The staff of The Wall Street Journal was honored with two Pulitzer Prizes today. One was the Public Service Gold Medal for uncovering the improper backdating by companies of executive stock options, while the other was the International award for reporting on China.
“These Pulitzer Prizes underscore our commitment to bring readers a unique perspective on news, providing the insight and analysis they demand,” said Paul E. Steiger, managing editor of The Journal, in a statement. “Our teams of editors and reporters have worked painstakingly this year to unravel the complicated schemes that corporate executives use to backdate potentially lucrative stock options and defraud shareholders and to illuminate and demystify the Chinese business juggernaut.”
These awards represent the 15th and 16th Pulitzer Prizes the Journal’s news department has received under Steiger, who became managing editor in 1991 and reaches the mandatory retirement age this year. The Journal has received 33 Pulitzers to date.
The Journal’s reporting on backdating of options has already earned six awards.
To identify which companies were backdating options, Journal reporters developed their own statistical-modeling technique and then used it to find likely perpetrators of massive and long-hidden abuses. At the core of the effort were custom-built probability algorithms designed to assess the odds that an executive’s pattern of richly timed options resulted merely from chance. In one case, the odds were 300 billion to one.
Journal reporter Charles Forelle, a math major at Yale, wrote a computer program called a “Monte Carlo simulation,” a statistical technique that calculates odds by repeating a test billions of times to identify which companies were most likely to have been backdating their options. The number-crunching was so intensive that the reporters commandeered two powerful servers at Dow Jones & Co.’s corporate offices in Princeton, N.J., in order to run the program for a week. The Journal’s reporting team also examined thousands of corporate filings and conducted numerous interviews.
The Journal’s coverage in 2006 of China’s rapid economic growth focused on the dislocations brought on by government policies and institutions that have not kept pace with development. A series of articles by the Journal’s nine China-based correspondents and five researchers explored these topics, bringing to light often complex and long-lasting tensions.
The reporters on the backdating stories were James Bandler, Charles Forelle, Mark Maremont and Steve Stecklow. The reporters on the China stories were James T. Areddy, Andrew Browne, Jason Dean, Gordon Fairclough, Mei Fong, Shai Oster and Jane Spencer.
Other business journalism named as finalists did not win.