Romney arithmetic and Staples
Divorce folklore abounds with stories about men trying to offshore assets, so to speak; dark hints about bank accounts concealed or moved abroad, about the plaintiff’s attorney being bought off by job offers or other means, about property liquidated for pennies on the dollar. Most such lore seems more suited for entertainment media–Dick Wolf’s Law & Order–than for hard reporting. Goldie Hawn’s character in the movie The First Wives Club had a little fun with just such a dirty trick, gender-bent.
It looks like less fun in real life. Now we get the real deal, from family guy Mitt Romney of all people. Testifying in a divorce hearing on behalf of a crony who had left his wife, Romney presented the court with an estimated value of a share of stock in Staples at the time–$1.75.
Bain Capital had bought Staples stock at $0.86 per share. At the time of the testimony, a recent sales figure had been $2.90 per share. (Romney testified privately that the stock was actually worth less than it was selling for.) Months later, Staples went public with a price of $19.00 per share. The IPO closed on the first day of trading at $22.50 per share. The ex-wife had received $2.50 per share.
Bain Capital got out with a $13 million profit. The Staples executive got out of his marriage, shortly before the company went public, assessed a tenth of the pay-off there would have been after the IPO.
Today’s Washington Post, btw, omits some of these facts.
Some quick highlights from coverage so far:
Romney acknowledges the ex-wife’s stock category as a “favor” to Tom Stemberg, the divorcing exec.
The Republican Chicago Tribune whitewashes the whole thing.
A fuller though softened report comes from the WP.
Romney was on the board at Staples by virtue of his position at Bain Capital.
A few more early reports:
From Business Week:
“Republican presidential candidate Mitt Romney, as a board member of Staples Inc., voted to set a low price on the stock and create a new class of shares as a “favor” to its co-founder who was involved in a divorce.”
“Sources have said that Romney provided testimony in the bitter divorce of his friend and staunch advocate, ex-Staples CEO Tom Stemberg, that meant his ex-wife received a poor divorce settlement, the report said.
He testified during the hearings in 1991 that the company’s stock was ‘overvalued’ and that the future did not look good, it added.”
From the Lawyer-Herald:
“Tom Stemberg, founder of Staples, has endorsed Romney on various occasions on his presidency campaign. Hence, his testimony in the Stemberg case is necessary to be exposed to the people, argued the Boston Globe and the judge agreed. ”
“Romney’s business Bain Capital played a crucial role in setting up the huge office-supply retail Staples in 1996.”