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To: Lizzie Tudor who wrote (11752)	5/24/2002 4:28:05 PM
From: stockman_scott	Respond to of 57684

Pitt: Stand Behind Your Numbers Friday May 24, 3:24 pm Eastern Time WASHINGTON (Reuters) - U.S. regulators next month will consider a rule that would force chief executives to sign off on the accuracy of their financial statements in a bid to hold them more accountable, Securities and Exchange Commission Chairman Harvey Pitt said on Friday. The proposal is part of an effort to improve accounting and restore confidence in corporate America. The SEC is under pressure after the stunning collapse of Enron Corp. (Other OTC:ENRNQ.PK - News) rattled investors' faith in executives and their auditors. "We've attempted to influence corporate behavior by reminding companies and their officers about their responsibilities and discouraging rewarding them for poor stewardship," Pitt said in a speech to the mutual fund industry's trade group, the Investment Company Institute. In his speech, Pitt alluded to the SEC's March charges against John Gallo, the former president and chief operating officer of IGI Inc. (AMEX:IG - News), for allegedly violating antifraud provisions and lying to auditors. The SEC sought to recoup bonuses, options and salaries paid for financial performance it said was a sham. Pitt said on Friday that the SEC will continue to seek similar charges against others.

To: Lizzie Tudor who wrote (11752)	5/25/2002 2:10:04 PM
From: stockman_scott	Read Replies (1) \| Respond to of 57684

Deal-Maker CEOs Fall From Grace By Tom Johnson Saturday May 25, 12:44 pm Eastern Time NEW YORK (Reuters) - With a single phone call in November 1997, Bernard Ebbers cemented his reputation as a formidable wheeler and dealer. Having already put $30 billion on the table to acquire long-distance company MCI, the chairman of telecom company WorldCom Inc. (NasdaqNM:WCOM - News) pored over the details of a possible court challenge from rival bidder British Telecom. Without even an attempt at negotiation, Ebbers phoned in a staggering offer: He would pay $7 billion in cash for BT's (London:BT.L - News) 20 percent MCI stake -- if it would just go away. BT did just that, saddling WorldCom with a pile of debt in the process, and the hard-charging Ebbers went on to close what Fortune magazine would later hail as the "Deal of the Century." It was a designation nearly a dozen other high-flying U.S. CEOs could have argued was rightfully theirs during the go-go era of the late 1990s. Today, Ebbers is out of a job and drowning in debt because of the loans he took out to buy his company stock. WorldCom, like many of the era's most acquisitive companies, lies in near-shambles, burdened by massive debt loads, feeble stock prices, multibillion-dollar write-offs for failed deals and investor ire at the expansion strategies that once made them the darlings of Wall Street. "Many of these individuals are very bright and creative," said Jonathan Layne, co-chair of the corporate transactions group at Gibson Dunn & Crutcher. "They have a vision on which they can execute, and they can develop a strategy and move forward. But sometimes they lose sight of objectives and are swallowed up by their own success." LOFTY EXPECTATIONS The list of acquisitive CEOs who have fallen from grace in the last few months is a lengthy one, with names ranging from conglomerate Tyco International's (NYSE:TYC - News) Dennis Kozlowski to telecom company Qwest Communications International's (NYSE:Q - News) Joseph Nacchio. The executives once routinely appeared on magazine covers and the front pages of newspapers, and Wall Street eagerly awaited their next move. Now their once-glowing reputations have been tarnished. In almost every case, the executives' seemingly unsatiable appetite for acquisition helped breed an untenable environment where success became more difficult with every deal, merger experts say. "There was a lot of empire building and ego building," said Michael Lord, assistant professor of management at Wake Forest's Babcock Graduate School of Management. "I'm not sure which comes first, but you certainly get a lot of press for doing deals. Indeed, Kozlowski spent more than $65 billion on acquisitions over the last several years, earning a reputation on Wall Street as a master integrator of companies. But soon after the collapse of Enron Corp., skittish investors turned their ire on Tyco, as Kozlowski unveiled a plan to break up the conglomerate into more discernible parts. The proposal raised immediate -- and unfounded, the company says -- fears about the method used by the Exeter, New Hampshire-based conglomerate to account for its acquisitions. Those concerns were inflamed further when investors learned Tyco did dozens of smaller deals that were disclosed only in the fine print of annual reports. "This boom market made every deal look like a good deal, even in telecom," said Syd Finkelstein, a professor of strategy and leadership at the Tuck School of Business at Dartmouth. "It was easy to make an acquisition look like a hero. Now reality has struck, so it's the hangover days." WHO'S TO BLAME? Finkelstein contends most of the troubled CEOs are, in large part, getting a bad rap. He argues, for instance, that Ebbers and Nacchio actually made brilliant moves in using their overvalued stocks to acquire MCI and U.S. West respectively -- two old-line telecom companies with strong cash flows that are now essentially keeping the parent firms afloat. "They are running into a lot of trouble right now, but I don't think it should be due to their M&A approach over the years," he said. "I often cite Tyco as a best practices story. They are a well-run M&A organization. Their problems are less making bad acquisitions and more having the misfortune of being a very diversified company with a lot of short-sellers going very aggressively against them." Even so, many of these executives possessed a feeling of invincibility that ultimately led them to stop listening to those around them, said Dr. John Maxwell, a best-selling author who studies management practices. Future executives would be wise to learn from those mistakes, he said. "When you are highly successful, what happens is people don't interrupt you," said Maxwell, whose latest success is "The 21 Irrefutable Laws of Leadership." "Maybe you don't get 'yes-men' around you, but you get silent people -- which is just as bad. "The qualities that make leaders successful are the same qualities that bring them down. Leaders are very vulnerable. We many times want to put them into a position where they are quicker, faster and smarter than anybody else," Maxwell said.