Coming to terms with public service

By DAVID MOON, Moon Capital Management
January 28, 2007

An interesting juxtaposition this week pointed out different ways to define the term 'public service' and balance an individual's civic and private investments.

On Monday, amid the tumult of the Knox County term-limits saga, TVA director Bill Baxter left the federal agency (annual revenues: $9 billion) after serving five years in the post, all but six months of them full time.

That made eight years of public service for Baxter, the other three as the state's Commissioner of Economic and Community Development. Assuming a typical 74-year male life span, that's more than 15 percent of his adult life working for the government.

That would be enough for me. I applaud the guy for returning to the place that creates almost every necessity and luxury we enjoy: business, the private sector.

In real life, Baxter is the chairman of Holston Gases Inc., a 50-year-old, family-owned distributor of medical, industrial and propane gas.

Our Founding Fathers assumed that it would be the rare public servant who would ' and should - make a career of working in the government. They further assumed that most officials would recognize this and self-limit themselves.

Madison and Jefferson did note that some legislators would be so excellent that their constituents shouldn't be denied the opportunity to return them to office. My good friends include many long-serving public officials, at all levels of government. Knox County is about to lose some effective, honest, dedicated public servants.

But I'm not sure if Madison and Jefferson would have anticipated that 90 percent of elected officials would have fallen into this extraordinary category.

Hallerin Hill once asked me what qualities I thought would best serve an elected official. I offered two: wisdom and humility.

Baxter apparently assumes that the agency in which he has invested a significant portion of his adult life can survive and thrive without him.

I think that meets the definition of humility.

* * * * *

In my column a couple of weeks ago about backdating stock options, I wrote that former Brocade Communications System CEO Gregory Reyes was aware of the company's practice but never received any of the backdated options. After hearing from Reyes' spokesman, I need to correct myself.

The prosecutors allege that Reyes was aware of the practice. Reyes strenuously denies ever backdating any options or condoning it. The prosecutors do not accuse Reyes of receiving any backdated options or personally profiting from the practice.

There's little question, however, that the other executive mentioned in the column, Steve Jobs, was aware of his company's practice ' yet he isn't facing down the barrel of a Department of Justice shotgun. Not yet, anyway.

In a December 2006 SEC filing, Apple Computer disclosed that it backdated options and that CEO Jobs had actually recommended favorable dates to use in redating some options to benefit the recipients. Initial reports suggested that Jobs was not a recipient of any of the backdated options, yet board minutes show that the Apple directors granted Jobs 7.5 million options at its October 19, 2006 board meeting.

Other records show, however, that there was no October, 19, 2006 board meeting. Jobs, who returned the 7.5 million once the situation became public, denies any wrongdoing.

David Moon is president of Moon Capital Management, a Knoxville-based investment management firm. This article originally appeared in the News Sentinel (Knoxville, TN).

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