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

SonicBlue 3dfx Connection

[Moridineas]

Greg Ballard was former CEO of 3dfx before it crashed. 3dfx is a terrible story of mismanagment of manager abuse. As a company, 3dfx existed to make money for it's managers, and for no one else--and Mr Ballard was at the helm then for 3dfx, and now for SonicBlue. Do the words Golden Parachute mean anythign to you Mr Ballard? If anyone is investing in SonicBlue, I'd pull out...

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:Large Companies

[dasmegabyte]

I'll tell you what's being taught:

Parents:
"Son, get your MBA. I'm proud of you and want you to make scads of money."

Friends:
"MBA? You're so smart. You'll make so much more money than I will with my BA in Art History, which I enjoy very much."

Business Administration:
"In times of decreased customer expenditure, it is often appropriate to reduce resources to appease the stockholders."

Business Ethics:
"Humans are our greatest resource."

Marketting:
""

Accounting:
"Payroll is the most expensive operating expense of any business."

Business Frat Poster:
"Win real money in our fantasy stock game! Each person gets $10k to play the market and the person with the most cash after just 30 days is the recipient of a $1000 datek account thanks to Takka Alla Profits"

Smart folks are filling in the blanks, mate. Customers are not always right -- they're the morons who fell for our marketting. Employees? Get the best we can get for the shit we're paying...young folks especially, and train them to work 10 hour days. Your only boss is the stockholders, and these guys will believe anything that shounds like it will make them money.

Lying? Don't get caught. Stealing? Give it a nice name. Executives have privilidge, or else they wouldn't be executives, eh? We're better than those 30k plebians. Offer them 28k and we'll get Mexican -- how does Mexico sound? Shit, we should move our corporate office there...cheap work, no taxes, and thanks to NAFTA no bloody tariffs.

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...