Tuesday, August 07, 2007

Bulletin: Overstock.com Has a 'Code of Ethics'

Isn't it amazing? The most unethical, vile company in the United States has a code of ethics. Isn't that a bit like an ice machine on the Titanic? Read all about it in Sam Antar's blog.

We know this because Overstock.com's lapdog board of directors just granted CEO Patrick Byrne a waiver from the code. Seems Byrne wants to make a..... what the hell is this? ... to make a $1.2 million loan to the "Senior Vice President, Branding and Customer Care of the Company," Stormy Simon.

Stormy came on the board the company six years ago. Like all Byrne confidantes, such as in-house stalker Judd Bagley, she has gone above and beyond the call of duty in the service of her wack-a-doo boss.

As Bethany McLean observed in an article a few years ago:

Perhaps nothing illuminates the growing strangeness surrounding Overstock better than an incident involving an Overstock senior vice president named Stormy Simon. Through the gossip mill, David Rocker heard that she was unhappy. So he got word to her that she should call him. She wasn't planning on complaining, but Byrne wanted to see what Simon could learn -- he had heard that former employees were being paid to divulge information about Overstock.

Simon's phone rang while she was in her office in Salt Lake City with Byrne. She put Rocker on the speakerphone so that Byrne could listen and told Rocker that she was in Philadelphia, close to his New Jersey office.

They agreed to meet the following morning -- she had to take the redeye to Newark to make the appointment. Simon told Rocker that she could "sink Byrne, I can sink his ship today." ("She showed him some thigh," Byrne says.)

Rocker wasn't sure whether to believe her. He told her that if she had valid concerns, she should get a lawyer and should take them to the SEC.

Since then, of course, there has been a whole lot more "strangeness" (to put it mildly) that has clung like moss to this dirtbag of a company, ranging from an astroturf website to attack Byrne's enemies to the nutty ravings of its CEO. McLean, typically, was subjected to an obscene attack by Byrne after this article came out.

Stormy, as you can see from the article, really knows how to earn a paycheck. Still, given the actual state of this train wreck of a company, I wonder why Byrne is so generous with this particular subordinate, loaning her $1.2 million out of his own personal funds, contrary to (let's hold down the laughter) that delightful and unenforced "code of ethics." I wonder what she is going to do with the loan.

Hey, wait a second! I know. She's going to get a college diploma! Wasn't it nice of Byrne to hire for a senior executive position someone with "only a high school diploma and minimal college" (as a conference bio pointed out a couple of years ago)? Damn nice of him.

Come on, don't snicker? He doesn't appear on "Worst CEO of the year" lists for nothing. It takes plenty of hard work to achieve such a distinction.

UPDATE: Sam's blog had pointed out that Overstock's "independent" directors have their "heads in the sand" by selectively enforcing -- ignoring, really -- the corporate code of ethics. Seth Jayson in the Motley Fool, pointing to the Overstock contention that this loan from the CEO to a senior VP "would not involve the company," comments:

Would not involve the company? A giant personal loan from the CEO to a senior vice president doesn't involve the company? Doesn't create any conflicts of interest?

Nice catch, Sam. But it's not fair to say they've got their heads in the sand. They don't appear to have heads at all.

Boeing, for instance, could have tried the same lame argument when Stonecipher and his employee had consensual affair. Boeing didn't, because it either had a) integrity or b) a lot of scrutiny because of its past gaffes.

Either way, the policy existed for good reason, and it didn't get waived simply because the CEO figured the rules don't apply to him.

But Patrick Byrne's pampered upbringing seems to have convinced him that no rules apply to him, not even the ones he makes up himself.
True enough. But I think it is interesting that, as Sam points out, Byrne has not decided to exempt himself from the ethics rules to paper over his other obvious violations.

Digg my article


Wall Street Versus America was published by Penguin USA on April 6.
Click here for its Amazon.com listing and here for more information on the book, from my web site, gary-weiss.com.

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