Fruits of Thought
The Dole Food Company put itself on the side of the angels with its recent announcement that it would start expensing stock options. Although there are technical questions about how this should be done, Dole put itself in league with America’s leading corporations such as Coca-Cola and General Electric in helping to restore public confidence in our markets by putting on the books a compensation expense that obviously belongs there.
If you are interested in the produce industry, you need to pay attention to proposals for reforming corporate governance and procedures at publicly held companies. Although consolidation gets all the attention, it is in many ways a sideshow. The fact that companies are bigger will probably not influence corporate behavior half as much as the fact that these bigger companies are likely to be publicly held.
This change is most pronounced in the retail end of the business, where it was once an industry dominated by regional chains, each controlled by a single family. Now it is an industry of publicly held behemoths, such as Wal-Mart, Safeway, Kroger and Ahold. Since our industry is increasingly going to be influenced by the behavior of publicly held companies, we have an interest in them being properly run and their accounting being clear. A few areas are crucial:
If we manage to have good corporate procedures for publicly held companies, it will make it easier for the produce industry to focus on adding value. If this is the focus driven by the growth of publicly held companies affecting the trade, the result will be a positive one for the business. pb