April 17, 2001 was an important and deeply misunderstood day in Enron history. It was the day Jeff Skilling called shortseller Richard Grubman an asshole on a public analyst call.
Highfields Capital analyst Richard Grubman joined a conference call at Enron and asked, for the sixth consecutive quarter, for a balance sheet with the earnings statement. For the sixth time, Jeff Skilling told him that at Enron, the balance sheet was not released with earnings statements (at trial, the reasons for this were covered at length; there was nothing illegal or untoward about it – there was a very deliberate business purpose for doing things the way Enron did.) The following is a transcript of the challenged part of the call:
Grubman: You’re the only financial institution that can’t produce a balance sheet or cash flow statement with their earnings.
Skilling: You…you…you. [One can imagine this is the point when Mark Palmer, VP of PR at Enron, handed Skilling a note, reminding him who he was dealing with.] Well, uh…thank you very much. We appreciate it. Asshole.
At this point, everyone inside the Enron building was jumping up and down and high-fiving each other because their CEO had finally said something to this guy who had been talking down the stock for quite some time – and even the question was a sort of accusation. Enron folks thought Skilling handled the call just fine. Of course, it wasn’t as well received in the rest of the business world.
It caused such a kerfluffle that it was even brought up at trial by Sean Berkowitz. To which Skilling replied, “The now infamous ‘asshole’ quote was used as an example of arrogance or something. It wasn’t meant that way.”
It was clearly not – and though Jeff was an executive who should have just rolled his eyes and passed the call to someone else, that wasn’t his style. He got his hands dirty. He talked to short sellers. He tried to get people to see Enron for what it was. As he said right after the verdict at his trial, some things work and some things don’t. Calling Grubman an asshole, as a strategy for handling pests, didn’t.
But the comment was never as earthshattering as the revisionists would like to believe. It did not signal some sort of meltdown. It didn’t mean that Skilling feared the question or was trying to deflect Grubman. Even Jeff Skilling is entitled to lose his temper once in a while.
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