LeMay's resignation comes only three months after his arrival and only nine months after Philip Rooney was forced out at CEO after replacing retiring Buntrock. Right in the middle of the crisis of confidence were investor giants George Soros and Lens principal Neil Minow. When LeMay's resignation came the stock market blew a gasket on WMX and closed the sale of the stock on the exchange. Finally, when it opened WMX dropped over twenty percent to 23 and many dollars were lost. Thus the reason for several class action lawsuits.
Stock and investment houses immediately downgraded WMX. Analysts lifted up the troubled accounting procedures and the troublesome and reform-resisting Dean Buntrock as problems. The Dow-Jones News Service reported that WMX financial reports "had been puffed up by nonrecurring gains that hadn't been disclosed at the time." No one suggested that the company was corrupt and greedy up to the highest executives as did Federal Judge Ordell Horton in his recent $91 million judgment against WMX. But the company did announce the hiring of an ethics officer. Maybe LeMay's resignation speech's referral to "different kinds of challenges" means the need for a CEO as the ethics cop! With the basic WMX business practice of the use of legalized bribes (called user fees) to governing bodies, LeMay may have found the deep corruption within WMX. Clearly WMX practices what the Bible calls bribery.
One security analyst stated that WMX had finally "come clean" about its accounting. He refers to the claimed illegal reporting of sequential increases in income, earnings and profit margins while concealing the fact that the reported income, earnings and profit margin growth were due to nonrecurring items. Evidently the sale of divested operations and the proceeds from the settlement of claims against insurance carriers were included in the regular income. Accounting practices require that such gains be reported as special income. If such activity proves correct, more WMX management heads will roll. The company will have to restate it recent annual report results. Finally, it is believed that WMX trucks, landfills and other equipment are overvalued - another way to puff up their earnings.
Acting CEO Miller announced a sweeping restructure plan which will eliminate 20% of the US management and support positions. This 1200 employee downsizing results from the elimination of over 300 "profit centers" of the company. Thirty two regions centering around big cities will become the new structure. Each region will be responsible for approximately $200 million revenue per year.
On November 10, 1997 Crain's Chicago Business editorialized with a headline, "Waste Management board must clean up after itself." Crain's states that "edgy shareholders and any serious candidate for the CEO job" will want total removal of Dean Buntrock from the board. "They fear he's standing in the way of significant corporate change, such as the aggressive management realignment that Mr. LeMay thought he was hired to accomplish." In conclusion Crain's say, "the board must be willing and able to back up necessary change, no matter how difficult it becomes." Also on the editorial page Crain's cartooned WMX with three recycle bins. The glass and plastic bins had the three circulating arrows on them The third shows the WMX logo in the bin and is called Waste Management. Two arrows are circular but one heads directly down. WMX stock did go down as has its credibility with the business community. Among the civil rights and environmental communities WMX had no credibility to lose!
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