As noted in this previous post, University of Illinois law professor and prominent blawger Larry Ribstein has become NY Times business columnist Gretchen Morgenson‘s worst nightmare — a sharp mind on business issues exposing the vacuous nature of her columns.
The subject of Professor Ribstein’s latest analysis is Morgenson’s column ($) this past Sunday, in which she addresses the rather tame fight for three board seats at the Acxiom Corporation, an information management company in Little Rock, Ark., where Acxiom’s CEO, Charles D. Morgan and Acxiom’s largest shareholder, ValueAct Capital, have squared off over ValueAct’s allegations that Morgan has improperly billed Acxiom for his personal pursuits (such as sponsoring NASCAR teams and leasing a private jet from Morgan’s company), stacked its board with pals and rejected its value-enhancing management ideas. Ms. Morgenson is particularly troubled by Morgan’s company expense account, which is assuredly greater than Morgenson’s at the Times:

Since 1999, for example, Acxiom has spent $7.6 million to sponsor a celebrity Nascar truck racing team and Grand American road racing team, both of which were controlled by Mr. Morgan and his son Rob until 2004, company filings show. Those documents also show that from 1999 to 2001, Acxiom paid a company owned by Mr. Morgan’s wife, Susie, a former Miss Arkansas, more than $450,000 in fees for personnel staffing services. Mr. Morgan’s son-in-law, Rodney Ford, has been involved with three companies that have sold services to Acxiom in recent years, including CognitiveData Inc., which has current dealings with Acxiom.
Then there’s the jet, a Falcon leased by Acxiom from MorAir, a company owned by Mr. Morgan. In addition to all the trips to Mexico, flight records show that the jet has made eight trips to places where Grand American road races were held. Only four of those races were sponsored by Acxiom.
Since 1999, Acxiom shareholders have paid approximately $900,000 a year to lease the Falcon jet from Mr. Morgan’s company, filings indicate. But only once, in the 2005 proxy, has the company noted any reimbursement by Mr. Morgan for the “incremental cost” of his personal jet use ó $112,000 in 2004. Dale Ingram, a company spokesman, said that Mr. Morgan reimbursed the company for personal use of the jet in the amount of $83,000 in 2002, $79,000 in 2003, and $140,000 in 2005.
Mr. Morgan earned almost $1 million in salary and bonus last year. He owns about 6 percent of Acxiom’s stock outstanding; in 2004, the year he bought and began developing the Cabo San Lucas golf course and resort property, he sold Acxiom stock worth more than $20 million. [. . .]
The company also noted that in addition to a rising stock price, it reported record revenue, earnings and free cash flow in the third quarter, its most recent.
But questions remain. Like where are the shareholders’ race cars? And where are the shareholders’ planes? Inquiring minds at Acxiom may want to know.

In sum, Morgenson contends that Morgan makes too much money and spends too much company money on car racing, private planes and relatives. Picking up on her “inquiring minds” reference, Professor Ribstein disassembles Morgenson:

So Morgenson has discovered agency costs, though perhaps a hat tip to Adam Smith would be in order. But she’s forgotten a cardinal rule of journalism. After you write the entertaining story about the fat cat executive, you’re supposed to come up with some simplistic solution. [. . .]
Morgenson almost stumbles over a solution. She notes that ValuAct had tried a tender offer but the board rebuffed it. What about a hostile tender offer? Now the offeree would be putting its cash on the line, and offering the shareholders tangible evidence that it’s got something better ñ a higher stock price!
But you don’t see Morgenson or her ilk ever going that route. In her drumbeat of weekly columns about one bad executive or the other, there’s never a hint that the market for control might be a solution. The populists didn’t like all the money Milken and his breed made in the 80’s throwing out the overpaid executives. These barbarians weren’t the nice, wholesome union/shareholder activists a proper journalist could bring home for dinner.
More fundamentally, it’s not clear what Morgenson even wants. Does she want more profits ñ a better bottom line? Going too far down that road might not suit some of Morgenson’s friends. Maybe it’s all about the perks, not the management. Oddly, the ValueAct principal recognizes that Morgan “has created value for Acxiom shareholders.” Should the shareholders then dump Morgan just because he cares too much about race cars?
One last question: is Morgenson the most insightful person the NYT, one of the world’s leading newspapers, can get to fill its valuable Sunday business space? Inquiring minds want to know.