Steve Jobs famously took $1 in salary and earned the rest of his money the old fashioned way: He got stock options based on performance. Let's contrast this with the latest parade of rich, overpaid CEOs who have been paid millions as they were shown the door.
The practice known as the golden parachute is common in executive circles. No matter how poorly you perform, or even if you leave the company in disgrace, you still get a nice parting gift for your trouble -- to the tune of millions of dollars.
Next up was Apotheker, fired by HP's board, who reportedly took down more than $13 million after serving as CEO for all of 10 months.
It's not clear what HP will be giving laid-off employees, but you can be sure it will be nothing in line with what these overpriced CEOs got. What's more, imagine if HP could have taken that money spent on failed executives and actually invested it in the business. Over $80 million is not an insignificant sum, even for a company as large as HP.
Not to pick on HP, though. It's just one company in a long line paying off millionaire executives for their incompetence.
The thing I always loved about the Jobs salary story, is the idea that you pay for what is actually produced -- a principle sadly lacking in high-paying jobs, whether in sports or high technology.
Regardless, the job of any CEO at a publicly traded company is to protect and grow the company stock price. It's one of the reasons that Apotheker was given such a short leash. The stock was tanking on his watch. But if that's the job, then paying these folks for failing is a sick and twisted notion.
If you fail and you're let go, you should do what Thompson reportedly did: Pay back salary because you let the company down and you didn't successfully meet the conditions of your job description. In what universe does the person who didn't do the job get generously rewarded for it? Only in American CEO circles, apparently.
The whole idea of a golden parachute is just wrong. It's time we treated failure with a correct response and let these unsuccessful CEOs walk away without a penny more. They may get to keep what they earned, but they absolutely shouldn't get to take extra. It's a practice that needs to stop. It's not good for the industry and it doesn't make any sense.
He had a lot more control over Apple than I suspect most CEOs have over their companies. How many CEOs wanted to do things but were stymied by executives or by boards?
And yes, Ben & Jerry's had to drop the 7x policy when they hired a full-time CEO who wasn't them. Another interesting thing about the company -- when they first went public, they sold stock only to Vermont residents. (I've actually been to the original Ben & Jerry's, in an old gas station, because I was dating a Vermonter at the time. Unfortunately it's now a parking lot.)
@Ron Ah the gap that exists between what should be and what is abetted by cronyism in the "old boy network." It's at play in government as well as corporations.
The board is supposed to act as a check against the CEO to make sure he or she is acting in the best interests of the company, but as you say, in reality, it really is an old-boy network (quite literally).
As for shareholder uprisings, strong shareholders do make themselves heard. Just look at the Yahoo situation for an example, but you're right not as often they should or could.
@Ron aren't the key board members usually hand-in-glove with the people holding the top positions in the company? Many companies can obscure much of what goes wrong internally. As for shareholders putting their foot down, I don't know if that ever happens outside of happy ending movies like The Solid Gold Cadilac.
Regardless, the job of any CEO at a publicly traded company is to protect and grow the company stock price.
@Ron, I think stock price is not always the best way to measure the performance of the CEO. I have seen many instances(Ex : Satyam computers) where CEO's artificially inflate the stock prices. So I believe job of the CEO is to grow the value/brand of the company rather than grow the stock price.
I think it's fairly standard practice for the CEO of a company undergoing bankrupcy processes to STILL pay its CEO quite handsomely -- even when the company is bankrupt. That's crazy, but it's how the system works sometimes.
@mhhfive, true system works like that. I think government needs to create a body which keeps track of the CEO's pay vs Companies growth to protect the interest of investor. This body should flag/take action on those companies which are paying higher salaries to its CEO's inspite of poor company performance.
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Recently, the Obama administration has been of two minds where privacy rights are concerned. On one hand, you have an administration that vowed to veto CISPA and mandated open data for government websites. On the other hand, you have an increasingly out-of-control Department of Justice on a fishing expedition at AP and demanding legislation to let the FBI wiretap private, encrypted communications and levy fines if a company fails to comply.
These days, even some usually techno-friendly people have their hackles up about the potential of Google Glass to surreptitiously record video or take pictures. I've heard more than one tech savvy friend bring up "the creep factor," the ability of a weird guy to secretly record you.
Last year as you may recall, the Internet community rallied and prevented the passage of SOPA/PIPA legislation. CISPA, another piece of legislation that targeted Internet freedom, also died. However, one proposed law that failed in 2012 has been revived this year. And it appears forces are not now lining up against CISPA with the same enthusiasm as last time.
You might be surprised to learn that the FBI has generated hundreds of thousands of secret information requests since 2000, many of which go to Internet companies seeking information about individual users. You may be even more surprised to discover that in all those years, only one Internet company has challenged these secret requests.
Late Friday I learned I had been chosen to participate in the Google Glass Explorer's program, a group selected to take the first-generation of Google Glass out in the world and report back on how they're using the devices.
Cisco's rumored sale of Linksys suggests we may have problem with innovation and profit at the edge of our Internet, and that could be critical to the evolution of many Internet-delivered services.
Good news! The US gross domestic product grew by 5.5% last quarter. But does that number accurately reflect the value created by the information economy?
When Reiter gets incensed over incompetent Verizon FiOS order-taking and support, he broadcasts it via Twitter. Did it do any good? How should your company offer Twitter support? Watch this for all the answers.
Evidence shows that you can tweet too much. Sites and services like Twitter and Facebook are a good place to reach your audience, but think quality over quantity.
How do you recognize an Internet bubble when you see one? Saunders explains how all bubbles have four symptoms in common – and takes a swipe at Google and Twitter into the bargain.
The sky is falling! And in other news, Saunders explains why he’s predicting a second Internet bubble – this one based around the current craze for social media.
The whole Amazon.reader debate is a double-stupid. It's stupid to think that there's any e-book buyer who doesn't know Amazon's URL, and it was stupider to let ICANN launch the whole free-form TLD initiative to start with.
Subsidized handsets, rather than locked handsets, should be the focus of regulators. We're not getting good deals, not fostering innovation, and weakening our power as buyers.
Showing results is the best way to win over social business doubters, according to Mary Maida, Medtronic lead information solutions manager. Internet Evolution's Mitch Wagner interviewed Maida at the E2 Innovate conference.
New York's Metropolitan Transit Authority is conducting a pilot test of digital kiosks to guide subway users to where they want to go more efficiently and at lower cost.
The whole Amazon.reader debate is a double-stupid. It's stupid to think that there's any e-book buyer who doesn't know Amazon's URL, and it was stupider to let ICANN launch the whole free-form TLD initiative to start with.
While NFC's original goal was to enhance mobile commerce applications, it is finding its way into a number of other uses, which is creating both opportunity as well as challenges for IT departments.
Enterprises would like to move to cloud computing but are hesitant because they are concerned about providers’ ability to secure company data. Here are some tips that help to ensure that if breaches occur, the business is not left holding the bag.
Edmunds separates customers into segments based on the info it collects on its site and from partners, and uses that to push out custom content, said Brian Baron, director of business analytics for Edmunds.com, at Predictive Analytics Innovation Summit.
The automotive website uses propensity modeling to target ads and customer registration forms, said Brian Baron, director of business analytics for Edmunds.com, at Predictive Analytics Innovation Summit.
Subsidized handsets, rather than locked handsets, should be the focus of regulators. We're not getting good deals, not fostering innovation, and weakening our power as buyers.
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