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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.""
Potashner, who also received a $261,232 loan in December 1999 to purchase RioPort stock, said the board members voted last December to make their loans ``non-recourse,'' an accounting term that meant the directors would not be personally liable if they failed to pay.
How do I get one of these loans? Sounds an awful lot like free money...
How long before we see some network make a reality TV show about the corporate boardroom?
Probably not because, in effect, it's already on the air.
You can't short stocks that are trading below $5/share. SBLU is trading at 0.40/share now (down 9% for the day).
[All quotes delayed by however long it takes from when I checked them to when you read my post.]
Hence, if I'm ever in charge of a profitable company, I'll keep doing stock splits to keep the share price in that range. [Well, there may be an exception if the market cap is over a certain level.]
Just makes me wonder if Kenneth Potashner started making this incident public because he didn't get the "non-recourse" loan as well?
It's a little too cynic, but it's a possibility.
Either he's a moral person standing up for the shareholders--or he's a sour loser who's upset since he didn't get the good end of the deal that his Board Directors got.
I hope he's the former.
From what I understand, he had to approve the loans in the first place. At the time, he probably didn't care. Now that CEOs can be held responsible (theoretically) for the financial screwiness of their company, and the fact that people were starting to ask questions about the loans, he probably got worried and demanded repayment. At best, they'd repay the money. At worst, he'd get fired, but at least he's no longer CEO and it's not his problem anymore.
It's not enough to bash in heads, you've got to bash in minds. - Captain Hammer
But I don't see the value of government intervention.
You don't see the value of THE PEOPLE stepping in when a PUBLIC company is corrupt?
Your anti-government ideology is getting in the way of your practical thinking. OBVIOUSLY your "keep the government out of this" ideology has failed. Even now with all the corporate coruption in the news we see this story of a Board voting itself "loans" that they don't have to repay. Of course this should be illegal.
As an executive in the company I helped found, I purchased my options for a few pennies per share. Due to the number of shares, however, the total amount was sizable (around $100k), much more than I have in my bank account. Nor would a bank lend me that much. So I requested, and received, a note from the company giving me that amount, with which I purchased my options free and clear.
This is an entirely reasonable transaction, in my view. I would rather that they didn't charge me interest (around 6%); after all, the company may still be private when the money is due a few years from now. The cash position of the company was not materially affected. Ethically, this is completely aboveboard, a way of mitigating an employee's risk with the corporation's cooperation.
A few months ago, I asked if the board would forgive my loan. (Note: if this is done, the IRS considers the loan forgiveness as income to you.) They didn't, but in SONICblue's case, I could see how the board members might want to be released from the loan payment if the stock had fallen below the loan price before they had a chance to sell their position. Then they would be in debt for a profit they never collected on, not a good move. Though loan forgiveness is more of a gray area, it seems just as reasonable as, say, option repricing, another common practice.