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Stock Options Scandal Rocks McAfee
narramissic writes "ITworld is reporting that in the wake of a stock-options investigation, executive shake-up is under way at security software vendor McAfee, including the firing of the company's president. From the article: 'McAfee announced Wednesday that it has terminated the employment of its president, Kevin Weiss. The company's Chief Executive Officer and Chairman George Samenuk is retiring from those roles and the board of directors has appointed Dale Fuller as interim CEO.'"
I'm sensing a pattern here of rampant abuse-of-privilege in the tech industry powerhouses here. HP, McAfee ... who knows what other companies have some stinkers in the board?
:) And what's with all that pre-installed software? Does anyone actually make use of that junk?
This might go a long way to explaining why the user constantly gets shafted with their purchases
"I regret that some of the stock option problems identified by the Special Committee occurred on my watch,"
Well, regretting won't fix the problem, and neither will his ousting.
there is no issue with my network
Looks like someone's been back dating options again. At least in this case the management teams is being held accountable. They're not just saying "oops", like Apple and the like. Corporate America needs more directors who hold management accountable for behavior like this.
These gentlemen were caught by McAfee's internal-use-only feature, "Option Blocker."
Touting MyEclipse AJAX Tools
Perhaps the SEC will pursue a high profile company president like Jobs.
Apple has been dancing around this problem recently, including a firing.
Then again as Spitzer has found, the SEC passed on punishing most corporate crime.
it popped because of this... WorldCom, Enron, and all the others were playing with stocks, thanks to rules implemented in the 90s.
Instead of earning a regular wage (and getting taxed for it), they were given stocks which encouraged the holders to do what they could to cook the books...
Thanks to file sharing, I purchase more CDs
Thanks to the RIAA, I buy them used...
That always gets me: we fuck up and get fired, we get nothing; a CEO gets fired; they get a wind-fall!
Which is where the problem lies in any company that hands out stock options. The trick of "back dating" options so CEOs can cash in on higher returns, coupled with a CEO's knowledge of events in the company, give them unprecedented power to make money off the company's stock while simultaneously causing the company to slide toward oblivion. No one can claim McAfee has exactly been tearing up the anti-virus market of late. Now, having to restate earnings, the stock is threatened with a nose-dive and the other investors are left holding the bag while the defrocked CEOs and Presidents get to walk away with large sums of cash.
GetOuttaMySpace - The Anti-Social Network
In the aftermath of Enron, Worldcom, Tyco, etc. our legislators started to look more closely at how corporations are run and how their executives are remunerated. The result, among other things, is the Sarbanes-Oxley Act. http://en.wikipedia.org/wiki/Sarbanes-Oxley_Act
TFA didn't say it but it sounds like they backdated some stock options. The company I work for may give me stock options. That means I can buy stocks at the market price determined on a certain later day. If the value of the stock goes up after that then I will buy the stocks and resell them at a profit. If the value of the stocks doesn't go up, I don't have to buy them. I can't lose. Backdating means that they will date the options on a day when their price was particularly low. It is called backdating because it is done after the fact. http://en.wikipedia.org/wiki/Options_backdating Backdating options is basically fraud or maybe forgery because you are making it look like a document was produced at a time other than when it was produced.
If the anti-Microsoft newspaper ad was a diversion for a week from this bomb.
...some stinkers in the board?
You couldn't be sensing a pattern because this isn't a problem with the board. If you read the article you'll find that the problems aren't in the board of directors. They're with executive level management appointed by the board (in this case, the President). If there had been a problem with the board, it would have been extremely strange. In public companies, board meetings literally are gatherings of shareholders who vote their shares on certain issues and also appoint or fire officers. Though it is almost always a Bad Idea [tm], with smaller companies some people can have dual roles as board members and as company managers. In the article, it says that George Samenuk was in just such a situation as the company's CEO and Chairman (kind of a big deal because both are important positions). But the stock-issue problems didn't involve him, he resigned because they occurred while he held those positions.
The problem is not that a board of directors was up to no good, it was that an officer of the company--President Kevin Weiss--was acting unilaterally and breaking all kinds of SEC rules by granting questionable stock options in the company.
...but can someone explain why the stock price is going up based upon this news? MFE
Sometimes bad news really is bad news.
Never go to sea with two chronometers; take one or three.
Which is not to belittle the programmers, developers, network engineers and other technical types; I met some really outstandingly talented technical people there. Just a shame they were crippled by the top layer of dead wood.
Be sure to update your CEO.dat file on a daily basis, as new CEO's are released into the wild daily.
Yes.
Certainly, but blame is placed on the highest level manager anyway (no matter how fair or unfair it may be). In the same sense that the Commander-in-Chief of the United States can be held accountable for the actions of military personnel, the Chief Executive Officer can be held accountable for the actions of the people under him.
Ideally, yes. But these people are independently wealthy and their interest in running the company tends to wane after the first problem crops up. Sometimes it's just helpful to turn a new page and start over with new officers when there's a scandal.
Translated: "I regret that this came to light while I was still around. Next time I hope to be out of the country before the federales find there was no actual pea in our exclusive executive shell game."
Seriously, what attracts people to these jobs? Money.
What do they try to get even more of than the large, by global standards, obscene salaries? Money.
What always irks me is these are often not the people who started the company, but some pinstripe variety of parasite which comes in, directs things around for maximum stock value and then gets out with as much lucre as they can get.
It's the way it is. Don't invest in companies which have overpaid CEOs and get your money if you have to work for one, get your money in your paycheck, not options.
A feeling of having made the same mistake before: Deja Foobar
a crack dealer or a CEO at a High Tech Firm. Radio Shack's CEO turned out to be a fraud also.
you think its a good idea to short them right now?
When the CEO and the Chairman of the Board are the same person, you can pretty safely assume that management is running amok. The Board of Directors exists solely to make sure management isn't putting its own interests ahead of shareholders'. When management is the BoD that setup doesn't work so well.
http://www.eweek.com/article2/0,1895,1908834,00.as p
It was just over five years ago that then Network Associates CEO Bill Larson, President Peter Watkins and chief financial officer Prabhat Goyal announced their resignations from the company on the same day that NAI announced a fourth quarter revenue shortfall of $120 million and a new revenue recognition policy for sales through its distributors.
It sucks, at the time the stock went from around 60 to about 10 overnight. I feel pretty bad for my former co-workers and Im glad I got out when I did. There are alot of really smart people working there that deserve better.
George Kurtz would be a good internal CEO replacement candidate.
..as if a million shareholders cried out in disgust then went suddenly bankrupt.
"McAfee announced Wednesday that it has terminated the employment of its president, Kevin Weiss."
Not only that, but I hear he was also running Norton Antivirus on his company PC.
Vincent J. Murphy
Spandex Justice
There are many things that, strictly speaking, are illegal. If nobody is enforcing the laws then it doesn't matter; you won't be prosecuted for doing them.
What Enron, Worldcom, etc. did was focus people's attention on some things that people used to get away with. Backdating options was almost never prosecuted. By the time that the authorities started prosecuting, it had become something like standard practice. The result is that there are lots of people to prosecute.
This scam took a statistician to find and prove and that was only because stock option grants to executives are publically published at the end of each fiscal year prior to the SOX law. Now they have to be reported in a matter of just a couple of days which is why all this BS ended in 2003. IMHO, the only way this could be so wide spread and adopted it must have been touted by accounting consultants, financial consultants, and executive placement firms.
What concerns me even more is that this is surely just one of many widely used scams by executive to steal money from the company and shareholders. Obviously this scam had to be replaced with another money maker for executives once the SOX law was passed in 2002. We live in a weird era where executives have complete control over these companies and corporate raiding is the norm.
...McAfee Inc.'s stock is... up ?
"I have no special gift, I am only passionately curious." - Albert Einstein
And in the east bay, the Oakland Coliseum was called "Network Associates Coliseum", but the signs on the highway went to McAfee about 6 months ago..
So I hope this scandal can become a catalyst to start a public outcry to have McAfee's naming rights contract voided and us Californians can go back to naming our public buildings what they were intended.
Wonders when Microsoft will buy naming rights to the Hoover dam and call it "Microsoft Windows Vista Dam" or some such nonsense.
-=[ place
Didn't Borland/Inprise prove anything about this guy?
Ever since the release of this news, the McAfee antivirus product we are required to use at work has periodically jumped to 99% CPU utilzation.
Of course it did that before the news too...
I still call it Candlestick.. Let Monster xxxxx give me money each time call it how they want!
-=[ place
Did I mention that the Concord Pavilion is now called the "Sleeptrain Pavilion" after the F**king mattress delivery company?
-=[ place
and I take the ferry out to the "Ray's Pizza Liberty Statue"... Argh!
-=[ place
. . . Samenuk was named a distinguished alumnus at his high school alma mater, Saint Ignatius in Cleveland, Ohio, earlier this year.
/ default.shtm
http://www.ignatius.edu/advancement/alumni/Awards
Sorry, I couldn't figure out how to link this properly; this is my first comment.
Wow, Dale Fuller taking over as interim CEO. He totally tanked Borland - let's see what he can do with McAfee. Maybe he'll turn them into an application lifecycle management company, too. I can't get over this decision.