by Christopher Lindquist

CEO Scandals Throughout (Recent) History

Opinion
Oct 17, 20062 mins

CIO’s Christopher Lynch submits this nugget.

In September, Hewlett Packard Chairwoman Patricia Dunn resigned for allegedly ordering private investigators to spy on board members and journalists to find out who’d been leaking sensitive company information to the press. Now the man who replaced her, CEO Mark Hurd, is on the hot seat about what he knew and when he knew it. Last week, he fielded questions from lawmakers about his involvement in the scandal and took responsibility for HP’s missteps. Then you have McAfee et. al. reeling from a stock options scandal and firing president Kevin Weiss. Of course, executive scandals are nothing new. But what impact do they really have on the corporate bottom line? Here we look at five CEOs from technology and IT services companies who handled their scandals poorly, and what affect that had (or didn’t have) on their companies.

Company:

Brocade Communications Systems, Inc. — Provider of switches and data storage supplies.

Former CEO:

Gregory L. Reyes

Reason for Resignation:

Resigned Jan. 2005 after company reported finding suspicious accounting of stock options. Plead not guilty Aug. 2006 to securities fraud and other charges. Case pending.

Company Revenue Then: $596,300,000

Company Revenue Now: $574,100,000

Stock Price Then: $6.14

Stock Price as of October 3, 2006: $7.56

Company:

Keane, Inc. — IT consulting

Former CEO:

Brian Keane

Reason for Resignation:

Resigned May 2006 after allegations of “personal misconduct.” 

Company Revenue Then: $955,900,000

Company Revenue Now: Not Available 

Stock Price Then: $14.36

Stock Price as of October 3, 2006: $11.64

Company:

Comverse Technology Inc. — Communications systems.

Former CEO:

Jacob “Kobi” Alexander

Reason for Resignation:

Stepped down May 2006 after he and others are accused of stock option manipulation. Disappeared in July after authorities unsealed a criminal complaint. Captured in Sept. in the Republic of Namibia. He has posted bail there, while awaiting extradition to the U.S.

Company Revenue Then: $959,400,000

Company Revenue Now: Not available.

Stock Price Then: $23.65

Stock Price as of October 3, 2006: $21.35

Company:

CA — Enterprise software vendor

Former CEO:

Sanjay Kumar

Reason for Resignation:

Resigned in April 2004 in wake of $2.2 billion accounting fraud. Plead guilty April 2006. Faces up to 20 years in prison.

Company Revenue Then: $3,276,000,000

Company Revenue Now: $3,796,000,000

Stock Price Then: $26.34

Stock Price as of October 3, 2006: $23.64

Company:

Qwest — Telecommunications

Former CEO:

Joseph P. Nacchio

Reason for Resignation:

Resigned June 2002 to “be with his family.” Charged with 42 counts of securities fraud and insider trading in December 2005. Case pending.

Company Revenue Then: $15,385,000,000

Company Revenue Now: $13,903,000,000

Stock Price Then: $4.80

Stock Price as of October 3, 2006: $8.61