Charles Forelle Wins Pulitzer: Former Phillipian News Editor Uncovers Stock Option Scandal

Charles Forelle ’98 won the Pulitzer Prize for Public Service in journalism last Monday for a piece which uncovered stock option scandals at many US corporations. His articles for The Wall Street Journal, written and edited with James Bandler, Mark Maremont and Steve Stecklow, prompted the Securities and Exchange Commission (SEC) to investigate more than 140 companies. The investigative reporting of Forelle and his colleagues has caused over 80 unethical corporate officials to lose their jobs, and 10 officials have been charged with federal crimes. Forelle gave a great deal of credit to Phillips Academy for his quickly-launched career, and said, “I first learned at The Phillipian how fun and exhilarating it was to be in this business, and that stuck with me into college and then into my professional career.” He was also the News Editor for The Phillipian Editorial Board CXX in 1997-98. Peter Christodoulo ’98, a close friend and Editor in Chief of The Phillipian Vol. CXX, said, “Charles was widely considered one of the smartest students at school. When the ballots went out for class day speaker, there wasn’t much question who was going to be chosen.” Those who knew him during his time at Andover acknowledged his passion for journalism. Associate Head of School Becky Sykes said, “One of the things that always impressed me about Charles was how reasoned and grounded his thinking was, and you can see that in his work today.” Tom Huntoon, Forelle’s Andover roommate, said, “I remember one of our teachers at PA goading him a bit to use his talents in a field other than business, and, over the course of the many endless nights he put in at The Phillipian, Charles developed a love of journalism that continued during his time at Yale and to the present day.” After graduating from Andover, Forelle went on to Yale, where he was co-managing editor at the Yale Daily News. During his college years, he also garnered summer internships with the New York Observer and the Miami Herald, primarily reporting metro news. While at Yale, Forelle covered the story of a Residential College master’s resignation and arrest by the FBI, marking a major break in his student journalism career. Michael Horn, who lived next door to Forelle at Yale and was also co-managing editor at the Yale Daily News, said, “He is brilliant — one of the sharpest people I know. I mean, how many folks are math majors in college and yet know they are going to go into journalism and therefore devote their lives to it? He had thought very deeply about major issues in journalism, from ethics to techniques to writing styles to design choices.” Forelle graduated from Yale in the Class of ’02 and landed an internship with The Wall Street Journal in Boston, with the expectation that it could become a full-time position. As an intern, he wrote a front-page article for the Journal, published in July 2002, about Princeton officials who had broken into Yale’s online admissions system. Mark Maremont, a colleague of Forelle’s at the Wall Street Journal, sparked the stock options story in November 2005, after reporting on a California company that forced out several executives because of stock option problems. He then learned of academic research that suggested a broader problem and brought Forelle and another colleague, James Bandler, onto the investigative team. Forelle said they waded through “gobs of data…literally thousands of [S.E.C.] forms,” and consulted with “academic experts in statistics and finance to develop a method for finding executives whose grants came at particularly favorable prices.” At many companies, the Board of Directors approves a tranche of stock options for employees, but the mechanism by which these options are granted is not revealed to the public. Several companies and executives, especially those with volatile technology stocks, retroactively set the dates of these stock options to a day on which that stock price was low. This “strike price,” if lower than the price at which an executive exercises his or her options, allows for unusually quick gains. The Wall Street Journal team wrote algorithms to go through the stock options data released by major companies. Because of the slim likelihood of stock options being dated exactly to days with the lowest prices, they quickly picked up on patterns in unscrupulous corporations. Forelle said that The Wall Street Journal “is a fabulous place to be a reporter – particularly a young reporter,” especially because it often gives reporters extensive time and freedom to pursue stories. Forelle also appreciated the widespread domestic and foreign bureaus, which allow in-depth coverage in Europe and Asia. The Pulizer Prize winners were announced on Monday afternoon, and Forelle and his team were overjoyed to hear the news. Forelle said, “This series was obviously tremendously gratifying to work on. I’ve been extraordinarily fortunate at all stages of my career, from internships at the New York Observer and Miami Herald to the five years I’ve spent in the Journal’s Boston bureau, to work for great editors dedicated to training and developing reporters. That makes all the difference.” Friends and former teachers congratulated Forelle for his success and complimented both his keen intellect and admirable citizenship. Michael Gottesman ’98, a classmate of Forelle’s at Andover and Yale, said, “The fact that Charles has won this prize by age 27 is not surprising. He is one of the sharpest people I’ve ever met, and for as long as I’ve known him, he has had a way of winning the praise and admiration of his peers. This is just the most recent and most public example of that ability.” His experience on The Phillipian and teachers such as Bob Perrin, a Math teacher, and Kelly Wise, an English teacher, impacted Forelle’s career the most. He said, “I’ve combined math and writing skills in my newspaper work, and there’s no question having greats like those two in the classroom made a profound difference in my future education and career.” Forelle described his time at The Phillipian as “heady, exhilarating, totally fun,” with great friendships forged in the newsroom, which was then in the basement of Evans. Forelle said, “We joked and joshed and occasionally sneaked off campus to an all-night Denny’s in Lawrence in the wee hours of the morning…But we worked hard and we put out a paper week in and week out that we were proud of.” Forelle also greatly admired the faculty advisor during his tenure, Tom Lyons. Forelle said, “He sharply defended The Phillipian, and us, against the endless faculty pressures to pre-screen and censor and water down. That atmosphere of freedom and discovery was, perhaps more than anything, what made The Phillipian so important to me and others as an educational mission. I took from those rooms values that influence and shape me to this day.” Forelle and his wife Megan, a classmate from Yale, currently live in Boston. However, they will move to Brussels this summer, and Mr. Forelle will cover European issues for The Wall Street Journal.