NEW YORK (AP) -- It's hard to decide whether to cheer or jeer Global Crossing chairman Gary Winnick's offer to give $25 million of his own money to employees who lost it all when his company went bankrupt.
He is the first executive of a scandal-plagued company to actually volunteer to give something back to those people who had been the backbone of the business.
But $25 million may not be as much as it sounds like. This is someone who sold $734 million worth of stock, including $123 million in the weeks before the company began to collapse.
When you look at it that way it, the offer seems to be less of a payback.
As scandals have rocked corporate America, executives haven't lost much. Many cashed out of their holdings before the troubles of financial fraud went public, allowing them to walk away with bundles of money while those who worked for them went bust.
Some employees lost everything, their fortunes at times evaporating almost overnight. Few got severance pay and most saw their retirement savings vanish.
There's been a public outcry for executives to hand over some of their holdings to the employees that served them.
But no one had made such a move until Winnick's surprising pledge on Tuesday.
It came while he was testifying to a congressional panel investigating whether Global Crossing used misleading accounting to boost revenues artificially and thus gave a false picture of the companies' financial health.
Winnick, who founded the company in 1997, claimed that that he had no idea of such manipulation. That contradicted internal e-mail messages and previous testimony from lower-level executives.
He also said he didn't know that the telecommunication company's finances were deteriorating when he sold $123 million in stock at the end of May 2001, just weeks before he said he learned of looming problems at the company.
Global Crossing filed for bankruptcy in January, the nation's fourth-largest bankruptcy filing ever.
In the midst of his denials to the congressional panel, Winnick announced his $25 million offer. He said that was the amount of money employees had contributed to their 401(k) plans after the 1999 merger of Global Crossing and local phone company Frontier Communications Corp.
His pledge followed testimony from former Global Crossing employee Lenette Crumpler, who said she had lost her entire retirement savings -- $86,000 in total -- after keeping her money in the company's stock because of frequent reassurances from executives.
Winnick supporters will say his offer was a case of real compassion for those who've been left with nothing, his detractors that it was just public relations.
Either way, he's the only executive at any of the scandal-ridden companies to offer anything.
There haven't been any giveaways from others who cashed in big while their companies went belly up, like Enron's Key Lay or WorldCom's Bernie Ebbers.
Winnick also challenged others to do the same, but only time will tell if more executives feel inspired -- and possibly pressured -- to give from their own coffers, too.
Winnick's reputation got a lift from his pledge, and maybe that's all he wanted.
The offer amounted to only 3 percent of the $734 million he cashed out of Global Crossing stock. And when that $25 million is broken down among the thousands of employees who have been wiped out by the financial mess at Global Crossing, it doesn't add up to much.
In the end, it's more gesture than generosity.
Rachel Beck is the national business columnist for The Associated Press. Write to her at rbeck(at)ap.org
© 2018. All Rights Reserved. | Contact Us