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Question:
Could each of you gentlemen comment a little bit on the direction you
see CART going now with the change at the top and what you expect Bobby to
accomplish in the next few months.
Pat Patrick (Ford): I don't know how to answer 'how CART's going'. I
think the change at the top is very significant. I think Bobby will do an
excellent job. He is very experienced, and he's a racer. And that's the
kind of guy we need running this company. We use the word 'interim', and
that is what he is right now for the company, and I only have one vote,
but
I would vote to keep him if he is willing.
Cal Wells (Toyota): I think Bobby is going to contribute massively.
Because he has such a core understanding, such an integral understanding,
of the business. His experience as a driver, a team owner, how to run a
business and not put it in the tank. He's had multiple perspectives how
to
view the challenges that are ahead for CART, and the opportunities. I
think that Bob will recognize the opportunities and keep the CART 'boat',
if you will, steaming ahead. Plus there are a lot of exciting things
ahead
on the horizon, like the schedule, and television. I think Bobby is the
right kind of guy to capitalize on those, while still looking at things
such as the equipment we run, and where the next set of changes are going
to be, as it relates to engine and chassis, and team costs and
sponsorships
and so on and so forth. He's uniquely suited to attack the job at hand.
And while I think he'd be great (as permanent CEO), I've got to credit him
with more intelligence than that. So I think he'll hang around for a
while
and work to find someone suitable to take the job (permanently).
Derrick Walker (Honda): I agree 100% with what Cal said. I'm sure Bobby
can't afford to take a pay cut to keep the CART job, anyway! But I think,
in the short term, while he's at the helm, I'd expect to see a very
positive effect, getting everybody back on track, not only internally, but
outside the 'motor groups', the manufacturers, sponsors, the community of
racing that has become somewhat fragmented or flat over the last few
years.
I think he will have a positive effect, get everyone to 'rally around the
flag' as it were, to deal with the issues we've got that are already in
place. Then at some time in the near future we're going to find out
whether Bobby wants to hold on, or get out and find the next person. If
you ask me, that's going to be our next big challenge, if he doesn't want
to stay on board.
Bruce McCaw (Mercedes-Benz): I pretty much agree with everybody else as
well. The only other observations I'd make is that: A) I don't see any
massive changes in the direction of CART. I think the direction that's
been set off has been pretty clear. And I think that the objectives of
the
board are pretty obvious. We've made some changes to bring in some
stronger people - Hal Whiteford and Pat Leahy as well as some new members
of the board as independent directors. I think the company is well
positioned to move forward. I think we've got the people in place to
accomplish this. I think the combination of both Bobby as president and
CEO, and Jim Hardymon as chairman brings a lot of strong business savvy to
the company. Don't forget that Jim is taking a strong leadership role.
So
I think there's an opportunity now, as Derrick said, to pull people
together. This is a business where everybody becomes an 'instant expert'
on everything from marketing to rules and I think that Bobby perhaps can
provide some real strong leadership. He's a great people person, he
understands them, cares about them. I think this is a positive move, and
now we'll move forward from it.
Question: Do you guys think that, after all the leaders CART has had to date. Do
you think it's finally time to have one guy to lead you and give that guy
the say-so to lead this group and not have votes all the time. Is this
something that is possible and how do you feel about it?
Bruce McCaw (Mercedes-Benz): I think that, the way CART has become
organized, that particularly as a public company, that we have certain
responsibilities. I think that trying to build a strong professional
management team will ease the decision-making process and I personally
would like to see more strength in the management team in terms of the
decision making. The owners obviously will (continue) to have a lot to
say
about, and care about, the direction of the company. But a strong
management team will help to accomplish that.
Derrick Walker (Honda): Yeah, I agree with Bruce. We'd like to see our
front office be more independent, less reliant on direct direction from
the
owners. But, whether you like it or not, (CART's) been invented by the
owners, and to a large part controlled by the owners. So it is an owner's
organization that invented this series. So that influence is always going
to be there. I think that it is important that the next person who runs
CART - if it's not going to be Bobby - that in the long term that person
has the respect of the owners. And it seems like we've had people in the
past that we, the owner group, have put a lot of pressure on to sometimes
perform miracles. And sometimes I think we need to understand the issues
in greater detail so we can provide better support to our leader. I think
we're getting better at that. I think the fact the company is a public
company now makes things a lot clearer now, even more than just five years
ago. So I think the changes at the board of CART are going to give the
new
president more responsibility in the running of the company. I often
wonder if the CEO's job is really two jobs. If there's anything I think
Andrew (Craig) should've done differently it would've been to delegate
more. Hal Whiteford, who just came on board, perhaps he (Craig) should've
had a Hal about five years ago. Basically divided the company so you'd
have operations headed by one guy and the guy looking at the big picture
and the commercial aspects. I think part of the problem is that you look
for a guy with expertise in all areas and it becomes very difficult
someone
who's available and can do that. I wonder that in the future maybe we
should have two separate sort of entities, but still one guy sort of
overall in charge. So delegating to the right people and having the right
people in charge should be our mission when we search for senior
management.
Cal Wells (Toyota): I'll echo a lot of their thoughts. When the company
went public, from a business perspective, I'm not on the Delaware Board.
But from where I sit, there's a lot of business expertise that's been
acquired with the addition board members we've added and the team owner
board members on now, has improved massively Certainly, everything needs
to be managed in the best interest of the company, and the interests of
the
shareholders. I think maybe if things had been done that way 5-6 years
ago, we might've been able to dodge a couple of potholes in the road. But
like any public company, there cannot be one all-empowering individual,
like NASCAR, that is a privately-held organization. But we can have a
more
strongly focused group of people, determined to build the business, than
we
have had in the past.
Question: Pat, if I can alter the questions a bit for you, since you are one of
the founding fathers of CART. Can you talk a little bit about how
difficult it is to find someone with all the qualities for this position.
Someone with the proper background and experience in all the different
facets.
Pat Patrick (Ford): You know, I was involved in the CART management for
probably the first 10 years, even though John Frasco was president. He
relied heavily on people like Roger Penske and myself for advice. Then
when he didn't want to do that anymore, and I don't blame him, he
resigned.
Then we got this guy (Bill) Stokkan in. He was a very professional
person
in his own area, and so was Andrew Craig. The problem was, they just
didn't understand our sport. I'm a sincere believer that if you run this
operation you have to be an insider. And Bobby (Rahal) is an insider. I
think it's going to be an excellent opportunity for us to find out if an
owner really can run the organization, or an ex-owner. Now we need to
address the franchise board, that's a totally separate thing. What we
focus on is rules and the number of events. We don't allow them to work
in
any other areas. Having been there himself as an owner and a driver, he
ought to understand that board more than anybody. He'll let that board do
what it should be doing, and he'll do what he should be doing.
Question: This questions is for Cal and for Derrick. You guys are involved in
other series. What have you learned, Derrick you in the IRL and Cal in
NASCAR, there that will help you make better decisions and going forward
with CART.
Derrick Walker (Honda): Well, in the IRL they're a younger organization.
So, the level of competitiveness and the demands you get when a series
becomes more competitive and you get double the number of races, that
really changes the look of the front office. So it appears to be very
much
a simpler system of operation. They have fewer races, fewer cars, and
rules and everything you see when something starts to grow. I think in
terms of 'one against the other' in plusses and minuses, you know, they
just operate differently. They have their advantages being somewhat
simple
and in a smaller group, and their decision making seems a lot simpler. On
the other hand, I think CART has a much more democratic feel about it
which, when you take the benefits of being a democracy you get a lot of
imput from a lot of different areas, so you actually end up with a richer
product. I think they're just two different ways of doing it. I don't
see
one being overall a better system than the other. You can things either
way and still be quite effective.
Cal Wells (Toyota): I haven't been around NASCAR long enough to tell. I
mean, I've enjoyed what I've done so far. It is a very dictatorially
controlled organization - and they make their mistakes, too. They're a
pretty big monolith, they're able to drag a rug along and sweep a lot
under
it. It's a real apples and oranges comparison. They're not a public
company, they're really only responsible to themselves. They do have
their
competitors' interests at heart, there's no doubt about that. But, any
other comparison today, right now, would be a real stretch.
Question: The last two directors came, as has been noted, from outside the
sport.
The press isn't privy to the compensation package. But it seems a lot
more
attention was paid to the exit compensation, rather than to the entrance
compensation or performance compensation. Have you guys learned anything
from hiring people who's exit packages seem to be very rich?
Cal Wells (Toyota): You know, from my perspective the guys come in, they
bust ass and you take care of them when they leave. I think it's very
unfair for anyone to judge that because he's not here any longer, that he
screwed up. Bottom line, as owners, it is incumbent on us to hire the
right guy. And if we make a selection, as Pat alluded to earlier, Bob is
well suited to the job. But what if he wasn't available. Each time these
guys are hired, they're hired with the best intentions. Nobody hires them
setting them up to fail. It's a big challenge, and a lot of work. There
are certain things that needed to get done, that Andrew did. And there
are
certain things that needed to get done, that maybe didn't have the support
of the majority it could go. But as far as severance packages, those are
really private deals that A) shouldn't be discussed in public; and B) when
somebody does a competent job, you don't run them out on a rail. That's
not what Andrew's departure is about.
Bruce McCaw (Mercedes-Benz): I'm not quite sure what you're alluding to.
But if you're talking specifically about Andrew's case, I mean I don't
think that was the case. The exit package that was negotiated with Andrew
was done very much on the basis of a lot of things that he had
accomplished, particularly with regards to the stock side and everything
else. I've been involved in a number of these things and I think the exit
package was negotiated very quickly, was fair on both sides, and reflected
the accomplishments that had been done. So I really don't think that's an
appropriate thing to focus on because I don't believe it was a negative.
I
think it was handled extremely well on both sides. And I think Andrew did
have a substantial amount of performance orientation in his package.
Pat Patrick (Ford): I think that Bruce pretty well said it. I don't
know,
don't remember what Stokkan's exit package was, if it was very much or
not.
It shouldn't have been, if you want my opinion! But Andrew's exit
package
was very fair. He did a lot for the company, he did a lot to bring this
sport a long ways. He was not over-paid in my opinion, as an executive is
paid. Let's say you don't pay a guy anything. How are you going to
attract people. I's a two-edged sword.
Question: There's been a certain amount of talk, looking at the next guy, that
compensation should be based on certain things, such as race attendance,
or
TV ratings. Would you have any response to that"
Derrick Walker (Honda): Well, in principal it sounds like a good idea to
base it on that. But the reality is, if you look at that person in that
position, how much control they have over those areas is (questionable).
They can certainly lead the organization but, its very hard to base it on
television ratings when it takes a long time to build those ratings, and
you can argue how much he can really influence that. So, giving someone a
compensation package over things he can really control himself, I'm all
for
it. But I don't think, we've been there with the compensation committee,
looking at areas like that. But we've always had difficulty putting
something there that an individual can directly be measured by. You seem
to put a lot of emphasis on the compensation, and that's a fair question,
that's why we're here. But I think in Andrew's case, when you look at
what
the organization was like in 1994, when we hired him. He did do a lot for
the organization. So his compensation level over the years, and his exit
amount, is really a function of what he did for the organization. So I
don't really think it's fair to look at one number without looking at the
big picture and all the benefits that Andrew did achieve in CART, turning
it around and getting it focused in a forward direction. All credit to
him. So in my opinion he received his 'just desserts' with his
compensation. If we want to find someone who can run this company well,
then we've got to compensate him. Otherwise we're not going to get the
kind of leader we're looking for.
Question: Is the direction of the scheduling changing? Or is it still pretty
much
the same strategy the same in terms of where CART is going to go and going
to race?
Pat Patrick (Ford): I think that's already set by the Delaware Board. I
think that's pretty well set. The only problem with scheduling is that we
raced in Detroit last weekend, Portland this weekend and Cleveland next
weekend. Now, one way or the other you've got to find a way to solve
that.
It's just a little thing that maybe not too many people think about. But
it just kills us. It kills our people, and it's very expensive. As far
as
events, there's certain events we don't need to be at, and there's
certainly events we should be at. We've got to do what we think is best
for our sponsors.
Question: The CEO of any public company serves at the pleasure of the board of
directors. However, there comes a point in time when the CEO begins to
lose the confidence of the board and begins to attain a defensive posture.
The perception is that more people in the CART front office are more
concerned with keeping their job than losing their job. In Bobby's case,
CEO isn't the whole thing. He's still a team owner, he's still a member
of
the board, he's still got all the other things. Do you think it's an
advantage he's not as worried about whether he's not... He's still able to
make decisions and 'if you guys don't like it, that's fine, I'm still part
of the team'. Will that freedom allow him to be more effective?
Pat Patrick (Ford): I think, I've been the CEO of a lot of companies,
too.
And the biggest problem you have isn't whether he's scared of losing his
job. Either they're doing their job or they aren't. So if you're scared
of losing your job, you shouldn't have it in the first place. It's that
simple. And if Andrew was on the defensive the last two years I wasn't
aware of it. There's been a lot of dissatisfaction on both sides - the
management side and some of the owners. I don't think that's the issue.
You Roger Bailey worked for me for 12 years. I don't think he ever a bit
cared about losing his job. I should've fired him, I'm sure, 10 years
ago.
And Bruce has run a lot of companies, as I have. People need to work
together as a team. Anybody that's running scared like that causes
friction and morale goes to hell very quickly when that happens, and
that's
just bad.
Transcript provided by the CART (tape ended early)
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