Shake-up At SonicBlue

InfoMinister writes "Good story at SiliconValley.com. The lead tells the tale: "In a boardroom drama rivaling its courtroom battle with Hollywood, SonicBlue's chairman and chief executive, Kenneth Potashner, was ousted Thursday after he demanded board members repay more than a half million dollars in loans they gave themselves to buy stock in an affiliated company.""

Comments

Re:...isn't this type of thing still legal in the

[zangdesign]

In the case of Sonic Blue, apparently repayment is not a legal necessity. The board voted that they would not be held personally liable for failure to repay the loans, which means that the company is left holding the bag if anyone defaults.

If I was working at Sonic Blue right now, I wouldn't be by the end of the day. An action like this means that the board of directors can rape the company cashpile and not have to do a thing to replace it. It's legalized theft.

For whatever criticism the CEO may have endured in the past, right or wrong, he was definitely right to call in those loans and when they fired him, he was definitely right to call "shenanigans" and inform the press.

Re: Free money...

[anactofgod]

Precisely. This isn't capitalism, not by any definition I know. This is just corruption. This is yet another case of officers of company leveraging their authority to use corporate assets to subsidize their personal greed.

A corporate board voted to give themselves a no-recourse loan from corporate coffers to purchase stock. Explain to me how this was ever in the company's interest? Wasn't there a better use of the funds more in tuned to the *corporation's* interests? And where were the checks-and-balances to prevent this sort of crony-ism?

This sort of thing was common place in during the freewheeling days of the Internet bubble, when everyone expected a big payoff for little work. We (i.e., our economy) is going to be paying for those decisions for a long time to come.

And it is precisely this scenario (and Enron, MCIWorldcom, etc.) that I'm going to use as a counter-point to my laizze-faire free-market friends who claim that government has no business in then business of business. When corporate officers can't be trusted to act in the long-term best interests of their company over their own short-term self-interest, how can we reasonably expect them to make decisions that are in the best interest of society at large?

Any supposed free-market capitalist who is not opposed to these practices is actually merely a supporter of the aggregation off personal wealth, not competitive business.

...anactofgod...