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The Wall Street Journal’s Team Backdating Wins the Pulitzer!

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Don’t say we didn’t warn you. After it’s relentless and breathless coverage of corporate stock option backdating, the Wall Street Journal has reaped the ultimate reward in journalism—a Pulitzer Prize.
We’ve been one of the unfortunately rare sources of criticism of the Journal’s coverage of backdating. (Larry Ribstein and the Journal’s own Holman Jenkins are also among the thin ranks of critics.) It always stuck us as unduly scandalized, uncritically assuming that it was all a day of executive greed and theivery and misleading about the nature backdating. But like the Spartans at Thermopylae, it seems we’ve been overcome.
It was obvious that the Journal’s editors were gunning big-time for the prize. They released a front-page story on backdating on the last day the nominating juries were meeting at Columbia. But there’s no denying the reporting has had a major impact on the public discussion, as well as on corporate America, where chiefs have been toppled, prosecuted and, in one case, forced to flee the country.
It all started with a very simple idea—get some reporters to start digging into the findings of a few Midwest academics who had observed that many stock options grant dates were improbable. They seemed to have fallen on a perfect day for granting options—when the stock price was at an annual low. The academics concluded that it was more likely that the grant dates had been manipulated. The Journal simply followed up on this conclusion by naming names of the probable manipulators. It was classic muck-raking journalism that has succeeded beyond the dreams of most muck-rakers—and, in the process, has thrown a lot of muck into the public’s eyes.
And yet. And yet. We find ourselves still able to hope that this might lead to something that would be even more valuable than the Pulitzer Prize: a reconsideration of the criminalization of corporate governance. With so many c-level executives now former executives, the stocks of so many companies besmirched by the taint of scandal, some of those formers paying heavy fines and possibly facing serious prison time, the public might start to wonder whether we’ve pushed the Rudy Giuliani model of treating corporations like criminal families too far. A rollback of our rogue regulators might still be in the cards.
We apologize for our unusual optimism today. But as the champagne corks pop over at the Journal’s headquarters in One World Financial Center, we’ll comfort ourselves with the notion that the fall-out from the Journal’s backdating reporting could ultimately result in Jeff Skilling seeing freedom sometime before the twenty-plus years he was sentenced to by a federal judge.
Journal Wins Pulitzers For Options Probe, China [Wall Street Journal]