CEO Lies, Gets Caught, Doesn't Get Fired

The board of directors of chip-maker Microsemi has determined that CEO James Peterson lied about having two degrees from Brigham Young University. That means Peterson also lied in a press release when he "categorically denied" the allegations back in December.

Sounds pathological, doesn't it? The end of the line for Peterson, right? Wrong. The company's board of directors has decided to keep him. In a press release on Thursday, Microsemi chairman Dennis Leibel said, "In the end, the Board concluded that the interests of Microsemi's shareholders are best served by retaining Mr. Peterson while imposing appropriate financial penalties and remedial actions.''

I heard a rumor that there's an audio file hidden in the posted release's HTML code: in the midst of loud back-slapping, if you listen really hard you can just make out the sound of a wrist being slapped and a sarcastic, "bad CEO, bad."

Look, I know I'm being more than a little irreverent here, but come on now, don't you find this a bit hard to swallow? Forget lying about the degrees in SEC documents; that's secondary. When he was caught, the guy lied to his board, employees, and shareholders in a company press release. And now that the truth is out, there's been no admission of guilt, no apology, no remorse of any kind by Peterson.

That's not just unethical and probably fraudulant; it's bad for business. Are customers really going to trust this guy now?

According to Bloomberg, which has closely followed the Peterson - Microsemi - Brigham Young saga:

"It's not the degree, or lack thereof, it's the misstatement to the board and the public that's the issue," said Charles Elson, director of the University of Delaware's John Weinberg Center for Corporate Governance. "When this has happened at other companies, the CEO has been terminated."

In December, Broadcom Corp. fired Senior Vice President Vahid Manian after questions surfaced about the validity of academic degrees listed on his company biography. Peterson, who described Manian as a friend, served with him on the board of STEC. Manian resigned as a director of STEC on Dec. 4.

• Microsemi's board consists of 7 directors, all of which are current or former tech industry executives. Sounds a bit incestuous to me.
• The company's financial performance under Peterson's 9-year reign as chief has indeed been impressive. That said, the stock has plummeted 54 percent since the story first broke two months ago.
• Like most public companies, Microsemi's shares are primarily held by the usual institutional and mutual fund holders: Barclays, Vanguard, Janus and the like. And they don't seem to mind.
• The SEC is broken.

No wonder we're in the mess we're in.