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Stock Options Scandal Rocks McAfee

Posted by ryuzaki0 on from the no-escaping-that-worm dept.

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.'"

6 of 78 comments (clear)

  1. Re:I'm sensing a pattern here. by jellomizer · · Score: 4, Insightful

    Well it is an issue of years of abuse. And lately there is a crackdown on such abuses. I will expect more in the future as the feds get around to invistigating other companies.

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  2. remember the 90s bubble by night_flyer · · Score: 4, Insightful

    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...

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  3. The Crux of the Matter by Billosaur · · Score: 5, Informative
    McAfee set up a special committee of independent directors to look into the company's practices of stock-option granting. The committee was assisted by independent counsel and forensic accountants. Based on the committee's findings, McAfee now expects to have to restate financial results over a 10-year period to record pre-tax non-cash charges of between US$100 million and $150 million for stock-based compensation.

    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.

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  4. Update your signature files by saboola · · Score: 5, Funny

    Be sure to update your CEO.dat file on a daily basis, as new CEO's are released into the wild daily.

  5. Re:All you need to know by seanadams.com · · Score: 4, Informative

    When management is the BoD that setup doesn't work so well.

    It's not quite that black and white. If you have competent management, it is GOOD to have them on the BOD (plus a few, perhaps a majority, of disinterested members for checks and balances). Otherwise the BOD doesn't know what the fuck they're supposed to be doing, which is quite often the case. For example, in a private company it is not unusual for the founder to also be CEO and Chariman. Keep in mind, shareholders ELECT the board and as long as your charter gives them reasonable voting rights it should not be able to get too far out of hand. Ideally shareholders should elect a few people who are "in the know", plus a few principal shareholders who are NOT employees, plus a few industry experts who are compensated only for the time in serving on the BOD.

    Also board members, be they management or not, have a fiduciary responsibility to shareholders, so if the CEO does something against shareholders interests he is liable. And not just to the tune of whatever personal benefit he may have gained, but jointly for the full damages attributed to malice/fraud on the part of the BOD.

  6. What other scams are out there? by rabun_bike · · Score: 4, Insightful

    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.