Houston-based Waste Management named David P. Steiner to succeed A. Maurice Myers as chief executive officer. Mr. Myers will remain as chairman until November, when he will retire. Upon Mr. Myers’ retirement, board Director John Pope, a former president and chief operating officer of UAL Corp.’s United Airlines, will become the company’s nonexecutive chairman.
The company also named Lawrence O’Donnell III as president and chief operating officer. Previously, O’Donnell was executive vice president, operations support, and the chief administrative officer. Robert G. Simpson, formerly senior vice president and chief accounting officer, replaced Mr. Steiner as finance chief.
Mr. Myers was responsible for stabilizing Waste Management’s business after a 1998 accounting scandal rocked the company and foreshadowed similar scandals at Enron, WorldCom, and other companies. The 1998 scandal resulted in Waste Management declaring a $1.2 billion charge against earnings, removal of the company’s top executives, a Securities and Exchange Commission review, and dozens of shareholder lawsuits.

Houston-based Reliant Resources announced late Monday that federal prosecutors in San Francisco have informed the company that its trading unit subsidiary — Reliant Energy Services — and four former and current employees are targets of an impending grand jury indictment stemming allegations that Reliant Energy Services engaged in price manipulation on two days in June 2000 by curtailing power plant generation in California. In January 2003, Reliant Resources reached a settlement with the Federal Energy Regulatory Commission regarding the same matter that is the subject of the expected indictment in which Reliant Resources agreed to pay $13.8 million without admitting or denying that the actions in question affected electricity prices in any market or violated any law or regulation.

As this earlier post noted, the Harris County Flood Control District released its preliminary new flood plain maps for five Houston watersheds today. Here is the site at which you can check an address against this latest flood plain information. The new flood plain maps will have a major impact on real estate development decisions and on plotting better ways to protect Houston from catastrophic flooding similar to what occurred in 2001 during Tropical Storm Allison. Within the so-called 100-year flood plain — the area with a theoretical risk of flooding once every 100 years — flood insurance is mandatory and the City of Houston imposes development requirements such as elevating buildings or digging detention ponds. These measures can substantially increase the cost of development. The information released today is a draft version of the Federal Emergency Management Agency‘s Digital Flood Insurance Rate Maps, which are expected to be released in late spring. An appeals process will follow over the next several months before those maps become final.

This NY Times article describes the increased competition that Dallas-based Southwest Airlines is facing from other low-cost airlines and the steps that Southwest is contemplating to combat that competition.
A word to wise investors in airline stocks: Don’t bet against Southwest.

Here is the link. Here a few pearls of Buffet wisdom from the letter:
Mr. Buffett, the chairman of Berkshire Hathaway Inc., said he was finding it difficult to identify undervalued investments to add to Berkshire’s portfolio. Mr. Buffett suggested both stocks and bonds are overvalued, and he expressed regret about not dumping some of his holdings several years ago when the market peaked. “I made a big mistake not selling several of our large holdings during The Great Bubble.”
“Overall, we are certain Berkshire’s performance in the future will fall far short of what it has been in the past,” wrote Mr. Buffett. “Nonetheless, [Vice Chairman Charlie Munger] and I remain hopeful that we can deliver results that are modestly above average.”
Mr. Buffett criticized both excessive pay packages for corporate executives and compensation committees for not paying enough attention to the interests of shareholders. According to Mr. Buffett, directors of public companies and mutual funds need to have their interests aligned with rank-and-file shareholders “in a big way.” He pointed out that all 11 directors at Berkshire are required to hold substantial amounts of the company’s stock to keep their own financial interests consistent with with those of shareholders. Each of the directors purchased their stock in the open market because Mr. Buffett does not allow Berkshire to grant stock options or any other incentive-based compensation.
“The bottom line for our directors: You win, they win big; you lose, they lose big. We know of no better way to engender true independence,” Mr. Buffett observed. However, Mr. Buffett admitted that the Berkshire approach does not always work, even conceding that he has sat on boards of companies in which Berkshire had invested and has “remained silent as questionable proposals were rubber-stamped” by the boards.
Finally, Mr. Buffett used his letter to accuse the Bush administration of pursuing tax cuts that favor large corporations and wealthy individuals. “If class warfare is being waged in America, my class is clearly winning,” he observed. Mr. Buffett also pointed out that too few corporations and corporate executives were paying close to the 35% federal tax rate they should be. Aside from 1983, Mr. Buffett observed that the percentage of federal receipts from corporate income taxes last year was the lowest since data was first published in 1934. Mr. Buffett went on to contend that Berkshire pays its taxes and is almost certainly among the country’s top 10 taxpayers, paying $3.3 billion in 2003 income taxes, 2.5% of the total 2003 U.S. corporate income tax.

An old joke among insolvency lawyers is that hotels are such a bad investment that no owner makes any money on it until at least three prior owners have gone bust. This Portland Tribune article indicates that basketball arenas may have the same problem.

Tomorrow at around 10 a.m., Warren Buffett will publish his anxiously awaited annual letter to Berkshire Hathaway investors. This Wall Street Journal ($) article provides interesting background into the development of this annual event that literally can move markets, comments on Mr. Buffett’s investment moves over the past year, and reveals Mr. Buffett’s often pithy observations on the economy and the state of American capitalism, such as the following:

He looks for memorable phrases. In one annual letter, he complained that any director’s questioning of lavish options awards to CEOs was tantamount to “belching at the dinner table.” He moaned that misleading tax treatments have resulted in an “Alice in Wonderland outcome.” Last year, before New York Attorney General Eliot Spitzer launched a probe of the mutual-fund industry, Mr. Buffett wrote: “A monkey will type out a Shakespeare play before an ‘independent’ mutual-fund director will suggest that his fund look at other managers.” He called derivatives “weapons of mass financial destruction,” prompting a rebuttal from Federal Reserve Chairman Alan Greenspan.

Floyd Norris is one of the most insightful business reporters for the NY Times. In this column today, Mr. Norris raises the issue that, if former WorldCom CEO Bernie Ebbers really masterminded an elaborate fraud at WorldCom, why didn’t he sell his WorldCom stock before the stock price collapsed? Rather than getting out rich, Mr. Ebbers went from being a billionaire to being so deeply in debt that personal bankruptcy appears inevitable. He borrowed against his wealth, lived well, and overpaid on other investments. When WorldCom stock began to fall, margin calls forced him to sell one big slug of stock, but then he got WorldCom’s incredibly compliant board to approve WorldCom’s guarantee of his loans. Now, with most of his liquid assets sold, Mr. Ebbers still owes the company more than $300 million.
Interestingly, a very similar situation pertains to former Enron Chairman and CEO, Ken Lay, who was purchasing Enron stock up until the company filed its chapter 11 case in December 2001.

Houston-based Landry’s Restaurants $9 million remodeling plan outdueled a 35-year incumbent and hometown favorite Thursday to win a 15-year concessions contract for restaurant atop the Tower of the Americas, the 750 foot tower near the Alamodome in San Antonio.

On Feb. 25, Houston Mayor Bill White announced to much fanfare that ChevronTexaco had agreed to buy the former Enron building in downtown Houston. But this Chronicle story today indicates that the deal apparently has developed an unexpected hiccup: Mayor White’s eagerness to make the announcement of the deal may have undermined ChevronTexaco’s ability to receive millions in ad valorem property tax breaks from Harris County that it assumed that it would receive in deciding to buy office building. Ooops!