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Mitt Romney faces new scrutiny over his time at the helm of Bain Capital, the private equity shop he ran from 1984 until — well, that's exactly the question.
The political fight of the moment is just when Romney stopped running Bain Capital, which specialized in buying troubled companies and turning them around.
The Republican presidential candidate (and presumed party nominee) has long said he left in February 1999. But a Boston Globe report this week pointed to regulatory filings showing him as the company's chairman and chief executive into 2002.
What does it mean that these documents listed him as the company's top executive? From a technical standpoint, a lot — but from a practical standpoint, maybe not as much as it first seems.
First, the background.
For years, Romney and his campaign have said he left Bain to run the 2002 Winter Olympics in Salt Lake City in 1999. But on Thursday, the Boston Globe ran a detailed article describing how Bain Capital, in regulatory filings with the U.S. Securities and Exchange Commission, continued to list Romney as its chairman and chief executive for another three years. (Others had published similar, less detailed reports before, but with less impact.)
Since the Globe article came out, debate has swirled. Romney's campaign maintains that Romney was not running the company, and besides was busy running the Olympics. The Obama campaign and its supporters argue that the filings show Romney remained in charge for longer than he has acknowledged, and thus is responsible for more of Bain's practices during that period.
Bain is a privately held company ("closely held" in financial-speak, to differentiate it from private-sector but publicly traded companies), so its reporting requirements are different than, say, General Electric's. The company doesn't have to file documents with the SEC to tell the investing public who's running the company and how much they're paid, for example, or how much money the company made last quarter.
Instead, the regulatory documents in question were filed by Bain Capital because it owned significant chunks of companies that were publicly traded. One filing from the summer of 2000, for example, shows that a fund ultimately controlled by Bain Capital owned almost 33 percent of juice-and-granola-bar company Odwalla Inc (now a unit of Coca-Cola).
That document includes this sentence, after detailing the relationship between the particular fund that owned the Odwalla shares and Bain Capital itself:
"Mr. W. Mitt Romney is the sole shareholder, sole director, Chief Executive Officer and President of Bain Capital and thus is the controlling person of Bain Capital."
Other filings make similar statements about Romney's position with Bain Capital during the years he was running the Olympics.
So what does it mean that the documents in question listed Romney as chairman and CEO? On the one hand, it's pretty clear-cut: SEC disclosures are supposed to be accurate.
"If you knowingly make a false statement in a regulatory filing, it's a crime," says John Olson, a securities attorney at Gibson, Dunn & Crutcher, and founding partner of the firm's Washington office.
That said, several securities lawyers we spoke with (most of whom didn't want to comment publicly on a political topic) noted that these filings are often put together by some pretty junior employees. It's conceivable that someone copied and pasted from a previous filing and forgot to update some parts. But barring that, if someone is named as chief executive in an SEC filing, he or she should be CEO.
Exactly what a CEO does, however, is a more open question. Companies, especially private ones like Bain, have considerable flexibility to define just what their various executive officers do, within the broad bounds of state incorporation laws and their own bylaws. CEOs can go on leave as well, though companies typically designate another executive to fill in on an interim basis when that happens.
CEOs also don't necessarily run every element of their companies. Warren Buffett is chairman and CEO of Berkshire Hathaway, but he famously leaves its divisions largely in the hands of his lieutenants: Berkshire Hathaway bought the Burlington Northern railroad in 2009, but few would argue that Buffett operates a railroad.
For Olson's part, even though he expects to vote for President Obama and generally contributes to Democrats, he sees the question of Romney's tenure at Bain as at least a little overblown.
"It's a bit of a leap from saying he's the CEO of the management company to saying he made the decision about laying people off," Olson says.
That leaves the final question: Is the CEO responsible for the actions of different units of his company, whether or not he's making day-to-day decisions? That's more open to interpretation.
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