Almost all of my friends are convinced that Black is going to the big house. This is interesting to me. They pretty much think the jury is going to nail him for taking money that should have gone to the shareholders. The way I see it—perhaps because I spend so much time watching and writing about CEO compensation—vast sums of money flowing to CEOs whether or not they deserve it is a pretty standard occurrence. And, as in the case of Black, it is all revealed in the regulatory filings and approved by everyone with a vote.
The defence’s star witness, Alan Funk, testified that he plowed through 400,000 pages of documents and declared definitively on the stand that he found no evidence of fraud. Given that he is a forensic auditor, which must surely be the most boring and tedious of professions, Funk showed reasonable charisma as he crossed swords with prosecution lawyers who attempted to discredit him by pointing out that he was being well-paid. This was yet another instance of the prosecution chronically failing to distinguish between greed associated with being over-paid and fraud as in willful deception.
In its closing arguments, the prosecution continued with greedy, wily, and arrogant equates to fraudulent, and I suspect the defence will counter with greedy, wily and arrogant equates only to unseemly.
So in the end, I am less scandalized by Black than are many of my friends. I am more scandalized by the majority of the class of large-firm CEOs in general. In the next two weeks we should come one major step closer to figuring out whether Black’s behavior is simply scandalous or across the line to criminal.