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Five Things You Need to Know: Chrysler Taps Severance-Package Expert to Boost Turnaround; Bear Stearns Axes Spector; News Deflation; Working-Class Millionaires; The Rich Take Risks!


What you need to know (and what it means)!


Minyanville's daily Five Things You Need to Know to stay ahead of the pack on Wall Street:

1. Chrysler Taps Severance-Package Expert to Boost Turnaround

Robert L. Nardelli, the former chief executive of Home Depot (HD), is taking the reins at Chrysler (DCX), according to the New York Times.

  • Chrysler's current chief executive, former Los Angeles Dodgers manager Tommy LaSorda, will stay on as president and vice-chairman and act as a consultant to Cerberus, the private-equity firm that controls the company.
    Hoofy and Boo Look at Chrysler's Recent Management Shakeup

  • Nardelli is perhaps best known for turning around and whipping into shape Home Depot's Human Resources and Payroll departments, orchestrating a $210 million severance package that included $20 million in cash.
  • The move to acquire Nardelli's Human Resources acumen and enormous severance package receiving skills comes at a good time for Chrysler, which lost more than a billion dollars last year.
  • According to news reports, Nardelli has reportedly agreed to take the Chrysler job for an annual salary of just $1 (one) dollar.
  • However, if Nardelli is able to engineer the same kind of quick severance package and golden parachute turnaround he pulled off at Home Depot, it's quite possible that the severance package and cash payout he receives when he is ultimately fired from Chrysler could top $250 million.

2. Bear Stearns Axes Spector

Bear Stearns (BSC) over the weekend ousted Co-President Phil Spector due mainly to credit-market losses tied to the slumping U.S. housing market and his freaky hairstyle that never quite fit the Bear corporate image.

  • Phil Spector, 49, was responsible for fixed income and asset management, and for creating the famous "Wall of Subprime," a technique yielding a dense, layered maze of leverage and illiquidty.
  • Bear Stearns shares have fallen nearly 40% this year and shareholders and analysts were beginning to question whether Spector, known for producing such hits as "You've Lost That Loving Feeling" by the Righteous Brothers and the 1998 surprise hit, "Refusal to Participate In the Wall Street Bailout of Long-Term Capital Management," had lost the magic touch.
  • In a related story, Bear Stearns Chief Executive James "Charles Foster" Cayne, perhaps best known for having the worst handicap of any golfer who is transported to the golf course by a helicopter, reportedly told a CNBC reporter that he has "no desire to step down" from his position, according to Bloomberg.

3. News Deflation

Beginning today, the New York Times is reducing the size of its pages in an effort to save money.

  • The change, which the "Gray Lady" announced would take place a year ago, will result in cost savings of about $10 million per year, spokeswoman Diane McNulty told Associated Press.
  • The new, sleeker, modernized version of the New York Times will be vastly different from the bulky newspaper of years-gone-by.
  • What's the new New York Times look like?
  • The old, 13 1/2-inch version of the newspaper that was printed on chemically-processed and treated wood pulp sprayed with printer's ink will now be made from a a 2.16Ghz Intel Core 2 Duo and come complete with a 11GB 667 DDR2 SDRAMm 2x512, 250GB Serial ATA Drive, NVIDIA GeForce 7300 GT 128MB SDRAM
    SuperDrive 8X, an Apple Keyboard & Mighty Mouse and Mac OS X, a 24-inch widescreen LCD screen, AirPort Extreme and feature Bluetooth 2.0 + EDR so that you can read the paper anywhere a wireless Internet connection is available.

    Revamped New York Times (also available in Windows format!)

4. Working-Class Millionaires

Look dude, you may think being a millionaire is all cake and cookies, but it's not. It's really, really hard!

  • The New York Times over the weekend took at look at how crappy it is to be a millionaire these days... especially in Silicon Valley.
  • "Silicon Valley is thick with those who might be called working-class millionaires - nose-to-the-grindstone people," the Times reported.
  • To this, we have three words: It's About Time.
  • It's about time someone focused on the plight of the millionaire in this country.
  • Gary Kremen, 43, the founder of, told the Times, "You're nobody here [in Silicon Valley] at $10 million."
  • "People around here, if they have 2 or 3 million dollars, they don't feel secure," David W. Hettig, an estate planner based in Menlo Park, added.
  • The problem of economic security doesn't just affect millionaires, however.
  • It also affects the enormous number of thousandaires in this country, not to mention the, literally, millions of people who can be classified as rising, or in some cases falling, thousandaires; people we refer to as "hundredaires.

5. The Rich Take Risks!

Related to the time coverage on the plight of working-class millionaires was a sidebar piece yesterday on how the rich are different. And how are they different (besides having money)? Turns out they are willing to take risks. Huh.

  • "The thing that wealth buys you," Umberto Milletti, an entrepreneur based in Silicon Valley with a net worth of roughly $5 million told the Times, "is the freedom to take risks."
  • So as the rich set about on whatever adventurous courses of risk-taking may move them on any given day, millions of not-rich people continue to play it safe by being poor.
  • Yes, for every tale of risk-taking by the rich recounted in the Times - take the guy who walked away from $800,000 in stock and options after earning $3.2 million in stock and options at Microsoft (MSFT) - there's the case of yet another not-rich person playing it safe by charging this month's groceries on their credit cards.
  • Hmm, perhaps what wealth buys you is not the "freedom to take risks," but the freedom to choose which risks you take.
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