May 29, 2006

Shivers running down Executive spines

Sir, After the “guilty” had been read out for Mr. Lay in the Enron case, one of the jury members stated unequivocally “To say you didn’t know what was going on in your company . . . was not the right thing to do”, and it must have sent shivers down the spines of all those responsible for public corporation who, in a world of derivatives and other complexities, are keenly aware that they are far from having a complete knowledge of what their companies are up to, as in fact, much worse, neither do many of those who design and trade these financial puzzles. It would seems like reality is now justifying some of the immense compensation packages of the Executives, on account of the risks of prison, or on account that they will now have to go back to the school, but then we guess that this is not really what they bargained for either.

Sent to FT May 29, 2006