Brian Sommer finds that, lately, there have been several people in the world of tech that he wouldn’t want to be. Greed may have something to do with it.
(The following blog is being posted by Brian Sommer. Brian and Jyoti go way back. Brian is a U.S. software strategy and marketing consultant. He was formerly the head of Accenture's Software Intelligence unit and even launched a dot.com. He and Jyoti occasionally cross-post on each other's blogs. You can contact Brian at brian@techventive.com or see his blogs at www.servicessafari.blogs.com or www.softwaresafari.typepad.com).
For example:
The US Department of Justice has gone after 10 firms for backdating stock options. Five CFOs have lost their jobs over scandals related to this. (see www.CFO.com, July 2006, "Backdaters Get Clocked"). Companies mentioned in the article include: Comverse Technology, Mercury Interactive, Power Integration and Vitesse Semiconductor.
The Chicago Tribune dug further and reported a significant story on Comverse in its 8/10/2006 issue ("3 From Comverse accused of Backdating", Business section). That story detailed how the CEO and two former executives were criminally charged with stock-option manipulation. Back dating options for economic gain was apparently the impetus behind these charges. The article also indicates that 90 companies are being investigated including Apple Computer. The Tribune also reports that the FBI (US Federal Bureau of Investigation) is investigating 45 cases of back dating.
CFO magazine, in August 2006, continues to follows CA and its GAAP issues and executive departures. (See "Sins of Commission", www.cfo.com). The gist of CA's latest financial woes apparently involve the consequences of new sales commission plan.
The "Notes from the Field" gossip column in InfoWorld (see www.infoworld.com) always has a few nuggets in it. In the 7/31/2006 column, Cringely writes that Brocade Communications' CEO and HR executive could each do 20 years of prison time for their part in back dating options. He also indicates that Apple Computer, Intuit, McAfee and Juniper Networks could also get slammed.
Finally, in the "Notes from the Field" column of 7/24/2006, Cringeley writes about how the Dept. of Justice is trying to get a former Peregrine Systems VP extradited from England for cooking the books.
All of these stories indicate that greed is alive and well in tech. So, are government regulators. I can understand how executives could get talked into these backdating deals as I met a lot of pushy tech executive job applicants in my time. I had a couple of them question me as to why their options would not be priced at the rate of current employees and they had to wait until the board set a new price. I can remember having several pricing discussions with the board, too. However, anyone who was that greedy and unethical to insist on this unearned benefit didn't get an offer from me. As for cooking the books, that's been going on since Pacioli and still as wrong today as it was back then.
In the margins of these stories, one can read about executives spiriting away their option gains to Israel and other locales. More than one of these executives is outside of the country with no apparent plans to return. If their actions were above board, they would come home. I hope the countries that take their money and provide them respite kick them out post haste.
Your table certainly appears in order to me. It illustrates the shift in needs from a small business to a medium business. As the small business grows to the M business good systems and processes are vital for control and efficiencies. They are also important as they can give management space and resources to assist growth.
Viewing the differences from a large company to a M demonstrates how imperative good people are to M organisation.
Posted by: woodgate53 | August 24, 2006 at 08:26 PM