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"Monte Stellar" <CEOMonte@AmSmelt.com>
"Biff Chatsworth" <TheBiffster@SmudgePR.com>
Hustle and Flow: It’s Hard out Here for a CEO

Dear Monte:

Allow me to offer my congratulations. Or, perhaps more accurately, my sympathies. Once again, you’re a player in the latest fad in American business: A six-month-old hedge fund — run by two former derivatives guys from Enron — has decided it’s time to (cliché alert) “unlock the hidden value” at AmSmelt.

They want two seats on the board, a new CEO, and a 20% reduction in the headcount.

Or, as one wag put it on the Google AmSmelt newsgroup: “They’re going to put some lipstick on this pig,” break it up, and sell off the pieces “to anybody whose telephone number doesn’t begin with the international dialing code for Dubai.”

Monte, Monte. I can only imagine how you’re feeling right now. You’ve delivered a 7% return in the last year, in the face of rising oil prices, Chinese competition, and the Nigerian government nationalizing your Smelt-Afrique subsidiary. And yet these guys insist that it should have been 20%.

(And, for the record, let me point out that all hedge fund traders seem to be almost irrationally obsessed with this magical 20% number — as in the 20% of Alpha that their bonuses depend on. Given the chance, I’m convinced they’d name their first kid Alpha20.)

So what’s my advice?

On the one hand, you could pull the rip cord, walk away with millions, and get another job, becoming one of those serial-engagement “have Hermès tie, will travel” CEOs for hire.

But on the other hand, it seems to me that despite all the day-to-day problems, you’ve developed a real affection for AmSmelt and its employees over the past few years. You’re good at this. You’re turning the company around. And you’re not going to go down as the guy who vaporized a 62-year-old institution.

With this in mind, I made some calls around the Street this morning. According to my people, these hedge fund guys aren’t so much quants or momentum traders as they are Carl Icahn wannabes. They bet wrong on Krispy Kreme and Hooters Air; they actually bought into all the Howard Stern hype on Sirius Satellite Radio. Word is they’re desperate, terrified of losing their investors and having the fund blow up.

And now for the good news: It seems that one of their larger investors is your state comptroller. He’s given them a piece of the state employee pension plan. (I know it’s ridiculous. But after day trading, dot-coms, and mortgage refis, every dentist and his brother is now investing in hedge funds.)

In any case, with this in mind, I’ve set up a golf date for you with the governor — who, coincidentally, is up for reelection. I’m sure he doesn’t want this to become a political issue; the last thing he needs is to be accused of underwriting the demise of one of his state’s biggest employers.

My bet is you can have this worked out by the time you reach the back nine. I’ll be waiting in the clubhouse, with an offer to do pro bono work on his new hedge fund regulation bill.

Tee-off time is 9 a.m. I’ll be in touch —

The Biffster.

P.S. In the unlikely event these guys show up at the next directors meeting, I suggest you begin by instructing the caterer to pass out Krispy Kreme donuts. I hear they’re delicious. Yr. thoughts, pls.