When 'CEO' Spells 'Crooked Excessive Overlord'
Luckily for the stock market and individual shareholders, the Clippers are not a publicly traded entity. Some other once-big-name firms, however, aren't so fortunate. Here's a look at several of the more egregious recent examples of destructive CEO behavior.
Kenneth Lay, Enron
Now a byword for corporate fraud on a massive scale, Enron was an energy conglomerate that posted impressive results throughout the 1990s, at one point reporting over $100 billion in revenues.
Such numbers sounded too good to be true, and they were. Lay and company did this through widespread and pervasive fraud using a variety of dirty accounting tricks. Lay was found guilty of 10 counts of securities fraud and related charges in 2006, but he died several months before he was scheduled to be sentenced.
While it was a stock market darling, Enron stock hit nearly $91 per share at one point. Barely a year and a half later, after the scandal broke, it could be had for a mere 12 cents.
Bernie Ebbers, WorldCom
With large-scale deregulation recently behind it and the rise of the Internet ahead, the telecom industry was exciting in the 1990s. And few companies were as thrilling to watch as hungry operator WorldCom.
The busy company grew huge through acquisitions, swallowing companies such as CompuServe and MCI Communications, and reaching an ultimately unconsummated deal to merge with Sprint (S).
But a general corporate pullback on telecom spending started to bite, the debts piled up, and the company's stock began to slide. In desperation, management started to cook the books in order to inflate net profit.
The company was forced to enter Chapter 11, and ultimately Ebbers was socked with a raft of charges, including fraud and conspiracy, for which he was sentenced to 25 years in jail in 2005.
Shareholders were left holding the phone. WorldCom stock was canceled outright, becoming completely worthless. In 2005, Verizon (VZ) bought its successor company for $7.65 billion.
L. Dennis Kozlowski, Tyco
When your company funds a lavish, $2 million party nicknamed "the Roman Orgy," claiming that it's a shareholder meeting, you know you're in trouble. This was only one of the many hallmarks of Dennis Kozlowski's tenure as CEO of sprawling conglomerate Tyco International (TYC).
%VIRTUAL-article-sponsoredlinks%That lavish soiree was indicative of his style as a boss: Kozlowski was a guy who liked to spend. Tyco under his reign was an insatiable acquirer, buying everything from pharmaceutical companies to sprinkler manufacturers.
The problem was he didn't seem to distinguish between acquiring assets for the company and adding to his personal stash. The law soon caught up with Kozlowski, and in 2005 he and Tyco's ex-CFO Mark Swartz were found guilty of 22 counts of conspiracy, grand larceny and securities fraud. The onetime CEO served time until earlier this year, when he was released on parole.
Tyco shares trade at around $40 a share these days, far from the onetime high of over $120.
John Rigas (and sons), Adelphia Communications
It's bad enough when a single individual wrecks his or her company through greed and mismanagement. It's much worse if their family joins in on the looting.
Cable powerhouse Adelphia Communications was led by CEO John Rigas, whose sons Timothy as chief financial officer and Michael as executive vice president of operations.
In 2002, Adelphia disclosed that the Rigases "co-borrowed" $2.3 billion with the company. Among other misdeeds, they were accused of tapping more than $250 million in corporate funds to meet margin calls on their personal investments,and spending nearly $13 million to build a golf course.
John received a 15-year sentence for fraud and conspiracy. Timothy was hit with a tougher stretch of 20 years. Michael walked away relatively unscathed with a 10-month home-confinement sentence.
In 2006, Comcast (CMCSA) and Time Warner Cable (TWC) carved up the useful assets of the firm, acquiring them for a combined $17.6 billion. Adelphia technically still exists today, but it's essentially a paper entity and a hollow shell of the big company it once was.
Motley Fool contributor Eric Volkman has no position in any stocks mentioned. Nor does The Motley Fool.