Oh, it’s like a kiss from Jesus! Insider trader and perennial whistleblower/victim Sherron Watkins has emerged from obscurity once again to give us her opinion of Jeff Skilling’s Supreme Court win.
I know, I know. If you’re anything like me, it’s almost so good you can barely stand it. I absolutely love Sherron Watkins because she reminds me of everything I do not want to be. She’s a camera-seducing, microphone-licking, attention-seeking trainwreck, like watching Courtney Love trying to do calculus. You feel sorry for her, but it’s just so funny and wrong that you just can’t look away.
Anyway, Miss Sherron bestows us thusly with her knowledge:
Remember Enron? Remember the 24-year prison sentence that was meant to discourage similar corporate malfeasance?
Sorry, I’m drawing a blank here. All I remember is a vindictive Enron Task Force pursing anyone with an E on their resume with the intent to destroy their lives. You might recall that because you were part of that lynch mob. Or have you forgotten?
Well, this past week, Jeff Skilling, Enron’s former CEO and my former boss—
Had to squeeze that in there, didn’t you. No, Sherron, it is painfully obvious that you need Jeff Skilling. You need him to give yourself credibility. Jeff wasn’t your direct boss. You worked for Andy Fastow and then, toward the end, Cindy Olsen. But by using Jeff’s name, you hope to attract the fission of interest because you simply can’t do it on your own.
who was convicted and sentenced to more than two decades behind bars in 2006—won a partial victory in an appeal before the U.S. Supreme Court.
The appeal, however, is not likely to spring Skilling from his prison cell in Colorado. Even if he gets some convictions tossed, federal sentencing guidelines will probably keep him behind bars for at least another decade, given the size of Enron’s multibillion-dollar financial collapse.
Which you desperately need to maintain any kind of relevance. Jeff Skilling created thousands of jobs at Enron. Yours was one of them. And it seems to me, you’re making money off him still. You need him in prison so you can find a camera and do that sad head shake, and talk about how “he had to know what Andy was doing.” Don’t you ever get tired of this song and dance?
But the appeal—and recent financial-reform push—has set me thinking, once again, about how we deter the next generation of corporate miscreants, especially now that a new financial-reform bill is making its way through Congress.
I literally laughed out loud at this. Suddenly you are in a position to lecture us on the financial reform bill? Since when are you interested in the goings-on in Washington? Oh you’re really straining to make some kind of connection here – a way to mention Enron and keep your name in the news while pretending to talk about something else. This is called a head fake, coined by Randy Pausch and I am on to you.
By now, after the fallout from executive overreach/malfeasance/gambling at Bear Stearns, Merrill Lynch, Lehman Brothers, Goldman Sachs, and AIG—even after Skilling—it is clear that lengthy prison sentences do not do the trick. The convictions of the Enron CEO and other executives from our scandal-plagued start of the century have, ultimately, been ineffective warnings to the corporate daredevils, and, later, bailout recipients.
At the heart of Enron’s meltdown, and the recent Wall Street collapses, is a single issue: compensation systems run amok.
You’re a moron. You mentioned this before so I suppose I ought to be glad you’ve finally developed a meme for yourself. But you’re still way, way off base.
Let’s start with you. You were very well compensated and you admitted, under oath, that you traded on insider information. Why did you do that? Were you not making enough money? Is it because of your greed? Did you need MORE money? No, let me guess, you’re about to make the case that executives should make far less. But it begs the question: WHO THE FUCK ARE YOU TO TELL ANYONE ELSE WHAT TO MAKE?
In the case of Skilling, the U.S. Supreme Court rejected the prosecution’s use of an anti-fraud law known as “theft of honest services” and sent his case back to the appellate court to consider the impact on his multiple convictions.
“The government charges Skilling with conspiring to defraud Enron’s shareholders by misrepresenting the company’s fiscal health to his own profit, but the government never alleged that he solicited or accepted side payments from a third party in exchange for making these misrepresentations,” the high court said in its recent ruling.
My question to the government is this: What constitutes a modern-day bribe or kickback? Is a perpetrator off the hook because he or she uses the market to pay the kickback?
Look you egotistical maniac, they’re the Supreme Court. I don’t like a lot of the crap they do but I do accept the argument that as far as the law goes, they know better than most of us. Compensation, as Petrocelli answered during the appeal at the Fifth Circuit, has never been considered a way to deprive a company or shareholders of honest services. Or don’t you keep up with the Skilling case?
In 1993, Congress passed a law disallowing tax deductions for compensation in excess of $1 million. This new law was an attempt at reining in CEO pay; instead, it fueled the use of stock options to compensate executives for the loss of their salary above $1 million.
As COO and then CEO, Jeff Skilling was both contractor, builder, and owner of various stock-option and stock-grant plans put in place for his benefit as well as other Enron executives and employees. In the U.S. government’s indictment of Skilling, he was accused of hiding Enron’s true financial condition in the years 1998 through 2001 by using various means to fill the “gap” between actual results and budgeted goals, all the while benefiting from this deception by selling stock and options in the marketplace that netted him more than $89 million in profit.
Sound familiar to those reading the Lehman Brothers’ Bankruptcy Examiner’s reports?
In 2002, in the wake of the collapses of Enron, WorldCom, Adelphia, HealthSouth, and others, Congress again focused on the issue of compensation and the use of stock options.
In congressional testimony to the Committee on Financial Services, Paul Volcker said this as early as June 2003:
“I think it is clear that the grotesque escalation of executive pay over recent years has been importantly a function of the greatly expanded use of fixed-price stock options for a small group of senior executives,” he said. “That development has been encouraged and defended by the theory that such options align the interests of managers and owners… Experience provides ample evidence that the relationship between reward and performance is capricious.”
Well the Supreme Court said otherwise, so go find a tub of Haggen Daaz, put on House, and relax, because you’re not gonna change the definition of “bribe” or “kickback” on a Daily Beast blog post.
The business world erupted in protest at any legislative inquiry into compensation practices, and Congress eventually settled for the Sarbanes-Oxley Act, an overhaul bill focused primarily on accounting. Given the enormity of the Wall Street collapses of 2008, it would appear Sarbanes-Oxley was ineffective.
How on earth do you blame Sarbanes-Oxley for the housing collapse? This is a nonsensical allegation.
And sadly, current financial reform does not get to the root of the problem, either.
The fix is simple, but not pain-free: Repeal the 1993 law and allow corporations to deduct all corporate salaries, even those above $1 million. Then require CEO compensation to be all cash—no stock options. Eliminating the use of stock options for the CEO and the C-class executives solves the problem.
That would work for you because as we know, you’re a criminal with stock options. But honest executives don’t need that stupid rule. Executives should be permitted to own stock in their own companies; it incentivizes them and frankly it is none of your business, or mine, or Washington’s what any person is making and how they make it.
In terms of Enron, the story is over. Skilling’s plight and fight are of little interest; he’s been in prison for the last 3.5 years, with many more to follow. He’s paying for his crimes with his freedom and his money. He destroyed $60 billion of shareholder capital, wrecked the lives of thousands of Enron employees, and, in some cases, indirectly caused untimely deaths.
That’s it, you bitch. You are a liar, a criminal, and you’ve just barely managed to phrase that in a way that isn’t slanderous, but you owe Jeff an apology, and you should retract that sentence.
You’re too afraid to name names? Are you talking about Cliff Baxter? Cliff didn’t kill himself because of Jeff. You’re just absolutely despicable to accuse him of “indirectly causing untimely deaths.” That’s beyond the pale.
Even if he prevails at the appellate court and is released, his life’s work will be considered a failure, and so will
No. Jeff Skilling is a success. Jeff Skilling has done nothing to be ashamed of. Jeff Skilling can close his eyes at night and rest peacefully, knowing in his soul he did nothing wrong. You, however, should at least have the sense to be humiliated by your own lecherous behavior.
More importantly—and depressingly—than the individual fate of Skilling is the fact that, seemingly, we’ve learned nothing from the rash of corporate scandals from Enron and onward.
Oh sigh. Hey, did you pay the Enron Compensation Fund the money you illegally made on your stock sales?
Enron was Ebola in a Petri dish, and, instead of stamping out the virus, we let it fester.
Purple prose, anyone?
Why hasn’t Congress had the courage to address compensation abuse head-on? We’ve had abusive corporate practices in our past that were successfully addressed by Congress; such as monopoly abuse, child labor, environmental pollution, and worker safety.
Oh yes, Government, please take care of every aspect of our business lives, we’re too stupid to do it ourselves, boo hoo.
The trouble with compensation abuse
No, we’re not making “compensation abuse” a “thing” now. No.
is that we—as a society—are envious first, and only outraged later, when we hear the story of yet another lucky executive who bankrupts a company, and walks out the door with multiple millions in his pocket.
Oh you just made a deep diagonal across the chess board, and I’m about to rape your queen.
See, Sherron, most people don’t feel “envy” at the millions that executives make. We feel happy and proud. We feel inspired to work harder so we can one day make that kind of money. We redouble our efforts. But you clearly do feel envy, and I am sorry for you. I am sorry you can’t see monied people and be inspired by them. I think you’re petty.
And the little bio at the end:
Sherron Watkins is the former vice president of Enron Corp. who alerted then-CEO Ken Lay in August 2001 to accounting irregularities within the company. Time magazine named her as one of their 2002 Persons of the Year. Watkins is co-author with Mimi Swartz of Power Failure: The Inside Story of the Collapse of Enron.
She did not alert Ken Lay. She said there was a PR problem.
Oh and I guess it makes me small for noticing but the photo she is using on the article of herself is about 15 years old.