Michael Hiltzik: Who advises the advisors?
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In the same vein as the doctor who smokes, the accountant who gets scammed and the computer nerd who can’t change a light bulb, here we have the PR pro with a PR problem.
As my Wednesday column reports, the lawsuit alleging that Mike Sitrick cheated his employees out of some retirement assets is thus far mainly an embarrassment. Whether it becomes something more, such as the seed of a federal investigation or the basis of a civil recovery, will depend on whether the facts as alleged and the interpretation placed on them by the plaintiffs stand up to judicial scrutiny.
But one truth the lawsuit underscores is that employee stock ownership plans, or ESOPs, have not always been designed to empower employees. They’ve often been exploited by employers to place a block of stock firmly under management control or to extract tax breaks from the government. They don’t give workers a voice on policy or a seat at the board, and certainly not a sure path to wealth.
Sitrick’s attorney, Jim Brosnahan, e-mailed me Tuesday to say, ‘Whatever ESOP abuses may have occurred elsewhere, the Sitrick Company ESOP is not one of them.’ That sounds like the opening line of a legal brief. A lot of people who know Mike Sitrick, whatever they think of him, will be watching to see if Brosnahan can back it up.
The column begins below.
Given Michael Sitrick’s renown as a prince of PR, it’s unsurprising that the big question being asked about him just now isn’t whether it’s true that he ripped off his employees for roughly $8 million, as two ex-workers are alleging in federal court. It’s how could he ever have let this thing get to the stage of a public, and very embarrassing, lawsuit? In the worlds of Hollywood and corporate public relations, the spectacle of Sitrick locked in courtroom battle with his former employees has overshadowed the hard-core legal issue in the case: How employee stock ownership plans, or ESOPs, often fail to deliver the riches the employees expect. (Employers get a tax break for setting up ESOPs.) Sitrick, 62, may not exactly be a household name, but he’s an undisputed leader in crisis PR, with reported billings in 2008 of more than $20 million and more than 50 employees. His profession is spin, which might be defined as making your client look as good as possible in the face of potentially devastating facts or rumors.
Read the whole column.
-- Michael Hiltzik