for most of us is that we no longer are talking about our environment for what is happening next door, our own backyard or perhaps a competitor for your corporation that is two states away.

Now we are dealing with what is happening in India and in China and North Korea and other places that perhaps are going to create such a drain on some of our resources, dealing with human beings in such a way that is inappropriate from a wage and labor conditions standpoint.

It is very difficult to control.

If somebody doesn't start taking some leadership in the world but down to the individual, we are never going to get there and we are going to run at a time.

True, we are going to take a quick coffee break here, a kind of PSA for entitled opinions. We will be right back.

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Drew I promise that we were not gonna speak too much in the abstract, but we want to you know speak from the inside and

I I would like you to speak personally of how you manage

Your own companies and how you try to bring to bear these these various

Interests but first before we turn to the personal. Let me let me just ask a question about what is a corporation?

Is it anything? I mean is it more than a piece of paper?

For example for for for in terms of quarterly earnings or corporate earnings and so forth

Robert is something it's different to a lot of different people, but it certainly was formed as a as a way of

having some way of

Establishing yourselves in in the capital world for an entrepreneur or a group of people to start a product

It gives them some some liability protection from from personal

involvement

Financely but it is a way to raise capital

It's a way of it's a roadmap of how to accomplish a lot of things in our world today to me

It's a lot more than just a piece of paper though, and I think I think that there is a

Spiritual or pardon the word almost a heart to a company that that has to evolve for it to be really successful and not of the great companies have been that way

now you there's a lot of examples of

companies that were

corporate raiders and rapacious in the way they did their business and then later the owners perhaps would become great

philanthropy

donors, but I think the I think a company truly does have a

system within itself to

respect the dignity of the people the stakeholders to really look at more than just being a piece of paper and

That seems to have been forgotten unfortunately by some of the companies you've been reading about recently

So to get back to how you actually

Would like to run companies and have run companies can you can you tell our listeners a little bit about

what a CEO or you know a president can do in

order to more allies and remorillize the

operations and the procedures of business

Well, I'd rather probably not use the word more lies and has a lot of

limitations to different people, but I think there are some certain morals that an individual a CEO of board of directors

people should have followed to

Really offer respect a lot of it does go back to respect it goes back to entitlement it goes back to to

Empowering people to do things as individuals rather than just get a paycheck and go home

I heard that

Statement once that a corporation would just something where you check your heart in your car

You locked it up and you went into work your eight hours and you came back and got in the car

Your heart joined you again less of very sad. That's a very sad

connotation of a of a

Corporation in my own companies. I really believe everyone is

Do the same respect no one is really more important than someone else somebody may have a lot bigger paycheck

And some of the paychecks are quite egregious in my opinion, but I think as as much as anything else

Everyone whether it's the receptionist answering the telephone whether it's the guy that's cleaning your office at night

Everyone is due respect and I always tried my best to make sure that that was a

Number one thing within our company everyone should be respected and we had a we had a

Incredreul if someone was treated disrespectfully and

harassed by an outside person for instance that would call in and in harass or receptionist or someone that's on the job

And I personally would get involved. I would not accept that kind of behavior that they are if they're angry and they want to express it

That's certainly they're they're entitled a ability to do that

But if they have a real problem they can bring it to me not to somebody that's six months on the job just

I'm barely making it by a single mother for instance. That's just trying to work and make a paycheck

So respect is one the other is really trying to

give people a

Responsibility to do more than just do their eat a five job to really care give them some empowerment to make some decisions

Let them give them responsibility give some good training to them then let them do their job not stand over their shoulder

Trying to to guide them the way you would do it. Everything you would do something the third thing

It had a very big power in the companies I've been involved in is involvement in something outside of the company itself

It we feel like we felt like that our company's always had a responsibility to the community and

And and it wasn't necessarily that we set what that responsibility was but everyone that was interviewed especially on any type of a management level

Would be question in their interview process of what interests they had outside of the job requirements we would

Define the job description when they were hired that that one of their five perhaps goals that they would be reviewed on the next year

Would be how they were involved in the community did something outside of

Outside of the company itself and whether they were interested in Boy Scouts or whether they were interested in in the teaching of class

At night whatever it was we tried to back that and we backed it not only with

With encouragement we backed it with some of our donation

Money's for nonprofit to through them to give to their organization to give them some empowerment

That it had a tremendous effect. We were known for being involved in the community

We were known for being responsible citizens and it seemed to pay off in a lot of ways

And to me all these things

Actually have a bottom line that I think create a more profitable company if it's run well

Well, there you go a more profitable company. That's the the that one could say that

that

You know the profit motive is still the king there

I don't mean to be cynical about it. However, I'm looking at the this document I referred to and

It seems to confirm what you were saying that the more you trust people in your company the employees and so forth and

You use the word respect, you know the better performance you get

But of course I take you to be saying that it's not just about performance. It's not just about being

Getting finding ways for the company become more profitable that there has to be a genuine and not just rhetorical

commitment to a greater good than just

The company's profits. I get you right. You absolutely you know you actually speak a lot louder than your words and and I

Know in one of the companies involved in they they formed their own

They're found their own community involvement committee. They invest their own funds

We match it with corporate funds. They invest that they make the decisions and we have people in every rungs of that

Corporation involved in those decisions and it has a tremendous

Moral effect, but it but I say profitable it's profitable for for individual for feeling good feeling empowered going home and telling their kids

They're happy to be working there having they probably have a little happier when they come over work with their wives and family

They're they're involved. They feel like they're part of the part of the

the company and rather than just

The top five managers are just the investors from Wall Street. They're really part of that organism

And I think corporations really are an organism that you have to treat and nurture and and take good care of

ultimately

It is a responsibility of a company to stay in business

As if you don't stay in business. They're not gonna be any jobs and we're gonna have all these wonderful

moral

Delimacy even talk about but to do that you need to have companies that keep their employees have happy employees

productive employees and feeling like they're really part of the team

Do you think the Japanese are particularly good at that where for the Japanese the corporation is a family really you know

almost literally speaking you spoke about an organism but there they they managed to

induct their employees really into a

larger family unit

That seems to get the best out of them

There certainly is a lot of

enthusiasm for a

Company loyalty. I think part of that is systematic not necessarily just within the companies that per se

I think that I think the Japanese culture

creates that desire to be part of something they're gonna stay with and until the last few years

Leaving leaving a company after ten years would be and you know almost unheard of

I'm not very qualified to speak on Japanese corporations in

themselves, but I think excuse me true

It wasn't at the same here in the States for a long time that if you joined general motors

It was like you had a job for life or IBM a job for life

And it was really like joining a company and somehow this changed along the way where the emphasis on corporate earnings and

short-term corporate earnings made made jobs security a thing of the past and now

You never know when this can be your last day when you join a company

To a certain degree I agree with that what you just you said that but I don't I don't look back at the General Motors

Or Ford or what what's happened in the in some of the movements as someone that was like wanting to necessarily be there

It was truly strictly job security. I

Think there have been company and there are a lot of companies where people really care about their company and they're

Above and beyond that's why they rate the top hundred companies to work for in America

And it's usually not how much money they make necessarily they are profitable. They are good

It's the environment that they work in but I do think I think you've got to be careful and differentiate a little bit between job security and and a real sort of a

Organism of a company that people are really really enthusiastic about being part of because a lot of General Motors people that stayed there for 30 years and probably hated 29 of those 30 years. Yeah

I want to ask you a question about CEO compensation

You know for a lot of us lay people it's just

unbelievable and

and

somewhat obscene

When you read in the newspaper about what some of these see these compensation packages some of the CEOs of the big companies are getting

Do you do you have a particular view on that?

I agree with you. I think some of the some of the compensation packages are obscene

I think one thing that that the general public should be

Perhaps more aware of is that a lot of those large

Paychecks so to speak or not

salaries they were stock options and and the way our our system has

Evolved is that if a executive who joins a company perhaps at the embryonic stages

Get so many stock options. He's taking your risk. He's left a job that perhaps is very secure this extremely well-paid

He goes to a new company. He's not paid so much in salary, but he gets all these stock options

And that's very particularly true here in Silicon Valley

Well the the rules of counting are that after so many years

That executive has an opportunity to exercise a stock options or not if he doesn't do it he loses them

So if a guy's got some stock options it 10 cents and there were 50 bucks

If he doesn't exercise them at a certain time he loses them and he'd be throwing away a tremendous

Boone for doing so that being said just the two things are having stock options for the first time are starting to be reflected and

Expensed by most companies today and that's still a big debate

So that you can when you look at how well a company is doing they're expensive those options because they do cost a company

Secondly the other change is that what really gets me is to see someone get a huge salary our huge stock

When in fact the company is not doing well and they're not meeting a lot of a lot of

Perhaps litmus tests of how they should be performing but just because the guy next door got so much they're giving these egregious

salaries

Finally given that there's not that much time left through with on the future of capitalism in the broad picture that I began with

Can I ask you if you agree that maybe the

Most dangerous enemy to the capitalist system as a whole or the excesses of capitalism itself and whether you think that that dangerous is a real one that we're facing now

That's a big question Robert. I think

You know, there's an old saying that excess profits breeds ruin his competition

Well, I think in some cases in the case of in wrong others excess profits have bred

greed and greed and greed and dishonest acts and I

Was listening to one of your shows recently where philosopher here at Stanford was

when it was pretty

Negative about a lot of things about our system, but when asked if he would

Perhaps substitute it for a different system. He says no, I still love capitalism. I love this country because show me another

Show me another example that's better and I might go for it and I think there's a lot to be said

for the future capitalism

I think there's also a lot to be said for the negative aspects of capitalism that need to be curtailed

We're going through a phase right now where everybody's attention is on the in runs and the world comes and

Companies have been in the in the headlines recently, but I think I think all in all

You know, this is a very unusual company country here. I think it is the epitome of capitalism

Show me another you want to borrow money to buy a house in England or Germany in most places

You better have some wealthy parents that will sign on the

The slip of paper to guarantee that loan because you can't borrow the money that you can borrow in this country

Well, the question is not

Whether one can replace capitalism with a with a difference is that's not going to happen at least for the foreseeable future the question is

whether

Capitalism now in the wake of the collapse of the Soviet Union is and in the wake of of what I think was an irresponsible era of

Regulation whether it serves the interest of capitalism itself to have more regulation

from the forces from outside of the corporate world namely government and

community

Well, it certainly leads you to think that there needs to be more regulations

however as a as a person involved in companies with

credible amount of regulations including the Sorbanes Oxley and other other laws have been passed recently by the

Stuckie changes in the SEC

the amount of profits and money and and and human capital spent on

Government regulations is so great. I'm the chairman of a public utility deals with not only all those issues with the public utilities corporation and

the amount of time and effort we spend to follow through those

governmental rules is

astronomical so it scares me to hear about another layer of

Rules and regulations because every time you put those on and look at our tax laws a great example every time you do that

It just breeds another

Another group of advisors that come in and tell you how to get around those and change those and do something else and in fact

What we need to do is figure out to educate more of our boards of directors and CEOs and the general public investing public to

Hold to the fire the feet of the people that are running these companies to

Be more appropriate in their application of human endeavor and of perhaps a little more more realistic

Statement but running a company smart that really takes into account. Love the stakeholders involvement

You you use a term educate the board of directors

So I want to shift the discussion a little bit in the time that remains to the to education

Because I know that you've taken a lot of humanities courses here at Stanford in the continuing studies program

You've taken a couple of my own courses and in fact on Dante and Conrad and and and book atro and stuff

First personally what what is it that these continuing studies courses do for you or mean for you?

Do you do them just as a private individual or or does there are some kind of carry over into your professional life as well?

Well, I certainly have taken the courses which I've thoroughly enjoyed

at Stanford and other other books and other things that I've done

But I think they do carry on of a humanistic standpoint one of the one of the problems that we are so specialized in our world today

Whether you're a doctor or your professor or your a scientist or your an engineer a lot of times your whole academic

study

History is about that specific narrow field and unfortunately it doesn't

Lin went to look out about what's around you and for me taking some of these courses and whether I was studying South American

Literature or Greek philosophy or in your case Dante or bakashio

It gave me a relativity. I think guide post to see what was around me and that me lift my eyes up a little bit and get out of the mundane

Immediate what's gonna happen in the next quarter?

What's gonna happen tomorrow in the corporations and I think I was a better than have been a better leader for that

So do you think the university not only stand for it with the university in general plays a crucial role in the community the larger community in

Silicon Valley at least let's say I

really think it does and and the primary role it's played for the most part has been direct interconnect with

That's definable between the business school and the business community and perhaps engineering school and the scientific community

Etc, but there's a there's a greater role which is which is far there when that's accessibility to a lot of different minds to a lot of different

Resources available to the community that I think have a leveling effect in the humanistic effect on the community as a whole and I

would miss not being close to a

University and we've moved recently down to the Monterey area and there's two universities down there that are

Fairly close, but I miss that close association with with Stanford which I think leads a lot to a community to people look

To look without from themselves and get out of their own particular docket and see what's happening in the world

I asked also about your involvement in the arts because you've very directly involved with the San Jose Museum for example and

Whitney when did this

Interest in the arts and commitment to its promotion and diffusions begin for you

Well, then it didn't happen to my immediate family growing up

I grew up in Dust Bowl Oklahoma and didn't have a lot of exposure that I got to college and I was very interested in history and English

Things that I end up getting a letters degree which was an opportunity to take a lot of courses and a lot of different

environments where there was music and art and things that I had not been exposed to and I just it just took hold

I was just fascinated by it

my my

current

Life is is very involved around the arts. I find it's sort of a tactile way and I

If I go to a town, I'm going to I drag my daughter and my wife and I had got a museums

We love we love to see art. It's a great expression and whether it's listening to music or whatever your your love is going to theater

I think it it's a humanizing effect that

That we get so busy in a world that it brings you down to look at something in a different way to see way in artist paint something or sculpt something or

Express is something is so enlightening and just gives you a

Different perspective that you can't achieve anywhere else and how are things going at the San Jose Museum?

quite well, very exciting. We've you know, we've built a new museum down there about 12 years ago

It's been it's been a very very popular and a very successful non-profit in the San Jose area that that's pretty wide-reaching

There's some exciting things going on now

We've had the opportunity at the San Jose Museum to negotiate with the city for the old King Library by the Convention Center

which perhaps made triple our size and do some things and in the leading edge of art today which

involves a lot of

Digital art and a lot of visual art and things which which are new to

many viewers, but I think would build on the

Expertise in this valley and that peels a lot of the young people in this valley that are interested in those type of endeavors

Well, Drew has been a real pleasure to have you on you spoke about over specialization

I I plead guilty in the sense that I'm a humanist who is a

Literary scholar philosophy and so forth and since I've done this show

I've been trying to you know

Brought it out and talk about things where I really actually have no business talking and today is one example of that when we're talking about

capitalism corporations and and

The very difficult sort of constraints that a

CEO or someone who's running a company faces in terms of balancing the interest of

you know the investors with the interests of the community and and

Hiring procedures and so forth and I don't know how you do it, but it's very admirable the

the kind of

Concept you have of how to bring corporations

how to themselves and out of their narrow focus on the quarterly earnings

into the world of the stakeholders

The community and even for people like us here at Sanford so appreciate you're being on

Thank you very much. Thank you very much. Thank you. This is Robert Harrison for entitled opinions. Please stay tuned

The deck is going to be coming up with at the cafe Bohemian and we'll be with you next week

Well the stream's holding you learn as a load

Once therefore

Oh

Oh

Oh

Oh

Oh

Oh

Oh

Oh

Oh

Oh

Oh

♫ in turn he's gonna move on ♫

♫ In turn he's gonna move on ♫

♫ in the sun cloud. Let's now call the Navy. ♫

♫ in turn he'll move on ♫

♫ in the moon. ♫

♫ in the moon as hePRE ♫

♫ in the moon. ♫

♫ in the moon. ♫

♫ in the moon as he ( INDISTINCTLY PHONE RINGING)

♫ You got no one happy. ♫

♫ Got no breath. ♫

♫ in the moon. ♫

♫ in the moon. ♪

Are you going to know who you can go to bed?

Oh, when you're with the other riders,

then you're coming on-stroke.

♪ You're starting to slip in and slide ♪

♪ I don't know who you're going to be gonna. ♪

♪ So, ♪ Time me on a window, she left,

♪ You're starting me on a boat. ♪

♪ So, time me on a pond ♪

♪ Together be papin', ♪

♪ Some time me o'er gonna know it ♪

♪ Some time me o'er gonna look just like the hill ♪

♪ Spent time me on the bomb. ♪

♪ So, time me on a window, ♪

♪ So, time me on a pond ♪

♪ Some time me on a window, ♪

♪ Together be papin' ♪

♪ ♪ ♪

♪ ♪

♪ ♪

♪ ♪

♪ ♪

♪ ♪

back.

Come on.

So time to all come to give a few.

So time to all them to hear of us.

Time to heal the wounds.

And I'll be a little worse.

And I'll be a little worse.

So time to all come together for me.

So time to hold the load.

So time to hold the load for two other enemies.

And time to hear the phone.

So time to all come together for you.

So time to all come together for you.

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I'm not the star, and it's shooting up out of the ground

And don't have it being, from a loud guitar

And you just kind of get from the sound

Don't worry too much, it will happen to you

We want to use and we're playing with toys

And the thing that you're hearing is all in the sound

How the love of the happy boy

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You're a person who's just playing with you

High-sized while you're living beyond all your means

And the man in the suit has just bought the new car

From the top of the day, down your green

That's who you're very, very, very, very sad

That's a man who's got red, but I've found that didn't make any noise

But it's one of the more that they played into it

What the love of the happy boy

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If you had just a minute to breathe

And they'd granted you one final wish

Would you ask for something like another chance?

A something similar as this

Don't worry too much, it will happen to you

It's just your sorrows that you're in

And the thing that you love to say to you is all in the sound

How the love of the happy boy

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You're a person who's just playing with you

High-sized while you're living beyond all your means

And the man in the suit has just bought the new car

From the top of the day, down your green

But today you get away, that didn't make wish

I've found that didn't make any noise

But if I were to fall at the late you'd direct

What the love of the happy boy

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High-sized while you're living beyond all your means

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