Thursday, February 16, 2006

Tough Times for a Couple CEOs

With the high salaries, perquisites, stock options, and adulation heaped upon CEOs, one would think that the living is easy once a person enters the corner office.  That may be true, but if you're caught padding your resume a bit, it can trigger all sorts of negative publicity and a board of directors investigation.  It seems that RadioShack Corp. CEO David Edmondson may have misstated the college degree he holds.  His biography on the company website (here) states, "Edmondson graduated from Pacific Coast Baptist College in San Dimas, Calif., where he earned a degree in theology. He is also a graduate of Harvard Business School's Advanced Management Program."  While that is sufficiently vague, in the past Edmondson has claimed that he received a Bachelor of Science degree in theology and psychology.  Unfortunately, his alma mater, Pacific Coast Baptist, does not offer a psychology major, and his degree is a ThG, which only requires three years of course work, not the the four years required for the B.S.  A Reuters story (here) states that the Board of Directors has hired outside counsel to conduct an investigation and advise it on proper employment policies.  Resume padding is nothing new, but it always amazes me that people would put down incorrect or non-existent degrees and think that it will pass unnoticed.

Things are even dicier at Chicago Bridge & Iron Co. N.V., which fired its CEO, Gerald Glenn, and chief operating officer on February 3.  Although the company's terse disclosure said nothing about the reasons for the termination, it has been involved in an extensive internal investigation into possible accounting fraud, and the terminations appear to be related to those issues.  Rather than go away quietly, however, Glenn has filed a challenge to his termination in the Netherlands, where the parent company is headquartered.  According to CB&I's Form 8-K (here): "While as previously announced Gerald M. Glenn has been terminated as our Chairman, President and Chief Executive Officer effective February 3, 2006, Mr. Glenn remains a member of the Chicago Bridge & Iron Company N.V. Supervisory Board and a member of the management board of Chicago Bridge & Iron Company B.V. Effective February 8, 2006, Chicago Bridge & Iron Company B.V. resigned as the managing director of Chicago Bridge & Iron Company N.V. Mr. Glenn has filed suit in The Netherlands contesting the circumstances and effectiveness of his termination as Chief Executive Officer."  Unlike resume padding, which may be embarrassing but probably not much more, accounting fraud is likely to draw significant attention from the SEC and U.S. Attorney's Office in Houston, where CB&I's U.S. subsidiary is headquartered. (ph)

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Fraud, Investigations | Permalink

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