No-No at Boeing
1. Hearty Harry
Turns out Harry Stonecipher's critics had the former
chief all wrong.
Yes, Stonecipher was ousted Monday after 16 months in his second stint in the aerospace titan's executive suite. The board demanded his resignation after discovering an ethical lapse involving a relationship with a female Boeing executive.
The irony of Stonecipher conducting an extramarital affair hasn't escaped public notice. After all, the 68-year-old executive staked his run at the top on strict adherence to a companywide code of ethics that he devised.
But the latest episode illuminates an even greater contradiction in the Stonecipher legacy, we think. Before this week, after all, the impression most people seemed to have of Stonecipher was that he was the very embodiment of the heartless CEO.
Consider the outsize reputation that Stonecipher dragged along with him when Boeing acquired rival McDonnell Douglas in 1997. Workers derided the exec as "Hatchet Harry" and fretted that his main interest was in cutting costs. Not long after Stonecipher joined CEO Phil Condit at the helm of Boeing following the McDonnell Douglas merger, the company laid out plans to slash more than 50,000 jobs by the end of 2000.
Moreover, Stonecipher did little to shed the tags his detractors slapped on him -- words like abrasive and confrontational. Indeed, in a 1999 interview with The Wall Street Journal, Stonecipher positively embraced the no-feelings stereotype. "Everybody thinks I'm a mean son of a gun, and that perception gets a lot of things done," Stonecipher said.
Of course, the implication of that remark is that Stonecipher only seemed mean. And though he told
The Wall Street Journal
on Monday that he regretted the events that led to his departure -- "I used poor judgment," he said -- it seems likely this latest twist could serve to cast him in a more favorable light for posterity.
Like it or not, after this Monday, Harry Stonecipher will go down in history as a lover -- not a fighter.
2. Waksal on the Wild Side
This week marks the five-year anniversary of the
all-time high. Scribes everywhere have commemorated the event by offering up financial advice gleaned from the market's plunge.
Avoid the shares of companies that have a lousy business. Stop before you double down on a losing bet. Don't sink your life's savings into outfits associated with sock puppets.
There was one recommendation we didn't see, though: Don't let Sam Waksal tell you what to do with that
Waksal, of course, is the former executive who was convicted of insider trading in his biotech firm's shares. Prosecutors say he tipped off various chums in December 2001 that the Food and Drug Administration was about to issue a negative ruling on ImClone's Erbitux cancer drug.
Now serving 87 months in jail, Waksal remains linked in the public's mind with longtime chum Martha Stewart, the
Martha Stewart Living Omnimedia
founder who was released this past week after five months in jail.
December 2001 seems almost as long gone as Nasdaq 5000, but those conversations Sam Waksal had with his friends keep on paying dividends -- for the feds, at least.
On Wednesday, federal officials arrested Zvi Fuks and Sabina Ben-Yehuda, charging them with securities fraud. The
Securities and Exchange Commission
filed a parallel civil case, aiming to recover profits from the two.
Like Stewart, Fuks and Ben-Yehuda allegedly sold stock after Waksal tipped them off about the FDA warning, which caused ImClone stock to drop 16% in a day. The SEC said Fuks sold his shares for $5 million, while Ben-Yehuda's sale generated a gross profit of $73,453. Lawyers for both said they were innocent and would be exonerated in court.
Notably, the latest arrests came after Waksal testified against Fuks and Ben-Yehuda before a grand jury.
We don't know the defendants, but they'd only be human if they wished Sam Waksal would just keep his mouth shut for once.
3. Beantown Soup
Sam Waksal's friends aren't the only ones cursing their luck lately.
Just this week,
lost its top lawyer and general counsel, Thomas Bucknum. And it seems like the timing could have been better.
The news, after all, comes as the Cambridge, Mass., biotech firm prepares to defend itself against a string of shareholder lawsuits claiming the company violated securities laws by allegedly failing to disclose immune system risks linked to the Tysabri drug it sold along with Ireland's
It appears that Bucknum has his own issues to work through. The executive, who had worked at Biogen for nine years, resigned this week after reports emerged that he just happened to cash in a huge chunk of stock right as the company was learning of Tysabri's problems -- and before the company told the public, causing its stock to crater. The SEC is looking into the matter, according to media reports.
For its part, Biogen said last month that Bucknum didn't know about the problems with Tysabri when he sold the shares. On Thursday, a spokesman said Biogen wouldn't comment beyond its terse previous public disclosure on Bucknum's departure.
In any case, Bucknum made $1.9 million in a Feb. 18 sale of stock underlying exercised options, according to filings. That sale came the same day Biogen was learning that the multiple sclerosis drug was being linked to some patient illnesses. Biogen pulled Tysabri Feb. 28 after consulting with regulators over the patient problems.
The bulk of Bucknum's options would have been worthless at the stock's lower price,
We assume Bucknum is enjoying more time with his family, but it's hard to know for sure. A call to his residence in Boston wasn't returned.
4. Stress Test
If the people at
are looking a little stressed lately, it's hard to blame them.
The Atlanta-based company warned Wall Street this week that a recent surge in oil prices will squeeze Delta's finances and leave it with steep losses for 2005.
The news comes after Delta's workers made huge wage and work rules concessions last year just to keep the airline flying.
Of course, Delta is hardly alone there. For years there has been no shortage of bad news in the airline industry, what with big names like
stuck in Chapter 11 and other old-line carriers racking up losses in the billions.
Still, the setback comes just two months after Delta
rolled out its SimpliFares policy, which cut prices on some routes by as much as 50% while reducing fare categories and eliminating required Saturday-night stays.
The company's Web site entices would-be customers by offering, "
Have Less Stress."
In its annual report, filed Wednesday evening with regulators, Delta stood by
the simple life.
"While SimpliFares is expected to have a negative impact on our operating results for some period, we believe it will provide net benefits to us over the longer term by stimulating traffic; improving productivity by simplifying our product; and increasing customer usage of delta.com, our lowest cost distribution channel," Delta said in the filing.
Still, with analysts saying Chapter 11 remains a distinct possibility, it's hard to imagine that anyone involved with the carrier is stress-free nowadays.
5. Tall Order
Every juror knows public service involves sacrifice. But you've got to draw the line somewhere.
That could help explain a recent jury request in the Bernie Ebbers trial. Of course, the ex-
CEO is in U.S. District Court in Lower Manhattan this week, facing charges he oversaw an $11 billion accounting fraud. Deliberations were in their fifth day Thursday after six weeks of testimony.
After another day spent mulling over the finer points of line-cost accounting, jurors had a request for Judge Barbara Jones.
They asked her if they could get pizza for lunch. Members felt so strongly that they even specified where they wanted to order from (
) and that they would pay if necessary.
Recess at Bernie's
"We appreciate our cafeteria lunches," the jury said in a note, according to
The Associated Press
, "but we would appreciate a change." Jones said she would grant the request.
Yes, justice may be blind, but even it can see that the courthouse cafeteria isn't all that appetizing.
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