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Executive Sweets (and Sours)

Jason Stipp

Jason Stipp: I'm Jason Stipp for Morningstar, and welcome to the Friday Five. It's Executive Suite Week here on the Friday Five. We're going to look at back at five sweet--and sour--management-related news stories from the past week.

Joining me as always with the Friday Five is Morningstar markets editor, Jeremy Glaser. Jeremy, thanks for joining me.

Jeremy Glaser: Always a pleasure.

Stipp: So what do you have for the Five this week?

Glaser: Warren Buffett released his annual letter. Wal-Mart raised its dividend. Domino's is having some interesting plane issues in our Footnote of the Week. Health care takes a step forward thanks to the executive branch. And finally, we'll take a look at a FUN SEC filing.

Stipp: I always like to go to Omaha, so let's hear what Buffett had to say.

Glaser: In his annual letter, where he always has some interesting tidbits, Warren Buffett talked a lot about how CEOs that are rewarded so handsomely for doing well, also need to be punished when things don't go so well. There seems to always be a retention bonus, and you always get a gold parachute, even if the company basically dissolves in front of you.

He thinks that CEOs need to take responsibility for the actions of their companies. He holds the CEOs of his subsidiaries to that standard, and I think it's something that he'd want to see happen across the entire economy.

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Stipp: Well, it certainly seems like CEOs might have been a little more careful for their shareholders if they knew their jobs were on the line. Although I guess they could also work at Wal-Mart as a greeter if they got fired or something like that...

Glaser: Yeah, exactly. And speaking of Wal-Mart, they actually raised their dividend 11% this week, which is the continuation of a string of dividend increases every single year since they went public.

I think it shows that that boardroom is really committed to returning capital to shareholders when appropriate. And if you were worried last week that they were spending too much money on little side projects like online web video, there's still plenty of cash to around back to shareholders.

Stipp: And on the flipside, questionable management decisions. Something was baking in a footnote for Domino's this week. What was that?

Glaser: Yeah. In our Footnote of the Week, the Michelle Leder's team found that J. Patrick Doyle, who's the new CEO of Domino's, is getting a pretty sweet deal when it come to corporate jets. Although it says in one part of the proxy that he's limited to 35 hours of non-business use, it then later defines any use of the airplane by him as business use.

So he essentially could have unlimited use of his private jet whenever he wants. I guess it's a lot harder to "avoid the Noid" nowadays. You need a private jet to do it.

Stipp: [laughs] Someone who flies around in a private jet and probably deserves to is President Obama. He's the CEO of America, you could say. He was trying to take some action this week on the health-care front. What's your take on that?

Glaser: The executive branch has been making a pretty big push to finally get health-care done. While before it seemed that they were outsourcing a lot of things to the House and to the Senate, they've put their stamp of approval on what they think is the final bill.

President Obama got in front of America and said, "We need yes or no vote on this particular bill. The negotiations are over, and we just need to move forward."

Not 100% sure that they have the votes in the House yet, but it really shows that one way or the other I think we're finally going to get a conclusion to this in the next couple of weeks.

Stipp: Certainly the markets and the health-care sector will at least appreciate a little more clarity one way or the other.

Glaser: Exactly.

Stipp: For number five, you said we have a "FUN" filing. What is this--a Tilt-a-Whirl or a roller coaster? What are you talking about, Jeremy?

Glaser: It's almost a roller coaster. Cedar Fair, which trades under the ticker symbol FUN, released a company presentation this week that was a little bit different than most that you see.

The company is currently trying to get shareholders or unitholders to approve a transaction so they'll get bought out by Apollo Management, which is a private equity group. Shareholders are a little bit skeptical that this private equity firm is giving them all of the value that they deserve.

So management, instead of talking about all the great things that they've done, they had a lot of candor and talked about some of the mistakes they've made and a lot of the challenges they're facing. And how shareholders would really be a lot better off by taking this deal.

I'm not sure exactly who's right on this side, but it's certainly unusual to see such a presentation come out of a company.

Stipp: "We've done such a bad job, you really just need to sell." [laughs]

Glaser: Exactly.

Stipp: Thanks for you management insights, Jeremy.

Glaser: You're very welcome.

Stipp: For Morningstar, I'm Jason Stipp. Thanks for watching.