Happy Jeff Skilling Day!

Today in Enron history, in 2001, while on an earnings teleconference, Jeff Skilling called Richard Grubman an asshole. At the time, this caused great consternation across Wall Street – though inside the company, most employees (particularly the traders) loved it.

I was never bothered by Skilling’s outburst. I accept that there is a code of behavior that we should all observe, but I also know that when someone else breaks that code, and publicly asks questions designed to make you appear in a negative light (“Mr. Skilling, when did you stop beating your wife?”), the code is pretty much worthless. All parties must respect it, or none do.

In this case, Grubman was being a rude, obnoxious asshole who needed to be put in his place. He had asked for six consecutive quarters for the balance sheet with the earnings. Enron, as a normal business practice, did not publish the balance sheet with the earnings. At trial, Jeff Skilling explained why this was so: Enron was still collecting and collating the figures that would impact the balance sheet – they sometimes went deep into the next quarter before those documents were finally ready for public consumption.

The balance sheet should never be a pro forma document, assembled to meet the literal requirement for one. In order to give analysts the information they needed to evaluate the company, Enron had to ensure the balance sheet was actually meaningful. Consider, by way of example, the fact that PricewaterhouseCoopers has an entire department dedicated to determining for their companies what is meaningful and what should be left out of balance sheets for their client companies. For Enron to provide the balance sheet at that time would have been irresponsible because it would have provided incomplete or inaccurate information.

The second point about this is that it was not Jeff Skilling’s policy. It was Enron’s policy for as long as anyone cared to remember, because while the business was constantly changing, it only added complexity to the balance sheet. That complexity required time to distill to make meaningful.

On the conference call, Richard Grubman asked again for the balance sheet.

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.

Jeff Skilling was not the first or last executive to lash out at an annoying analyst, but because of the collapse of Enron, the incident took on more importance than it really required.

As I said, it never bothered me. And as time goes on, I’m actually proud of Jeff Skilling. It is about time that corporate leaders start pushing back. American businessmen have been kicked around too long by anti-business politicians, analysts who are trying to short stock (such as Grubman) and PR machines that require them to suck up anything because they are compensated well.

Enough!

Businessmen should be permitted to be more stern with those who wish them harm. They should fight back.

Thus, April 17 shall henceforth be known as Jeff Skilling Day, the day we honor not only Jeff Skilling, but all American business executives. No more talking trash about the engines of our economy! No more pushing around executives because you’re jealous that they have private jets. They deserve our respect and more than that – they deserve our gratitude.

Happy Jeff Skilling Day!