What matters most in the 06' contest between Repubican challenger Mike McGavick and Dem incumbent Maria Cantwell of Washington for U.S. Senate are issues and character. Issues such as as national security, social security, energy, immigration and federal spending. The character and integrity of the candidates, their campaigns and their supporters also matter. Now, a blood relative of some old-money Seattleites cum Cantwell and Democratic Party campaign contributors is the political proxy in a nasty bit of legal sniping underscoring McGavick's call for a new era of civility in national politics. Neil Modie of the Seattle Post-Intelligencer has more on the lawsuit that former waitress, University of Washington student and Safeco shareholder Emma Schwartzman filed against the company yesterday over McGavick's exit pay package.
Modie has done an exemplary job of connecting the dots, (In fact, as of 10:30 PST, 8/2/06, he has completely skunked the Seattle Times' Alex Fryer, whose take will doubtless be updated soon). So here goes, via the P-I's Modie, with some links I've woven in for additional background.
The plaintiff, Emma Schwartzman, 27, is a waitress, University of Washington student and a member of the Bullitt family, a wealthy business and political dynasty that gives generously to liberal crusades and candidates. She owns what was said to be "40 to 50" Safeco shares, which would have a total value of between $2,126 and $2,658.Her great-great-grandfather, C.D. Stimson, co-founded General Insurance Co., which later became Safeco. Her grandfather is Stimson Bullitt, a prominent Seattle lawyer and businessman. One of Schwartzman's attorneys is Steve Berman, a nationally renowned litigator of securities, antitrust and shareholder lawsuits whose name strikes fear in corporate boardrooms.
Knoll Lowney, another of Schwartzman's lawyers and a prominent backer of local liberal causes, denied the suit was politically motivated. But it was the second time McGavick's Safeco compensation has emerged as a potential campaign issue. The state Democratic Party filed a complaint with the Federal Election Commission in April, alleging that the compensation package, coming after McGavick became a candidate, constituted an illegal corporate campaign contribution from Safeco.
....Lowney said Schwartzman and her mother, Ashley Bullitt of Port Townsend, contacted him about bringing the lawsuit. Although Schwartzman's prominent relatives have been big donors to Democratic and liberal causes, Lowney said she isn't politically active.
According to Federal Election Commission records, Stimson Bullitt has donated $1,500 to the Cantwell campaign this year, and his sister, Harriet Bullitt, of Leavenworth, has given Cantwell $4,000 since 2001 as well as $25,000 last year to Washington Senate 2006, a Democratic fund-raising committee.
.....Ashley Bullitt couldn't be reached for comment. But on his liberal Seattle political blog, David Goldstein wrote: "Are you a Safeco shareholder? Are you (upset) by the $17 million golden parachute Safeco gave Mike McGavick after he announced his resignation? If you're both, send me an e-mail." Goldstein didn't return phone calls Tuesday.
Laughably, Schwartzman's attorneys claim the suit is "non-political and non-partisan." Additional evidence of the Democratic party involvement is that Schwartzman's attorney Berman has donated $37,000 to national Democratic candidates and committees in the last four years. Schwartzman's attorney Lowney is a law partner of Richard Smith. Smith is not only another campaign contributor to liberal causes and candidates in Washington state. As Stefan has reported, Smith also recently was the second stalking horse candidate to add his very common surname to the ballot in a state supreme court contest that pits strong conservative challenger Stephen Johnson against threatened liberal incumbent Susan Owens.
The Democratic-inspired lawsuit against McGavick was filed a day after former President Bill Clinton headlined a pricey fundraising event for Cantwell in Puget Sound and told a Seattle audience at a fundraiser for U.S. Rep Jim McDermott (D-7th) that Republicans "favor attack over argument," are "tribal," and "need a divided America to win."
Thanks for putting it all in perspective, Mr. President.
Posted by Matt Rosenberg at August 02, 2006 09:30 AM | Email ThisOh, please don't throw me in the B'rer Patch!
Posted by: Larry on August 2, 2006 09:48 AMAnd people can say this isn't politically motivated?
Posted by: swatter on August 2, 2006 09:57 AMBut I've got to say the civil suit itself seems reasonable. The huge severance package and the sweethart deal that Mike got when he voluntairly left Safeco clearly seems to squander the shareholder's money. What possible financial benefit would Safeco shareholders get from paying a CEO who is voluntarily leaving the company a huge compensation package in cash and stock options? The deel seems a bit like a giant campaign contribution.
Posted by: Sstarr on August 2, 2006 10:04 AMRumors swirled - including some on this blog site - in early 2005 about his candidacy because resignation would require him to forgo millions in stock option.
Now, he and Safeco ultimately - inappropriately and dishonetly, if not illegally - got the money into his hands after he'd resigned and after he'd begun campaigning in full.
Any way you slice it it's still head cheese.
Posted by: Bluneck on August 2, 2006 10:13 AMIf it's not politically motivated then the left will be filing a lawsuit over Maria's stock options, Terry McAuliff's $18M in Global Crossing stock, or Al Gore's reported hundreds of millions in Google stock.
Typical of the left. They hate anyone that earns a salary, but idolize those that are given fortunes, e.g, Ted Kennedrunk, Maria, Terry, Al, and the whole Bullitt clan.
Posted by: Obi-Wan on August 2, 2006 10:14 AM""McGavick campaign spokesman Elliott Bundy said the $28.4 million "was a combination of his compensation for leaving the company." He said $17,000 was earnings for the two-month transition period, $2.3 million was McGavick's bonus for 2005 "and the rest was (exercising of) stock options previously granted" over the course of his Safeco tenure.""
Sounds like when McGavick came aboard to Safeco, they offered him a stock rich deal to become CEO. This is natural with companies that are in the tank. After all, it gives whoever in charge more motivation to turn the company around if they own a portion of it. So when McGavick turned Safeco around the stock he owned went up in value, and the company awarded him more because of the quality of his work.
From all account I read, McGavick sold most of his stocks when he left Safeco, which is natural because that what happens with most companies and retiring CEO's.
So is this out of character from regular practices in other board rooms of America? No
If there was something of a hint of an illegal contribution, would of board members Gary Locke and Judith Runstad complained? Yeah, but they didn't.
Also, this happened months ago? Tell my Mrs. Bullitt and Co., why didn't you complain sooner when these actions at Safeco was announced last December. For the math wiz's at home that was 8 months ago.
Here is an idea, let get a bunch of us to buy RealNetwork stocks and file a lawsuit against Glazer for betraying stockholders 6 years ago with his Cantwell payoff.
They say it isn't political but they kicked out anyone associated with mcgavick from their press conference. As seen on the Mak report this morning.
Posted by: rob on August 2, 2006 10:58 AMHow is this connected to McGavick? I have no idea. The company paid him, he is no longer with the company. It is between SafeCo and Ms. Schwartzman. So why is McGavick's name being brought up?
PS remember when answering this question IT IS NOT POLITICALLY MOTIVATED!
Posted by: Fred on August 2, 2006 11:17 AMThe closing share price for Safeco stock on January 30, 2001 was $24.56.
The closing share price for Safeco stock on January 30, 2006 was $53.52.
This represents an increase of 118% in five years' time - about a 17% yearly increase.
I wonder if the plaintiffs will also be suing McGavick for his role in DOUBLING THE VALUE OF THEIR INVESTMENT IN LESS THAN FIVE YEARS!
BUT REMEMBER - EVEN THOUGH HE WAS THE CEO WHEN THE SHARE PRICE DOUBLED - HE WAS PAID TOO MUCH AND THIS IS NOT POLITICALLY MOTIVATED!!!
Posted by: Larry on August 2, 2006 11:31 AMOver and over, we see Dems acting despiccably like this, and then accusing others who aren't doing what the Dems are doing of doing what the Dems are actually doing. It's almost unbelievable. We have had it with their double-talk. When you see this kind of talk and behaviour, you really DO have to agree that liberalism IS a mental disorder.
Posted by: Michele on August 2, 2006 11:53 AMBtw, what does Gary Locke have to say about all this?? I think he should be asked by TV reporters
Posted by: Michele on August 2, 2006 12:11 PMThe leadership which McGavick provided increased shareholder value of SAFECO by orders of mangnitude over what we walked away with. It's important to put the numbers in perspective. 28 Million seems like a lot of money to most people, but compared to SAFECO's increase in net worth, overall value, etc. 28 Million is paltry.
The politics behind this attack are motivated and based on Marxist class warfare. By framing the issue to the average person as Mike has, and you do not, the appeal is to envy. The left hopes that the average person will somehow feel that either he or she is entitled to the same wealth or at least some of the wealth that Mike has, or that if nothing else, Mike should not get that wealth, if they don't get it as well. But, this ignores the fact that the average Joe is not a CEO, and is not capable of generating that kind of wealth for a major business.
We do not have claims on the rich. We absolutely do not. And to the extent that we let ourselves become envious of the rich is to the extent that we corrupt the morality of our own future success. I assume that those on the left who are hating Mike now for his 28 Million won't be saying the same thing about themselvs if and when they come in to 28 Million in the future. If David Goldstein ever becomes rich in radio entertainment, I hope that no one villifies his wealth as he has done with Mike McGavick.
The message fromt the left is that it's OK to succeed. But only if it does not exceed some vague threshold that is part determined by how much you succeed and part determined by whether or not they agree with your political stance, amount and type of your charity, etc.
Mike McGavick is justified in his pay, this is a petty political suit and it will never ever stand up to scrutiny in a court of law. This is just timed to extract political damage. Pathetic, and exactly the kind of tactic we expect from those who support Maria Cantwell.
And I might add, there is no mention of Maria Cantwell's own gains that came largely from an explosive growth in the stock market timed well with when she left Real Networks. If the left has got a problem with Mike's wealth, shouldn't there be some problem with Maria's wealth, or at least an acknowledgement of her wealth?
Progressive; Hypocrisy is thy middle name.
Posted by: Jeff B. on August 2, 2006 12:13 PMYou'd be desperate, too.
Posted by: jimg on August 2, 2006 12:18 PMThe question was basically "Why did Mike get so much money for leaving a company?" Part of the answer is above - bonuses, stock options, etc. - but a bigger part is the non-compete that he reportedly agreed to.
When senior executives leave a company there is a real danger they will be hired by a competitor. To stop this from happening, smart companies will often ask exiting executives to sign an agreement saying they won't work in the industry for 3 to 5 years. These companies compensate the executive for the time they are asking them to "sit on the sidelines."
Now, put yourself in the shoes of one of these executives. You're being asked not to work in your chosen field for 3 years. Wouldn't you ask for the company to continue to pay you for the time you can't work?
When you consider what Mike could make elsewhere after his amazing turnaround of Safeco, and consider options and bonuses he had coming to him, the comp package makes perfect sense and there's nothing outrageous about it. Is it a lot of money? Yes, but top flight CEO's that can save jobs and stockholder value like Mike did are worth it.
Exit packages similar to McGavicks are put into place for executives all the time and The suit is a piece of political grandstanding and it's absolutely absurb for anyone who watches management compensation to believe it would be anything else. I'm sure the newspeople that cover this story know it, and I'm actually surprised at least one of the local media outlets didn't go into depth about how silly this whole thing really is.
I find it interesting that on top of this baseless lawsuit hitting the news last night, we also suddenly got a barrage of Cantwell ads that ran in heavy rotation throughout the evening.
You might have seen these new political ads, they promise that Do-Nothing Cantwell is actually doing a little bit of everything. She claims to be "taking on the big oil companies to keep gas prices down." Well thanks for that Maria dear. At $3.25 a gallon, I guess I know exactly how affective you've been. (I can't help but wonder how much less gas would cost now if we were pumping millions of gallons a day out of a remote wildlife refuge in the middle of frozen tundar somewhere that none of us will ever see.)
I think we really ought to hold the Cantwell campaigns feet to the fire on this ugly bit of political grandstanding. It really does help to show her for what she is.
Posted by: johnny on August 2, 2006 12:25 PMMcGavick: He was responsible for leading the company and because of his efforts (or at least during his tenure for the extemely cynical)the company had a complete turn around, saving hundreds, if not thousands, of jobs.
Cantwell: A high level employee that had stock, like everyone in the company, that went up far too high due to the tech bubble. She sold when it was high.
You see, McGavick earned his, she got hers along with the masses, which is so much more 'fair'. She just had a little more than the masses, but still.
You see, it is all quite easy
Posted by: Fred on August 2, 2006 12:26 PMJimmie-how-ya-doin says it is typical of the left to dislike those with "too much money."
Which is it?
Posted by: Eric on August 2, 2006 12:30 PMI wish Mary Lane or Dino Rossi had ran for Senate instead - I'd vote for them anyday. Methinks this is yet another lowest common demoniator race.
Posted by: Republican for Cantwell on August 2, 2006 12:31 PMI wish some hotshot Republican State Senator like Finkbeiner or Esser ram, instead of a guy who pocketed tens of millions after laying off tens of people, if not hundreds.
Get a clue people. McGavick is no Rossi. We should focus on retaking Olympia because that'll have more impact and possibility than D.C. on our lives.
Posted by: Republican for Cantwell on August 2, 2006 01:06 PMI believe that staying home is dumber than dumb, that's why I prefer being a swing vote. Power trip a la power trip.
Think about it: There'll be around 80 percent partisan diehards and 20 percent undecideds/swing voter. It's the 20 percent that decides elections and I like being there.
Posted by: Republican for Cantwell on August 2, 2006 01:11 PMPuh. Leeze.
Leading the charge to not drill for our own oil - and then championing it as some sort of virtue is fighting for energy independence?
I could, could, see how some people could support Cantwell, but certainly not on that issue.
Pay attention.
Posted by: jimg on August 2, 2006 01:11 PMI believe that staying home is dumber than dumb, that's why I prefer being a swing vote. Power trip a la power trip.
Think about it: There'll be around 80 percent partisan diehards and 20 percent undecideds/swing voter. It's the 20 percent that decides elections and I like being there.
Posted by: Republican for Cantwell on August 2, 2006 01:12 PMThe left also dislikes those with too much money, as long as they earned their money through hard work and skill. The left also gets to decide how much is "too much money." To the moonbats, if a Republican has any money to his name it's because he's a greedy capitalist who cheated the working poor, and he should be taxed even more so the "progressives" can give the money to those that don't want to work. If a "progressive" (say isn't that the name of an evil insurance company?) has any money, it will never be deemed "too much money," because the "progressives" are deemed inherently pure and enlightened, therefore deserving of hugh sums of cash thrown at them by slobbering syphocants.
Posted by: Obi-Wan on August 2, 2006 01:14 PMWell, she supports biodiesel and other alternatives to petroleum. You can go HERE to see her Guide to Federal Biofuels Incentives for starters and also her Homegrown biofuels page.
But personally, I support widespread drilling for oil. You can thank the malicious 19 for that.
You won't get both with McGavick.
Posted by: Republican for Cantwell on August 2, 2006 01:18 PMsee post # 25 above.
Posted by: Eric on August 2, 2006 01:19 PMWhen someone goes out of their way to tell you they are a republican (or democrat) then tries to use those credentials to talk about how the other team is right, you know you have a liar on your hands.
"Republican for Cantwell" is like an over-excited transvestite in a tight dress - both obvious and embarassing.
If this is the best their side can muster, all those stories we've heard about Cantwell driving away good staff members must be really true.
Posted by: johnny on August 2, 2006 03:11 PMCan't you see that I'm just as believable as 'Republican for Cantwell'??
Posted by: Cantwell Staffer For McGavick on August 2, 2006 03:12 PMI have no problem with buisnesses compensating their executives however they want to. Mr. McGavick was hired by Safeco. He seemingly did a very good job, and increased the value of the company greatly. He then quit voluntarily.
What logical incentive did the company have to give Mr. McGavick any more money? A goodbye present? This is buisness. He did his job well, he got paid according to his contract, he left. That should have been it.
Instead, he got a huge gift. The lawsuit alleges that Mr. McGavick claimed to be working full time when he had already quit in order to recieve compensation that he was not eligable for. If the allegation is true that's defrauding investors of their money.
Posted by: Sstarr on August 2, 2006 03:31 PM"When someone goes out of their way to tell you they are a republican (or democrat) then tries to use those credentials to talk about how the other team is right, you know you have a liar on your hands".
And when they repeat the talking points verbatim, "Maria Cantwell's fight for energy independence". By doing what, using land that should be producing food and instead using it to produce ethanol and biodiesel? Brilliant.
Oh and by the way, why are the dems always "fighting" for things. I thought they were peaceniks.
Posted by: Bill Cruchon on August 2, 2006 03:32 PM'Exhorbitant' on what scale? 'Exhorbitant' to whom?
Please see my comments above about the stock price. So there's one shareholder who is upset (and backed by the Democrat liberal libelers). So what?
It seems that the majority of shareholders, the SEC, the Board of Directors (including Gary Locke, right) DON'T think his pay is exhorbitant after he DOUBLED THE STOCK PRICE!!
Isn't it their opinion that matters?
Sstarr,
You need some background in Corporate Law and Compensation before you make such charges. Your over-simplification of a complex legal environment is a great illustration of how little you REALLY know.
Mike is smart and kewl!!!!1111 I hope he wins ;P
Also, here in the 2000's, Mike's pay is not out of line for a top flight CEO that turnaround a failing company. (Particularly one in the insurance/financial space.)
We live in an age where high school students can go directly to the NBA and earn $80 million year one and even mid-level actors make several million dollars a picture for 6 months of work.
The difference is that Mike created shareholder value that was of benefit to the kinds of funds that hold insurance stocks (like for instance the vast union retirement account funds) and preserved good local jobs in an industry that could have gone away.
Posted by: johnny on August 2, 2006 03:53 PMJohnny's absolutely right. Go back and read some reviews of Safeco by the 'experts' in late 2000 and early 2001. Many of them were predicting the demise of Safeco - and thereby the loss of all those local jobs.
Instead, he saved the company, saved all those local jobs, and created vast shareholder wealth for mutual funds and local shareholders.
It's really sweet that you're engaging in such Monday-morning quarterbacking, though. Do you, perchance, own Safeco stock? Are you a Safeco customer? Or are you just getting upset about something that has no impact whatsoever on your life?
Posted by: Larry on August 2, 2006 04:03 PM" FROM 6/16, GOLDY PUT OUT THE CALL: "Are you a Safeco shareholder? Are you pissed off by the $17 million golden parachute Safeco gave Mike McGavick after he announced his resignation? If you're both, send me an email..." "
Posted by: Cheryl on August 2, 2006 05:08 PM" KING-5, ROBERT MAK VIDEO REVEALS: ATTENDEES KICKED OUT OF SCHWARTZMAN PRESS CONFERENCE; LAWYER TALKED WITH HORSESASS.ORG WEEKS PRIOR, LOOKING FOR SOMEONE TO BRING LAWSUIT... "
however, when libs worship their Hollywood rich gods, it's ok & "due them". what most folks dont think about is that those everyday "bad corporations" are usually in their retirement holdings; so--should we hate business? it is our nest egg for most people; let's focus on the crimes of the individuals & crooked politicians, not the misdirected guilt & socalism directed at corporations and small business; need a reminder? just look at the old Soviet Union's ideas--bare shelves & rationing for the masses; goodies for the political;
Posted by: Jimmie-howya-doin on August 2, 2006 07:43 PMYep, the Bullit women have been on the front line of liberal(feminist) issues for more than 30 years. Too bad they did not stand at the place with a moral compass, or the will to defend a mutually agreed upon ethics.
Posted by: annelee on August 2, 2006 09:02 PMPato el gato
Posted by: Pato on August 3, 2006 06:13 PMOh it must be nice to be as rich and famous as her highness, or lowness!
Posted by: GS on August 4, 2006 12:18 AM