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CNN Saturday Morning News

Interview With Roben Farzad

Aired August 03, 2002 - 08:16   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
LARRY SMITH, CNN ANCHOR: It's not exactly the image that corporations like to see on national TV, their executives being led away in handcuffs. But it's a scene we've seen more than once lately as the list of corporate scandals grows. In such an atmosphere, is there anything a company can do to repair its corporate image?

Well, let's ask Roben Farzad of "SmartMoney" magazine. He joins us now from New York.

Good morning, Roben.

ROBEN FARZAD, "SMARTMONEY" MAGAZINE: It's a pleasure, Larry. Thanks for having me.

SMITH: Oh, hey, our pleasure.

First off, let's talk small scale. What can some companies do on a small scale to help repair their image?

FARZAD: Well, on the small scale they have to reconsider their relations with the consumer. A lot of these companies got fat in the '90s on unscrupulous practices. If you look at the credit card providers and price gouging and ridiculous interest rates or the telecom carriers like WorldCom and slamming, now the consumer has the upper hand and with consumer sentiment being where it is, companies have a lot of ground to catch up on.

If you take an example like the Hair Cuttery, the Hair Cuttery is offering free haircuts for foster children in Florida. These are small baby steps that companies can take to, you know, make overtures back to the customer.

SMITH: Now some other companies, you mentioned Coke, Tylenol, Xerox, on maybe a bigger scale, keeping their scholarship programs intact.

FARZAD: Yes.

SMITH: Again, things to improve, try to improve upon their standing in the minds of the consumer. What are some other large scale things that they can do?

FARZAD: Well, they have to do right by their employees. If you look at the WorldCom debacle, not only were employees urged to buy stock when management knew the trail, the train was about to head off the tracks, but they were unceremoniously dumped when the boardroom was paying out these outrageous retention bonuses during the bankruptcy proceedings.

You can compare that to a company called Malden Mills. This has been celebrated a lot in the media recently. They're the maker of Polar Tech fleeces and the CEO, Aaron Feuerstein, kept all of his employees even after a factory fire nearly took the company down in '95. And now he's staying on through old age to make the employees whole and make sure that they don't end up with worthless pensions and end up on the street without jobs in a very tough environment.

SMITH: The kinds of stories that we like to hear, especially with times like these. Are there certain kinds of companies that need to rehab their image more than others?

FARZAD: Yes. You can argue that the publicly traded companies, the ones that have listed stock out there, which really across-the- board has been hammered, they have to come back and think about this on a three-pronged effort -- how do I reconnect with my investors, with my employees and with the customers?

If you're a private company or a mom and pop business, your reach is more limited, one would think, and you have to worry about things on a smaller scale.

So the Fortune 500, the stocks on the Dow 30, the S&P 500, all these companies have to make up for lost ground.

SMITH: OK, you've got your brain trust together, you've got your plans on how you're going to do this and then maybe it doesn't work. How effective is repairing corporate image?

FARZAD: I mean it's one cog in the grand scheme of things. If the economy turns around, people are not going to emphasize as much, as they're doing now, on corporate governance and shenanigans. They're going to concentrate on the market again. People want a nicely performing market. They don't want to have to worry about these CEOs being taken out on perp walks.

SMITH: You mentioned in your magazine that companies have to unwind what was wound up in the '90s. Explain that.

FARZAD: Yes, that, a lot of bad will, if you will, during the heyday of the dot-com bubble and general excess across-the-board. I gave the example before with credit card providers. A lot of these sub prime lenders went out, offered, you know, zero percent interest rates how many months and then came back and hit you with these hidden charges. There were tons of complaints. The attorneys general got on board, the FTC. And that's easier to do during flush times. But when everybody seems to be down and out, there seems to be this sense of comeuppance and they have to come back and first reconnect with the consumer before they take on any other ambitious marketing efforts.

SMITH: Well, part of this effort includes maybe more of a checks and balances within the corporate structure. You mentioned that WorldCom, Ken Lay of Enron was telling people to buy stock as he was dumping it, actually. Is it, will there be like a checks and balances to kind of not only the CEO, obviously, you know, looking over the company, but also someone checking the CEO and the top guys in the corporation?

FARZAD: Hopefully. A lot of the labor unions now are pushing for independent people on the board of directors, not these people that put out rubber stamp decisions for the CEOs and are likely fattened on stock options. And in addition to that, outside of the corporate realm, the government is finally cracking down on this and they're becoming much more vigilant than they've been in the past 10, 20 years due to popular voter sentiment in this case.

SMITH: OK, well, long road ahead.

Roben, thanks so much for joining us this morning.

FARZAD: Thank you, Larry.

SMITH: Roben Farzad with "SmartMoney" magazine. We'll talk to you again some time.

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