CFOs do it. CEOs do it. Research analysts do it. Even poets laureate do it. It's the edu-fib. An edu-fib is a lie on a résumé about one's educational history, usually used early in a career to enhance professional opportunities. But if that lie is still there when an executive hits the heights of success, an edu-fib can make for some mighty embarrassing (and expensive) retractions, especially in today's low-tolerance climate for dishonesty.
According to Joseph Daniel McCool, editor of Executive Recruiter News, between 5 percent and 15 percent of executive résumés contain a falsification, embellishment, or omission. A raft of them have been outed in the past two months, including Ken Lonchar, CFO of Veritas Software; Ronald Zarrella, chairman and CEO of Bausch & Lomb; Bryan J. Mitchell, chairman and CEO of MCG Capital; Ram Kumar, director of U.S. research for Institutional Shareholder Services; Quincy Troupe, poet laureate of California (who knew poets needed résumés?); and uber-analyst Jack Grubman.
All the edu-fibbers admitted, eventually, that they fabricated parts of their résumés. Lonchar and Troupe lost their jobs, but Zarrella and Mitchell were both allowed to stay on, though they were docked bonus payments (Zarrella lost $1.1 million; Mitchell forfeited $350,000, his chairmanship, and had his severance package cut). All the companies affected reaffirmed their faith in the accuracy of their financials — despite their truth-challenged executives.
"We had just gone through the due diligence for the certification process when this came out," said a spokesperson for Veritas. "We are confident in the numbers." Bausch & Lomb's board is also buying Zarrella's "unqualified representation that there are no other issues of trust or veracity about which we need to be concerned," according to a company statement. This is remarkable, since Zarrella first claimed the fib was a "proof-reading" error.
"Lies are like potato chips. You can't tell just one," says Michael Josephson, president of the Josephson Institute of Ethics in Los Angeles. About Zarrella and Mitchell keeping their jobs, he adds, "The higher up you are, the more intolerable dishonesty needs to be, and yet it's almost the reverse." —Kris Frieswick
Go East, Young Man?
Mitt Romney used his handling of this year's Salt Lake City Winter Olympics as a springboard to the Massachusetts governor's job. Will he bring his Utah homeboys along with him?
Fraser Bullock, fresh from reporting a surprising $100.1 million surplus as CFO and COO of the Games, tells Grapevine that he, for one, has no plans to move east...at least not right now. Rather, Bullock plans to join three others in forming a $250 million Utah-based fund to invest primarily in "intermountain and California enterprises." The former airline CFO became CEO of the Salt Lake Olympic Committee (SLOC) after Romney left to begin campaigning.
Bullock is still awed by how smoothly — and profitably — the Winter Games went, considering that when he joined the SLOC, it was steeped in controversy over bribes that earlier organizers had paid to bring the Olympics to Utah.
"Nothing went wrong. Nothing," says Bullock, and an untapped $55 million contingency fund constituted much of the surplus. (The money was returned to the Olympic movement, the feds, or to the state in the form of sports-related projects.) An unprecedented level of volunteer participation saved millions of dollars, but Bullock credits cost-cutting initiatives for building the surplus far beyond the SLOC's projections.
Has Bullock been tempted to rejoin the Romney bandwagon in Massachusetts, where the two once worked together at Bain & Co.? No, Bullock says, "but if Mitt goes on to other things in his career, private or public, I might consider it." Does this mean the Massachusetts governor-elect already has his eye on Washington?
"I'll let you fill in the blank there," says Bullock. —Roy Harris
CFOs on the Move
Joseph Scirocco is new CFO of Tommy Hilfiger Corp. and is keeping his SVP and treasurer roles.... Computer maker Cray Inc. has named Scott Poteracki VP of finance and CFO, replacing Douglas Ralphs, who resigned.... Frank Vitrano, formerly CFO of Pathmark Stores Inc., is now its president and CAO, taking over from Jim Donald, who is now president of Starbucks North America.... More big changes at energy firm Aquila Inc., which has named Rick Dobson as interim finance chief, replacing Dan Streek. It is the third management change in one month.