Sunday, June 19, 2005
Kurt Eichenwald of the NYTimes, has a wonderful article here titled, "Big Paychecks Are Exhibit A at C.E.O. Trials." He states, "the Kozlowski verdict demonstrates that, at a criminal trial, high pay scales can serve as the government's Exhibit A of the defendant's potential knowledge of wrongdoing."
What is particularly interesting about this statement is how CEOs need to now consider a principle I call "how will it play to the jury."
But it isn't only the paycheck that they need to consider. Statements they make to co-workers, emails they write to directors and financial advisers, and comments they make to the press, may be played back before individuals who are unfamiliar with the corporate world and the intricacies of business. This is the evidence upon which the jury often infers intent of the accused. And what may be common language in the business world of a corporation may sound like fraudulent activity to an outsider who is unskilled in the business world.
Criminal defense lawyers have long considered the "how will it play to the jury" in dealing with clients. Often realizing that their clients will be convicted, they measure their words knowing that this client may be the first in line asking the government to give them a deal to testify against the attorney. Not that there isn't attorney misconduct out there, but how the words play on a tape to a jury adds a dimension that may make innocent conduct seem criminal to an outsider.
What is particularly fascinating about this NYTimes article is the application of the principle - "how will it play to the jury" to corporate executives who are now on trial. My advice to corporate executives is not to limit the "how will it play to a jury" only to their compensation, but also to their daily practices within the organization.
This is not a message advocating the hiding of illegality, as hopefully a company will not tolerate this form of conduct. This is a message to those in positions of power at a corporation to remember that someone may be listening, and the conversation may be testimony that a jury will one day hear.
Frightening? Yes. But the reality is that this is the way things are today. So deal with it, or change it.