Bill Esrey Tied To Countrywide Scandal

The August edition of Portfolio magazine has fingered former Sprint chief Bill Esrey as receiving sweetheart loans from Countrywide Financial. The article implies that these deals saved Esrey $24,000 while he was the CEO of Sprint.

Portfolio also noted that the communications firm was hooking up a data network for the mortgage lender at the time of the deals. This means that Esrey probably broke Sprint's Code of Conduct. Did Esrey know about the data sale that the marketing department had made? Should he?

To be honest with you, I see this as a non-story.

CEO's and board members from all types of companies get big discounts on services and goods that most workers would never dream of getting. Free autos, free cigars, unbilled hotel stays, etc.

Execs get free stuff. Get over it.

Read the story, courtesy of the Kansas City Star here: http://sprintconnection.kansascity.com/?q=node/704
Don't forget to read the juicy comments below the story. The paper's readers are pretty well informed.

Here is my opinion:

In the 70's Bill Esrey built United Telecom into a force that no one saw coming. He had UTI involved in the cable business, security systems, computer mainframes, premise wiring, logistics, cellular telephones twice, built the fiber network that would be the hallmark of Sprint, and launched PCS. None of these companies (save PCS) lost money. When he sold off a unit, he plowed the cash back into the company to continue its growth (buying CTT, FTC, etc.)

When Esrey was forced out, he was in the process of discovering that last mile. It was his holy grail. It would allow Sprint to be a true telephone/internet provider anywhere - not just in the heritage United/CT&T/FTC/Centel areas. The last mile would allow Sprint to get into any home or business nationwide without using the local telco.

He was pretty close to a breakthrough with point-to-point MDS (another day and I'll explain it to you).

Discoveries made on this quest eventually lead to patents that Sprint leases to others. Right now all cable TV companies must pay Sprint for the technology that allows telephone and high-speed internet over their old-fashioned coax cable networks. These patents came from the failed ION experiment of the late 90's. So it wasn't really a failure after all. It just worked really well over cable lines, and pretty much stunk over phone lines.

But when Gary Forsee came into power, the focus for Sprint was moved completely to PCS, the fiber network, and a merger with a competitor.

Bill Esrey would never consider losing his beloved land-line business, telephone directories, and research centers. But Forsee disposed of them - and the cash they were bringing.

It is hard to believe that Bill Esrey was fired for using a tax-shelter that the company's own financial consultants designed and pushed. Esrey didn't dream up this shelter. It was offered to him.

For what it's worth - All of Sprint's managers and many hourly employees were offered advice on what to do with bonuses, salary, and options. From the Central Office in New Bern to the Executive Office in Overland Park - you took the advice of your financial planner and assumed it was legal. It was a company benefit.

Bill Esrey was forced out of a company that he built and nurtured, with $1o million severance pay, and 18 months of various benefits. Nothing more. Even his stock options were worthless.

But in two short years running Sprint, Gary Forsee blew up the whole damn company, destroyed another healthy one (Nextel), and evaporated every one's 401K/retirement...

...for this he gets $40 million severance and a million dollars a year for the rest of his life.

I'm surprised his photo isn't beside the words stupid and greed in the online dictionary. I just checked. He's not there.

As for Esrey, he shouldn't have to deal with magazine articles like this anymore. Think what you will of the man, but he was a leader, a bean-counter, and a visionary. He demanded accountability from his employees and respect from his peers. Rare qualities for a rural telco CEO.

I wish him well.