White-collar witch hunt or failure of nerve.

Your article hits on a number of points I have been making for some time. Today I started drafting a letter to my Congressmen and the Speaker of the House (I sit on a board with him) to communicate my deep concern over the unbalanced legislation that SOX has proven to be.

I spent nearly 30 years as an auditor and partner with Big Four firm, KPMG LLP. Upon my retirement nearly four years ago, I joined several boards of public and private companies, now serving on three public company boards, as well as those of a number of privately held and not-for-profit companies.

One of the reasons I wrote down as I was considering my retirement from KPMG was the impact of SOX on the accounting profession and the concerns I had about how it would impact my profession. Little did I anticipate how negative an influence the law would be on business, jobs, capital formation, innovation and our economy.

Your article speaks of the IPO market and how this type of activity is so much greater in Europe than in the U.S. You also speak of the costs of SOX implementation and the number of financial restatements that have been occurring. I question the return on investment for the companies and their shareholders and other stakeholders, the types of alleged improvements in systems that may result from becoming compliant with the requirements of SOX and the alleged reduction of risks that should result from SOX compliance.

I think that Congress must look at the costs and benefits that result from compliance with SOX. I fear that the long-term impact on our economy could be significantly negative. Further, I do not feel that risks to stakeholders have been reduced in any measurable way through compliance with this legislation.

There are significant implications to companies frequently restating their financial results, which is a trend that has escalated since SOX enactment. I believe there are reasons for this, but that goes well beyond my time constraints at this time.

I look forward to reading more thoughts like those presented in your article and believe that these are matters that deserve serious consideration.

Dick Reck

Business Strategy Advisors LLC 

Hinsdale, IL

Good article, and I certainly agree with most of your analysis. I am a senior executive with over 25 years of experience in both Fortune 25 arenas and small, privately held high technology businesses. The limited corruption I have witnessed in contemporaries has largely been the result of greed and the axiom that power corrupts absolutely, but it has been infrequent. The real crime occurs after discovery in that there has historically been a lack of enforcement that has been allowed to flourish.

This has been largely out of a desire to "protect the shareholder interests" by avoiding the public display of that greed and the lack of governance. The price, however, is most often paid by those same shareholders and unaware employees who become victims. Now through SOX, many pay that price twice or more. We who are blessed to have the opportunity to lead an organization from the executive suite should focus on how to manage our resources with honest leadership as our guide, not the manipulation of operating results for our own benefit.

Those who cannot run a business within the rules and largely meet the desires of shareholders and employees should not aspire to or retain such positions of accountability. Those who are caught in the insidious game of fraud and at the flagrant abuse of the privilege of commanding from the executive suite need to be prosecuted through enforcement of the statutes we have on the books. SOX was/is an overreaction to the lack of prosecution for which those who are already victims must pay yet again for the sins of the greedy few. We did not need SOX, maybe the closure of a few loopholes, but not a legalized Salem-style witch hunt.

There is also a failure of nerve among CEOs and many board members to stand up to this legalized "witch hunt" and point to the historical lack of enforcement as the real culprit that should be used liberally on that greedy few. There is clearly a double standard and an unbounded and now legally sanctioned witch hunt with the implementation of SOX. Litigation is not the way to protect the small investor or employees, but more of a way to leverage and enlarge the budgets of the regulatory bodies for more and expanded witch hunts.

Executives in today's politically correct environment cannot easily vocalize such opinions in a public forum as they are then equated to be in sympathy, if not in cooperation, with the accused. All too often people are influenced by "the severity of the charge" despite the facts and not the level of complicity or degree of guilt, as one politician recently opined. Today's executives and many board members often bow to this artificial remedy and roll over, play deaf, dumb or dead and hope that they can spin the PR and come out ahead when the dust settles.

Dennis A. Grahl

President and CEO 

Financial & Strategic Advisors

Knoxville, TN

I'm hopeful there are exceptions, but the sad truth is that most CEOs did not reach the corner office by sticking their necks out in public. I wonder if Mr. Wriston would have stepped up to the plate if the Enron era had occurred during his tenure at Citibank.

Gordon G. Andrew

Highlander Consulting

Princeton, New Jersey 

An online posting of "Unintended Consequences of the Shorter Shelf Life of CEOs," which argued why the accepted view of performance doesn't always measure up, generated much comment, including the following.

The data that's coming from search firms on independent directors is fatally flawed. As a CEO, I maintain that any director who has 40 percent or more of his annual income from serving on my board of directors is too dependent to be independent.

Private equity firms who purchase public companies eliminate the ability of management to think long-term in a globally competitive industry--and that is disastrous for the U.S. over the longer term.

Any CEO who leads a management buyout of his public company should not be able to exercise any stock options for a minimum of five years, and then they should be tax-free.

Carl Youngman

Chairman, Omni Facility Services, Uniscribe Professional Services 

Boston, MA

Interesting analysis. Recently I read another article that developed a correlation between CEO tenure and stock performance. The conclusion was that investors should look for companies where the CEO tenure is greater than five years ... just about the average cited in your article.

John Blair 

CEO

J.Blair Consulting, and Board Director

Apollo Group

It is satisfying to note that what you believed in about employee engagement is indeed true. I am referring to the survey by ISR, the HR research and consulting firm, about an engaged workforce. Isn't that what many startups have and bigger companies only crave for?

Ram Srinivasan

CEO

FitMe

In an online posting from the editor, CE argued that while some of the unintended consequences of Sarbanes-Oxley are indeed troubling for U.S. competitiveness, much of the whinging about the law is misplaced since CEOs at the time could have come forward publicly to affirm that business, on the whole, is an ethical enterprise, and that the law, particularly with respect to Section 404, was fundamentally misconceived. For the full posting and exchange, visit www.chiefexecutive.net.