A Silicon Valley CEO Speaks Out

Posted by: Peter Burrows on August 15, 2006

In recent months, I’ve made a point of asking CEOs I speak with for their view on the stock options scandal. Almost none have been willing go on the record, for fear of drawing unwanted attention to their own company’s books. But there is a very common prevailing view: that despite the growing number of companies that have been implicated or who have admitted accounting irregularities, that the vast majority of Silicon Valley companies are run by talented, law-abiding people—and that the scandal is now doing more damage than good for the investors that are ostensibly being protected.

Finally, one has agreed to share his views: Check out this interview with NetApp’s Dan Warmenhoven.

I’m really glad Dan agreed to do this, because all perspectives need to be heard on this complex issue. In recent weeks, I’ve heard too many of my sources use the phrase “McCarthyism” to describe the current environment of fear. Because of the legal, regulatory and media pressure, they don’t feel free to publicly declare their innocence or even share their views on options accounting during the Boom. Like many others, Warmenhoven believes that at the end of the day, many companies may have to restate earnings to clean up paperwork and procedural problems, but that few will be shown to have intentionally set out to fleece investors.

Of course, some real crooks will be exposed. As a journalist, I’m certainly not giving anyone a free pass. And yes, the McCarthy metaphor is overdone. No lives of truly innocent people have been ruined that we know of, there are no blacklists, and the destiny of those who have been indicted will be decided in courtrooms—not by a demagogue.

But I don’t think my sources’ complaints are just the kvetching of spoiled, mega-rich techies that don’t like the scrutiny. This is a complex issue, and many smart people have not been willing to speak their mind. That’s never a good thing.

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BusinessWeek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, Douglas MacMillan, and Spencer Ante dig behind the headlines to analyze what’s really happening throughout the world of technology. One of the first mainstream media tech blogs, Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.

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