In the wake of Nortel’s plan to settle its outstanding class-action lawsuits with a $2.5-billion stock and cash payment, where does this leave ex-CEO John Roth? One of the lawsuits dates back to activities between 2000 and 2001 – during which Roth was CEO. At the time, Roth was going around telling investors that Nortel’s 2001 sales would grow by more than 30% and it would take market share from rivals. A month later – surprise, surprise – the bottom falls out of the market, which surprised Nortel despite the fact it had thousands of sales people in the field who could easily get a sense of what customers planned to do. As we all know, Roth conveniently retired in 2001 with $135-million in cash (much of it due to exercising inexpensive options). These days, he’s lying low at his estate in Caledon, Ont. with his collection of cars and investment portfolio that does not include Nortel stock (he sold it a year or so ago after lamenting it pained him to see Nortel doing so poorly). For investors wondering if Roth will get away scott-free, there is a class-action lawsuit still outstanding that was filed against Roth and more than two dozen executives and board members. Who knows if it will go anywhere but perhaps it will make Roth explain why he believed the market was so bullish just before it all crapped out – leaving many investors high and dry.
Is John Roth Home and Free?