But the “Perfect Payday” story is just the start. You are also going to say, among other things, (on July 15) that ninety-one companies, including Home Depot Inc., Merrill Lynch & Co., and United Health Group Inc. “rushed, amid the post 9/11 stock market decline, to give executives especially valuable options.”
And in case readers don’t get the point, after raising the question of whether these corporate icons backdated options, which is usually illegal, you say:
“The multiple options grants after 9/11 raise a different question: Did companies take unseemly advantage of a national tragedy?”
And if you are under the impression that Dow Jones & Co., the WSJ’s publisher, is some kind of financial juggernaut that can withstand big jury verdicts, then I can safely say that you, unlike The Audit, are not a DJ shareholder. You can thank your broker now.
The point?
The series was smart, effective, original, and took institutional, as well as individual, courage. And while Pulitzers are only one measure of the health of a paper, work at this level must be recognized. Otherwise, why have The Audit?
1. That’s a good Bandlerian analogy. As for options: If your stock trades at $20, it’s better to own the right to buy it at a low point, say $10, so you are guaranteed $10 a share, rather than at a random point, say at $19, which means you only make $1, or at $21, which means your options are worth nothing.
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Dean, I agree with your appraisal of the very fine series on backdating of options.
However, nowhere in your piece do you address, much less repudiate, The Audit's snide appraisal of the backdating options coverage at the time.
See
http://www.cjrdaily.org/the_audit/wheres_the_thief_the_options_s.php
"Where's the Thief? The 'Options Scandal' is a Dud"
in which The Audit said:
"In recent weeks, this supposed national corporate stock options scandal has started to remind us of nothing less than the Duke lacrosse scandal -- perhaps because in both cases the swarm of accusatory press coverage swirling around the developing story seems to have rapidly outpaced any actual proof of criminal wrongdoing"
The above Audit item specifically chastised the Journal for its series on backdating:
". . . the would-be scandal gained momentum this past March, when the Wall Street Journal picked up on Lie's research and published a story entitled, "The Perfect Payday," which would prove to be the first of an ever-expanding series of articles about options backdating."
The only thing the Audit had good to say about the Journal's coverage was an editorial page piece criticizing the media coverage of the backdating scandal:
"We hope that in the coming weeks, the Journal's reporters will take note of [Homer] Jenkins column before rushing to "out" companies for accounting techniques that were widely popular in the late '90s and which, in recent years, appear to have fallen by the wayside."
The Audit also said as follows:
"For readers who like their schadenfreude catalogued, the Journal has even published a handy Options Scorecard, listing some 50 or so companies and noting which ones are currently being investigated by the SEC, the justice department, and so on.
But having your books looked over by the SEC no more makes you guilty of corporate malfeasance than having your block patrolled by a beat cop makes you guilty of kicking the tar out of your neighbor. With more than two-thirds of all SEC investigations resulting in clean bills of health, we humbly submit that the nation's greatest business paper should impose some minimum quota on its a priori insinuations of guilt."
The Audit continued its criticism of the backdating coverage in
http://www.cjrdaily.org/the_audit/media_blows_more_hot_air_into.php
"Media Blow More Hot Air Into Options Scandal"
In this, the Audit "lamented the increasingly hysterical coverage of a supposed "scandal" involving dozens of corporations that might have issued backdated options to their presumably crooked executives. With growing numbers of "suspicious" companies targeted by the media, it seems a bit odd that so few of these companies have been found to have done anything particularly egregious."
While I appreciate the stance you now are taking, this is a dramatic departure from the past. Don't you think the Audit's past coverage should have been mentioned by you and specifically repudiated?
Thank you for your time.
Posted by Graham P. on Sun 22 Apr 2007 at 12:57 PM