‘Baseless Innuendos’ Not News
Regarding “Good-News Link to Options Suggested,” June 7:
Your coverage of Corporate Library’s unsubstantiated suggestions that Countrywide Financial Corp. may have timed news releases to inflate the value of stock option grants to executives and employees is an egregious example of irresponsible journalism.
Countrywide has established a well-earned reputation as a company that operates with the highest degree of integrity, and therefore we take great umbrage when the media undermine our reputation by reporting as news a set of baseless innuendos.
Even an analyst with Corporate Library said he found no evidence that such timing actually occurred. In spite of this, The Times demonstrated dogged determination to run a story.
Countrywide’s extraordinary performance speaks for itself. In the last five fiscal years, our earnings rose at a compound annual growth rate of 48% and total assets grew at an annual rate of 52%, from $23 billion to $175 billion. Countrywide’s stockholders in those years enjoyed a total return of 188%, compared with the Standard & Poor’s 500 index’s return of 3%.
Perhaps the next time the L.A. Times chooses to write about Countrywide, you will use it as an opportunity to report on some of our accomplishments and contributions to the community that both Countrywide and you serve.
Daniel I. Tarman
Managing Director,
Corporate Communications
Countrywide Financial
Calabasas
*
It is “bad news” that a reputable paper such as the Los Angeles Times would print a story that is -- generously -- an example of irresponsible journalism.
The article pays homage to a Corporate Library report in which the organization accuses a handful of Fortune 500 companies of issuing favorable news releases after granting executive stock options, presumably to “give the stock price a boost.”
The article then proceeds to quote one of Corporate Library’s own staff, who states that his firm found no evidence of companies’ issuing favorable news releases shortly after stock options were granted and goes on to say, “We are not saying that this is manipulation, but we are concerned that it might be.”
These comments speak for themselves, and a major national news outlet giving print coverage to a report that is based on loose assumptions could set a dangerous precedent -- especially when the accusations pertain to a successful company, its employees and shareholders.
Perhaps more important, however, the article minimizes the facts that the companies cited use the best practice of issuing options on a fixed date and, more significant, that those options do not vest until years after they are granted.
It is one thing to report on a company legitimately accused of wrongdoing, but in a case like Countrywide’s, where the stock has increased from $10 a share to nearly $40 in the last five years, the responsible headline should have been “Study Confirms Shareholders’ Gains.”
John J. Castellani
President,
Business Roundtable
Washington
