When Shareholder Value and Community Interests Collide

It`s not particularly gracious of me to say so, but I was singularly unimpressed with the comments of Winston-Salem, North Carolina Mayor Jack Cavanagh after Wachovia`s announcement that it was being acquired by First Union and that the merged company would be headquartered in nearby Charlotte. “It must have taken months and months to put all of this together,” said Cavanagh, “We were hearing about all the good things they`re going to do for the community, and all the while they were selling us out.” Well, maybe. Yet big banks like Wachovia are public companies with demanding shareholders, and when faced with everyday business decisions, it`s the shareholders whose interests are paramountu00e2u20ac”not those of mayors, cities, or even employees. And when spurning an attractive offer by putting the interests of a city ahead of the financial interests of shareholders can result in shareholder suits against the bank and its directors, well, maybe those shareholder interests better not get lost in a burst of civic boosterism. Now, having said that, I hate it. And I hate it not just because I think Mayor Cavanagh forgets the corporate generosity that has for generations made Wachovia arguably the most civic-minded bank in America. I hate the fact that the consolidation of our industry can turn a beautiful, old, historic city like Winston-Salem into the “too bucolic” town Ross Johnson described when he jerked RJR Nabisco out of there in the eighties. I hate the disruption about to befall the 5,000 Wachovia employees and their families in Winston-Salem, most of whom I`ll bet find that bucolic setting a great place to call home. I hate the fact that I just know that United Way and scores of North Carolina charities won`t receive the amount of corporate and employee contributions that First Union and Wachovia have historically made as independent companies. I hate all these accoutrements of being a public bank in a time of change in our economy. I just don`t know what to do about it. Banks have led the way in charitable giving all across our country, and the real story of what impact consolidation will have on that has yet to be written. One story I especially like, though, can be seen by going to www.enbpb.com. That`s the website for the Enterprise Bank of Palm Beach, in Florida. If you`re a shareholder of that bank, you buy into the bank`s stated policy of donating 25%u00e2u20ac”that`s right, 25%u00e2u20ac”of pre-tax earnings to the American Cancer Society. Director Warren Mosler pushed through the idea upon buying the bank six years ago, and under the leadership of CEO Randy Ezell, this bank gives back to the community in a planned, growing, and totally innovative way.

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