Insider creativity

We have a rule preventing company insiders from trading their stocks on non-public material information.

This rule is frustrating to some insiders who otherwise could make millions of dollars. But what if there was a way around this rule?

Well, there is. Another SEC rule, Rule 10b5-1, allows company insiders to set up a predetermined plan to sell company stocks. The price, amount, and sales dates must be specified in advance. The rule assumes that insiders can’t possibly match these future trading dates with the release of material information. That’s an obviously wrong assumption in my opinion. Insiders are the very people who are most likely to be in a position to control when material information will be shared with the public.

And so, today, NPR reports that the Pfizer CEO implemented his 10b5-1 plan last August 19 and, the next day, announced positive news related to Pfizer’s work on a COVID vaccine. Pfizer stock soared. Then, this Monday, Pfizer announced that its vaccine candidate was found to be 90% effective. The stock soared again. Oh, and Monday was also the day that the CEO sold $5.6M worth of stock, as detailed in the plan filed in August.

Purely coincidental, right?

Of course we can expect the SEC to change the rule to prevent this type of abuse. And then we can look forward to the creativity of another insider.

Daily briefings

Trump’s refusal to recognize Biden’s victory means that Biden is not receiving the daily intelligence briefings that the president elect is traditionally entitled to.

This fact reminded me of The President’s Daily Briefing, a top secret folder delivered to the president each morning to help him (and someday, her) make sound decisions. Each time I think of this practice, I think about the types of informal daily briefings that a CEO gets to inform their decisions. What is in them, and what type of E&C information is included?

As an E&C professional, do you provide a daily briefing to your leadership? How about a weekly briefing? Monthly?

How often does your leadership want to hear from you?

Checkmate in three

Last night I finished watching the Netflix series The Queen’s Gambit.

The main character is a fictional female teenager from the ’60s. She’s a chess prodigy and climbs her way up the male-dominated chess world, eventually playing against chess grand masters. She goes on to beat several of them. Some gracefully shake her hand in admiration while others storm out of the room in embarrassment.

As the last episode concluded, I used my TV’s remote to switch from the Netflix app to ABC News, wanting an election result update. What I saw was a player realizing the inevitability of his loss, a player with no intention of gracefully resigning. Doing so would require civility and respect for the electorate, virtues he does not possess.

We’ll have to play this game to the end.

Masks and tone at the top

Ohio Republican Governor Mike DeWine wishes Trump “had a more happy relationship with masks.”

His state is suffering from its highest number of confirmed COVID-19 cases and DeWine understands how tone at the top works. When the President attends rallies in red states with tens of thousands of tightly-packed and unmasked supporters, what’s a Buckeye to do?

It reminds me of the day I walked into the office and my boss wasn’t wearing a tie. When I asked him why, he said his boss wasn’t wearing a tie the day before. His boss’ boss was the newly appointed CEO, who decided he wasn’t going to wear a tie to the office. By the end of that week, the entire corporate office was tie-less. No memos went out. We just followed the leader.

The fact is, we don’t need to be President or CEO to impact our corner of the world. We all have people looking up to us or depending on us. They watch our every move and will behave in ways they hope will gain our approval. It’s our responsibility to set the right tone.

Over 230,000 people have died of COVID-19 in the US. One thousand more just yesterday. Forty-seven percent more people were infected yesterday than 2 weeks ago (over 100,000 in one day).

Please wear your mask. It saves lives.

See you at the polls

If you are a US citizen and able, I hope you vote tomorrow.

You won’t be voting simply for a man or a party but for what you believe in. I know you believe in courage, fairness, justice, kindness, truth and wisdom because you’ve been reading this blog on ethical leadership.

And you won’t be voting simply on your behalf but on behalf of the disenfranchised, whether they be children or convicts or otherwise silenced.

We had four years to set aside one hour to vote tomorrow.

See you at the polls.

What’s it worth to you?

When should we act to prevent corrupt behavior in our company?

When an employee raises a concern? When an internal auditor includes an observation in a report? When outside advisors recommend that you strengthen your internal controls?

The makers of Jim Bean Bourbon chose to wait until they were fined $8.2 million by the U.S. Securities and Exchange Commission and $19.5 million by the Department of Justice.

Somewhere in your company, someone is asking you to spend money right now to improve your controls and your culture. And I bet they are not asking for millions.

When it’s OK to fail

If you are responsible for a space program, almost every element of it must be perfect. Nothing can go wrong with the rockets or the space suit. But if the astronauts’ chicken-noodle-soup-in-a-tube doesn’t quite taste like your grandmother’s recipe, it’s OK.

For every job, some things must be perfect while others don’t have to be. Not having to be perfect opens the door to more experiments, to more ideas. The more ideas you have, the more likely you are to have a good one. Good ideas are fun and exciting and give you a competitive advantage.

Look at what you are working on today. Does it have to be perfect? Can you let your team fail repeatedly until a good idea propels you forward? Do you have (and give) the psychological safety to make mistakes and learn and grow?

In other words, do you operate in a trusting environment?

Just in time

Imagine a world where we don’t put stop signs or traffic lights at dangerous intersections.

Instead, we provide training to all students entering high school, telling them where the dangerous intersections are, hoping they will remember when they first take the wheel a few years later.

Sounds ridiculous?

Yet, many companies train their new employees on antitrust or corruption risks months or years before these employees will attend a trade show or interact with a government customers. Wouldn’t it be better for the training to be provided just before every trade show or customer meeting – as if they were approaching a dangerous intersection?

New employees and new risks

According to this article, most homebuyers are not warned about the new flood or wildfire risk caused by climate change. They know a lot about their new home: quality of schools, access to public transportation, and presence of lead paint. But they don’t know about the rising risks associated with climate change, mostly because the law doesn’t require disclosure.

Which got me thinking: are companies adapting their new employee training and onboarding process to account for the new risks associated with the pandemic and social justice?

Is yours?

Room for real voices

It turns out that cows react more positively to a live human voice than they do to a recording of that same voice. It might be a stretch to assume that humans react the same way but I’m willing to bet $1 that we do.

Personally, I derive a great sense of satisfaction when my wife an I host friends at our house for dinner around the fireplace. That sense is greatly diminished when those friends are on FaceTime (because of COVID). Same people, same conversation, same fireplace in the background. But what we hear and see is effectively a digital recording of the real thing, and we simply don’t react the same way.

If your company is planning its office space for the post-COVID era, consider that, 6 months from now, employees might have a stronger desire for in-person conversations than they have now. Make sure there is room for them.