Board Betrayal
Failed Governance and
Management Hand in Hand with Arthur Andersen: An ESOP Fable
by Phillip Hartley Smith
In 1983 the employees of Weirton Steel voted to take a 20% pay cut to save their jobs. Through an Employee Stock Ownership Plan, they purchased the ailing company. Full of hope and confidence, the workers believed their sacrifices would eventually secure their future.
Today Weirton’s stock is practically worthless, thousands of
jobs have been eliminated, and the company’s officers and directors have been
subject to multiple lawsuits. As members of top management made personal
fortunes, the employee owners watched their net worth erode year after year.
Long before Arthur Andersen’s incompetence became legendary, the firm’s
auditors helped Weirton Steel’s management waste millions of the employee
owners’ value.
Phillip Smith served on the Weirton Board for eleven years and publicly criticized its continual failure of prudent governance. In Board Betrayal, he shares a tale of irresponsibility, ignorance, conflict of interest, and deceit. Smith reveals what happens behind top management’s closed doors and self-serving corporate boardrooms and how the actions of a few in power can destroy the dreams of so many.
“As the President of the
Independent Steelworkers Union and a member of the Weirton Steel Board of
Directors since 1991, I was very interested in and intrigued by Phillip Smith’s
book. My tenure on the board of directors has been, and continues to be, both a
learning experience and at times almost a daily battle on various issues.
After reading Mr. Smith’s
book, I believe he was able to accurately capture the controversy and feelings
that often confronted our board of directors. The Phillip Smith book should be
required reading for all business major students in college because the
employee-ownership philosophy is in the future for many industries and
companies.
This timely book is a look at one man’s key role as a board director in a major employee-owned company. Good reading and thought provoking.”
Mark Glyptis,
President of the Independent Steel Workers Union, September 10, 2002
About the Author
Phillip Hartley Smith was born in Sydney, Australia. Following service in the Australian Forces during World War II, he studied Mining and Metallurgy at the University of Sydney. He came to the U.S. in 1950 as a Fulbright scholar to M.I.T. Mr. Smith joined Inland Steel Company as a metallurgical engineer, then moved to LaSalle Steel Company. He became an American citizen in 1961.
In 1964 Mr. Smith joined Copperweld Corporation and by 1967 was the President and CEO. In 1973 he was elected Chairman of the Board. Copperweld grew substantially during the ten years of his leadership, becoming one of the most profitable companies in the industry. Financial World magazine named him one of the three outstanding chief executives in the steel and metalworking industries, and M.I.T. has recognized him for his distinguished corporate leadership.
Mr. Smith holds patents in his field and has written texts on management and strategic planning. He taught at Purdue University and has been a guest lecturer at several business schools. In 2001 he authored Quaker Business Ethics.
He has served on numerous boards of business and public organizations, including McGraw Edison, Pittsburgh National Bank, Imetal (France), Japan Alumoweld Co., Seldon & Co. (Australia), Bekaert Steel & Wire Co., American Iron & Steel Institute, Kaiser Steel, Weirton Steel, YMCA of Pittsburgh, and Pittsburgh Theological Seminary. He has had extensive experience on board audit committees, chairing those committees for Bell of PA, P.M.F. Life Insurance, Weirton Steel, and Adience.
Mr. Smith is a member of the Pittsburgh Meeting of the Religious Society of Friends.
Board Betrayal by Phillip Hartley Smith
262 pages ♦ appendices / index ♦ Retail price: $19.95
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