Читать книгу Intellectual Property - Russell L. Parr - Страница 14

A lifetime of allegedly atrocious behavior led to the total loss of a very successful company. While not a public company, all those involved with the financial performance of it have been wiped out.

In 2005, Harvey Weinstein co-founded the production-and-distribution Weinstein Company. It produced and distributed the very successful independent films “Sex, Lies, and Videotape,” “The Crying Game,” “Pulp Fiction,” “The English Patient,” “Shakespeare in Love,” and “The King's Speech.” Weinstein's films have earned more than 300 Oscar nominations.

For more than 20 years, Weinstein had been trailed by rumors of sexual harassment and assault but allegedly a variety of moves, including legal threats and settlement payments, have suppressed his history. On October 5, 2017, New York Times reporters Jodi Kantor and Megan Twohey revealed multiple allegations of sexual harassment against Weinstein including unwanted touching, forced oral sex, and rape. The article led to the resignation of four members of the Weinstein Company and to Weinstein's firing. Allegations swirled that executives and board members were aware of Weinstein's behavior (on October 10, the Weinstein Company's board issued a statement, writing that “these allegations come as an utter surprise to the Board. Any suggestion that the Board had knowledge of this conduct is false”).⁸

The New York Times article spawned months of other investigative articles and a New York City police investigation led to Harvey Weinstein being charged with rape. Weinstein was seen as repugnant and as his entity was closely tied to his company, Weinstein Company was an outcast.

Victims of Weinstein, in a class action lawsuit, sued him and named his company as a co-defendant. Company employees, actresses, and models joined the lawsuit. A television production team sued the company over the collapse of a planned Amazon series, which was supposed to be produced by the firm but was scrapped after the scandal broke. The financial strain and unknowable outcome from the lawsuits drove Weinstein and company into bankruptcy.

Weinstein Company declared bankruptcy in March 2018 with less than $500,000 in cash, after failing to find a buyer that would give the company a second life outside the protection of the court. Delaware bankruptcy judge Christopher Sontchi signed off at a hearing on the company's bankruptcy auction agreement to sell its assets to the Dallas-based private equity firm Lantern Capital Partners for $289 million.⁹ All proceeds from the sales are expected to go to satisfy creditors and successful plaintiffs.

It seems that although well-behaved CEOs may not be able to justify their large compensation packages with correspondingly higher company performance, when they misbehave, investors face risks and losses they never saw coming. The value of highly paid CEOs should be questioned when valuing a company's assembled workforce.