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HP Spent Over $80M To Get Rid of Its CEOs

samzenpus posted more than 2 years ago | from the and-here's-a-parting-gift dept.

HP 261

hapworth writes "Analysis published today shows that Hewlett-Packard has shelled out over $80 million to get rid of three CEOs since 2005. The first CEO to take her expensive exit, Carly Fiorina, received over $42 million, once stocks, options, and pension are factored in. Mark Hurd, after just four years, received $12.2 million to take his exit; and now, after 11 months, Leo Apotheker will walk out with a reported $25.2 million in severance. With eBay's Meg Whitman in as the new CEO at HP, industry analyst Robert McGarvey writes today that 'the HP gig could help Whitman replenish her personal coffers, depleted by the pumping of $119 million into a futile bid to become California's governor.'"

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other peoples' money = stuff that matters??? (-1, Offtopic)

MichaelKristopeit420 (2018880) | more than 2 years ago | (#37516752)

slashdot = stagnated

Re:other peoples' money = stuff that matters??? (-1)

Anonymous Coward | more than 2 years ago | (#37516930)

You are retarded, which is not a surprise since your mother produced you by sleeping with your grandfather.

Re:other peoples' money = stuff that matters??? (1)

MichaelKristopeit421 (2018882) | more than 2 years ago | (#37517400)

ur mum's face are retarded.

cower in my shadow some more, feeb.

you're completely pathetic.

I've got a better deal (5, Funny)

GodfatherofSoul (174979) | more than 2 years ago | (#37516756)

I'll ruin your company for a measly $5 million; no stock options if you don't mind since I'll probably do a pretty good job of it.

Re:I've got a better deal (1)

poofmeisterp (650750) | more than 2 years ago | (#37516916)

Sadly, you'd probably do a pretty effective job.

The wheel in the sky keeps on.... ah, what's the use..

Re:I've got a better deal (4, Insightful)

cayenne8 (626475) | more than 2 years ago | (#37517482)

What does one study to become a CEO??

I'd love to get that job...tons of money when you're there...tons when you leave, and then...it seems, there are job opportunities after you leave, even in disgrace.

I don't see any perceptible skills required to be a CEO...is it all only who you know?

I mean, I'm member and good standing with the "anything for a dollar" club....so, wondering how I could get into the CEO business, and yes...I'm quite willing to sell shares of my soul for this.

:)

Re:I've got a better deal (3, Funny)

Anonymous Coward | more than 2 years ago | (#37517056)

Yeah? Well I'll do it even cheaper! I'll ruin the company for $4 million!
Your move bro.

They should just put it on eBay, and have a special "cheapest wins" sale.
Cheapest Price To Kill Our Company.

Re:I've got a better deal (4, Funny)

bennomatic (691188) | more than 2 years ago | (#37517356)

That's insane! You can't ruin a company for less than $5 million! Everyone knows that you need at least $5 million to ruin a company!

Re:I've got a better deal (4, Funny)

Surt (22457) | more than 2 years ago | (#37517598)

They did put it on ebay. Somehow Meg came out on top in the auction. Surprising result.

Re:I've got a better deal (1)

Anonymous Coward | more than 2 years ago | (#37517364)

The sad fact is, statistically speaking, you're either equally qualified or more qualified than most CEOs. Doubtful you could do worse.

Re:I've got a better deal (1)

cvtan (752695) | more than 2 years ago | (#37517494)

Rats! I was going to offer to do it for $10million!

Re:I've got a better deal (0)

Anonymous Coward | more than 2 years ago | (#37517596)

I doubt it. Once there with all that power at your disposal, you would probably try to do some good.

To me you are a random Internet person, and yet I have more faith in you going against your word out of sheer ethic need, than I have in yet another professional bean-counter.

Re:I've got a better deal (1)

140Mandak262Jamuna (970587) | more than 2 years ago | (#37517634)

You don't get it do you? Ruining a company is not a one (wo)man job. It takes the whole village (idiots). The board is doing its part by grossly overpaying some chimp in suit. The chimp in suit does its part to ruin the company. The logical flaw is, the board that wants to ruin the company would not hire a cheaper chimp. You would have better chance if you said, "I will ruin the company for 100 million dollars" they will listen. If you ask for 1 billion dollars they will take you seriously. Ask for 10 billion, the job is yours.

Re:I've got a better deal (1)

xstonedogx (814876) | more than 2 years ago | (#37517702)

I find your bid suspiciously low and therefore won't hire you to ruin my company.

Can I be fired as HP CEO Next? (0)

Anonymous Coward | more than 2 years ago | (#37516774)

I promise I can run the company just as badly as those people did.

Where are the shareholders? (4, Insightful)

bill_mcgonigle (4333) | more than 2 years ago | (#37516778)

The Board keeps choosing bad CEO's. Why do the shareholders keep re-electing them? Where are the institutional investors on this? I guess it's their company to destroy, if they really want to.

Re:Where are the shareholders? (3, Insightful)

LWATCDR (28044) | more than 2 years ago | (#37516840)

The problem is professional CEOs. They go from company to company and really don't care about anything long term. Isn't there one person that has worked at HP all their life that can step up and be CEO?

Re:Where are the shareholders? (1)

poofmeisterp (650750) | more than 2 years ago | (#37516962)

The problem is professional CEOs. They go from company to company and really don't care about anything long term. Isn't there one person that has worked at HP all their life that can step up and be CEO?

I wish there were a sector in IT that accomplished the same end.... Once you have the 'degree|title|position|job|company' of '.', you will never have to work again!

*sigh*

Re:Where are the shareholders? (0)

Anonymous Coward | more than 2 years ago | (#37516970)

How about someone with a publicly known persona in the industry, like Leo Laporte?

Re:Where are the shareholders? (5, Interesting)

Anonymous Coward | more than 2 years ago | (#37516978)

What's odd is when I worked at HP, there was a strong promote-from-within culture. It was relatively rare to bring in outside executives. Carly started her tenure as controversial CEO because she was an outsider, not because she was a rhymes-with-witch in heels.

But one article I read this weekend said the board looked around and none of the current second-level VPs was ready to be CEO. I find that somewhat hard to believe and poor planning on the part of the board. To have a prudent succession plan, they should always have a few potential CEOs being groomed.

I still want to know how Leo swung $2 million a month for his walking papers. I want a piece of that action. If I get fired for cause, I get zip. My few remaining options are worthless, my RSU vesting screeches to a halt, no severance pay, nothing.

Re:Where are the shareholders? (1)

Runaway1956 (1322357) | more than 2 years ago | (#37517322)

"the board looked around and none of the current second-level VPs was ready to be CEO"

Translated, that would mean something like, "None of our current VPs have slept with, or even performed fellatio, on any of the board members."

Re:Where are the shareholders? (1)

ryanov (193048) | more than 2 years ago | (#37517344)

Ditto with Mark Hurd. Although I guess the problem there is that the sexual harassment investigation turned nothing up. But that was still the excuse they used, wasn't it?

A slap in the face... (4, Funny)

AliasMarlowe (1042386) | more than 2 years ago | (#37517416)

I still want to know how Leo swung $2 million a month for his walking papers.

Actually, it took a lot of courage and fortitude on his part. He had to talk the board down from their initial settlement offer, which was vastly greater (it's only shareholders' money, not their own). Apparently, he wanted the monetary compensation to be so small that it counted as an obvious reprimand, almost an insult, and he clearly succeeded. A mere $25million is as hard a slap in his face as this board could be expected to give...

Re:A slap in the face... (1)

Anonymous Coward | more than 2 years ago | (#37517642)

I find it severely depressing that I'm completely unsure if you're joking or not...

Re:Where are the shareholders? (2)

LWATCDR (28044) | more than 2 years ago | (#37517474)

You mean when things started to go bad?
HP used to be quality. Now it means cheap printers and laptops. They sold off the Alpha, and PA-RISC teams. They sold of instruments as well.
They should hire me as CEO.
Here is my plan.
1. Bring back Compaq as the low end name for desktops and laptops. Move HP up market to take on the Thinkpad line now that it isn't by IBM anymore. When people think about a high end desktop or laptop have them lust for an Apple or an HP depending on what camp they are in.
2. Release VMS for 32bit X86 for free to the market. Who cares about low end servers but get it into the hands of developers and future sys admins. VMS is a very secure OS and doing this will cost nothing. Do not open source it because of the cost of code clean up but just turn it loose as a free download.
3. Try and reconstruct the tech teams that brought you Alpha and PA-RISC and turn them to ARM. Take on Samsung, Apple, Martel, and Qualcomm in the ARM market. Buy nVidia as an option.
4. WebOS. Put some real effort into WebOS now. I don't care if for the first phone you have to buy Galaxy S2s from Samsung like Google but get a good WebOS device on the market and to all the carriers. Same thing with a Tablet.
5. Create a and L series of computers that are Linux ready. Servers mainly.
6. UltraBooks for today. If Apple can do it so can HP
7. Start making media deals now. This maybe too late but NetFlix's stock is tanking so it could be a good buy. Maybe also pick up RDIO as well.
8, Supercomputing clusters. Take on Cray if for no other reason than government contracts and the technical attraction.

Just as the X86 has pushed higher and higher into the market so will ARM. There will come a time when you will not need an X86 because an ARM is good enough. Push ARM and WebOS everywhere to compete with Apple and Google. HP could have a top to bottom stack unlike Google and could offer both the front end, PC, Phones, Tablets, even TVs like Apple but also could supply the servers and infrastructure that Apple can not.

Re:Where are the shareholders? (1)

Surt (22457) | more than 2 years ago | (#37517624)

I assure you they did not fire him for cause. His severance will say nothing of the sort.

Re:Where are the shareholders? (1)

Synerg1y (2169962) | more than 2 years ago | (#37517440)

The problem is professional CEOs.

Lol, every time I hear the term, it's hard not to laugh. Leadership is only effective when trust and report are behind it, the kind you get from years of working with your managers. The problem is the left hand (board) doesn't talk to the right (employee hierarchical structure). They have no idea who to select from the HP employees, one looks as good as the next. So they are forced to go outside the organization and examine professional CEO track records as well as who's available. Reminds me of a pro sports league, except it's not.. even close in concept...

Re:Where are the shareholders? (2)

Surt (22457) | more than 2 years ago | (#37517614)

There are dozens. But competent leadership is not what the board wants. Apparently.

Re:Where are the shareholders? (5, Insightful)

doconnor (134648) | more than 2 years ago | (#37516918)

One problem with shareholder democracy is that if a shareholder doesn't like the management of the company it is far easier for them to sell the stock and forget about it then to work to elect better management.

A lot of people have been selling their HP stock recently.

Re:Where are the shareholders? (3, Interesting)

Archangel Michael (180766) | more than 2 years ago | (#37517648)

This is because to care about a stock, you have to care about the company. To care about the company, it can't be run by professional Board Members who are appointed by Professional Stock Managers. The simple plan is to immediately divest yourself of any stock the moment that Institutional Investors (ie Wall Street) gain control of the Board.

Look for smaller companies that don't have professional boards and haven't been discovered by institutional investors. Or don't care, and buy Market based Mutual Funds.

Re:Where are the shareholders? (0)

Anonymous Coward | more than 2 years ago | (#37517388)

You should probably read this: http://moritzlaw.osu.edu/eblj/issues/volume2/number1/20.%20Kominsky%20Note-%20Final%20Book.pdf [osu.edu]

It's a good start as to why corporate board elections are so fucked up.

tl;dr: as of 1942 the SEC allowed boards to prevent shareholders from using the proxy materials sent out by the company to propose alternate boards (see the 5th page, numbered 577). You're welcome to propose them yourself, assuming you can find all the other shareholders.

Every now and then an "activist" shareholder like Carl Icahn tries to shake things up. It costs him millions [icahnreport.com] to do so. Of course, the board gets to spend the company's money to defend their position.

gee... (1)

Lead Butthead (321013) | more than 2 years ago | (#37516780)

gee, I want a job like that...

Re:gee... (1)

Surt (22457) | more than 2 years ago | (#37517636)

Save up for your Stanford MBA. Practice your lying.

Interesting... (4, Insightful)

Ecuador (740021) | more than 2 years ago | (#37516782)

The one who was considered successful by all (Hurd) was the one with the least compensation (by a huge margin if you consider his years on the job vs Apotheker). It is no joke we say the worse you do as a CEO the more money they pay you!

Re:Interesting... (2)

maxume (22995) | more than 2 years ago | (#37517032)

Plenty of people think he (further?) ruined the company with cuts that made for nice short term financial statements and completely ignored the long term.

Re:Interesting... (2)

am 2k (217885) | more than 2 years ago | (#37517326)

Plenty of people think he (further?) ruined the company with cuts that made for nice short term financial statements and completely ignored the long term.

Doesn't mean that he wasn't the best, compared to the others :)

Re:Interesting... (2)

NeutronCowboy (896098) | more than 2 years ago | (#37517362)

Dunno, while I was there, he made plenty of sensible decisions. Yes, quite a bit was cut, but I didn't see any egregious cuts that jettisoned core products or teams. All in all, morale was actually doing quite well under Hurd. Granted, it was easy to do better than Carly, but still - I had the impression that HP was actually stabilizing under Hurd. Now.... it's the insane asylum run by the insane.

As for the compensation quip by the GP: that was actually established in a few studies that compared work outcome to compensation. Once compensation reached absurd levels for the work required, work output actually dropped. The researchers didn't have a ready cause available, but speculated it might be either that people try to hard to justify their income, or try not at all because the pay is so ludicrous that they don't care about keeping the job.

Re:Interesting... (1)

royallthefourth (1564389) | more than 2 years ago | (#37517088)

Actually, that's GNU/Hurd, and it's not at all successful.

Re:Interesting... (2)

dkleinsc (563838) | more than 2 years ago | (#37517298)

Remember the basic Dilbert Equation: Money = Work / Knowledge (Because Power = Work / Time, Time = Money, Knowledge = Power, and the algebra is pretty easy after that)

So it's no surprise that the most competent CEO is the one paid the least to go away.

I Feel the Gordon Gekko Speech Coming On In...... (1)

segedunum (883035) | more than 2 years ago | (#37516790)

1...2...3...

Re:I Feel the Gordon Gekko Speech Coming On In.... (0)

Anonymous Coward | more than 2 years ago | (#37517052)

1...2...3...

Yes, but the assumption is that the stockholders are greedy too. If they aren't the whole system is just a smash and grab of stockholder money by the board and their friends (and by friends I mean c-level executives).

Where do I sign... (1)

TheDarkMaster (1292526) | more than 2 years ago | (#37516804)

... to get a job like that? Oh wait, I need to sign using blood? And what stranger paper is this that smells like... sulfur?

Re:Where do I sign... (-1)

poofmeisterp (650750) | more than 2 years ago | (#37516986)

I think you're just smelling the dumbass 'top dog' egg farts in the air. :> /humor

Re:Where do I sign... (1)

cayenne8 (626475) | more than 2 years ago | (#37517566)

... to get a job like that? Oh wait, I need to sign using blood? And what stranger paper is this that smells like... sulfur?

Hey, you there....

Are you gonna take all day? If you're not sure, had me over the damned pen so I can sign up!!

You're indecision is really starting to hold up the line....

:D

Golden parachutes.... (3, Insightful)

luis_a_espinal (1810296) | more than 2 years ago | (#37516816)

... should be tied with performance measurements meeting certain baselines - reduce waste (not the same as reducing cost), or increase profits by % - that are established at the time of hiring instead of being given wholesome at the exit door. Then again, I might as well wait for pigs to fly.

Re:Golden parachutes.... (2)

skids (119237) | more than 2 years ago | (#37516960)

You've got it all wrong: it's the CEO's job to institute performance metrics, not become subject to them. After all, just by virtue of being a CEO they are among the nation's top "earners" so they simply must be made out of ponies and sassafras.

Re:Golden parachutes.... (1)

poofmeisterp (650750) | more than 2 years ago | (#37517072)

You've got it all wrong: it's the CEO's job to institute performance metrics, not become subject to them. After all, just by virtue of being a CEO they are among the nation's top "earners" so they simply must be made out of ponies and sassafras.

LOL. I hear that!

"You just got a 'excellence' check mark on that one. For your realistic statement, you get a red star on your name, as well!"

Effing kindergarten? :>

Re:Golden parachutes.... (3, Funny)

Reverand Dave (1959652) | more than 2 years ago | (#37517118)

Exactly, they are this nations "Job Creators" after all. They should be handled with all things soft and heralded with golden trumpets when they enter a room.

Re:Golden parachutes.... (1)

ceoyoyo (59147) | more than 2 years ago | (#37517098)

Silly, if you imposed requirements like that you wouldn't be able to attract the best talent to be CEO of your company. You might get some schmuck who actually made your business profitable!

Money well spent (1)

jd2112 (1535857) | more than 2 years ago | (#37516826)

Based on the performance of these bozos I would say it is money well spent. They should do the same with the board that appointed them.

Re:Money well spent (1)

wintercolby (1117427) | more than 2 years ago | (#37517422)

The shareholders are doing the same with the board that paid the outrageous severance packages, they're selling in large numbers. Before long they'll resemble the board of AOL, able to make big decisions about a company that used to be relevant.

Why pay them? (1)

Gideon Wells (1412675) | more than 2 years ago | (#37516852)

Before I either get worked up or try defending this practice, why are they being paid this again? Badly written contracts or what?

Re:Why pay them? (1)

tverbeek (457094) | more than 2 years ago | (#37516964)

This is one area where I'm inclined to blame it on corruption, not incompetence.

Re:Why pay them? (2)

poofmeisterp (650750) | more than 2 years ago | (#37517026)

Before I either get worked up or try defending this practice, why are they being paid this again? Badly written contracts or what?

No, I believe the contracts basically say you "won't disclose stuff to other companies, now go... go think of things that will bring the stocks up. Anything.. Just have fun! We trust you implicitly, until you screw up. Here's some money to make it worth your while."

I'm sure I'm 100% wrong on that one.
/sarcasm

Re:Why pay them? (0)

Surt (22457) | more than 2 years ago | (#37517552)

They are being paid because they are taking on a huge risk. If you bomb as a CEO, you'll never work for more than $10M/year again. So if you take on a job with a shaky ship like HP, where you might actually have a chance to fail, you have to negotiate a contract that will leave you covered for life in the event of failure. Otherwise, you refuse to take the job. CEOs don't make millions per year because they are morons when it comes to employment contracts.

So HP is learning painfully expensive lessons (0)

Shivetya (243324) | more than 2 years ago | (#37516860)

Maybe the new one they are buying will work out. No worse than the costs associated with some product launches that failed spectacularly. Yeah I know quite a few will be annoyed at the payouts but we are talking about the one in a million type person/personality types. Just like there is little chance any kid you went to school with would ever be a NBA/NFL star or Hollywood A-lister (or even B and C) their chance at this level is equally small.

Maybe if they knew what they wanted to be they could find someone who knew how to get there. Hopefully this time they will. HP is a great name, it just seemed lost, trying out every new fad without being HP first.

Are the numbers obnoxious, yeah for those of us who don't operate at these levels. Just like when see movie stars get twenty million for a flop or the sports star signed to hundred million dollar long term contracts. Its all about risk versus reward. Trying to find that one in a million person who really is capable of pulling a rabbit out of his arse all the while blowing smoke up there too. These same people need insurance too, against boards and corporations that are simply rudderless or so mired in bureaucracy that short term fixes are near impossible and your just the latest scapegoat. The high stakes game of finding your Steve Jobs isn't cheap. I won't even pretend to think I would ever be at this level, but I would love to sit in a room and watch how they work one day as a fly on the wall. Just what does set these people apart? When some hit it big they really hit it big.

Re:So HP is learning painfully expensive lessons (0)

tverbeek (457094) | more than 2 years ago | (#37516984)

These CEOs are one-in-a-million personality types, alright.

Much like serial killers.

Re:So HP is learning painfully expensive lessons (1)

tverbeek (457094) | more than 2 years ago | (#37517454)

Hardly trolling; I think it's a good analogy.

Re:So HP is learning painfully expensive lessons (0)

Anonymous Coward | more than 2 years ago | (#37517560)

Exactly like serial killers, but on a much larger scale with more casualties.

Re:So HP is learning painfully expensive lessons (0)

Anonymous Coward | more than 2 years ago | (#37517086)

Yeah I know quite a few will be annoyed at the payouts but we are talking about the one in a million type person/personality types.

Bingo! Nobody appreciates that John Sculley saved Apple. Good CEOs are hard to find.

Re:So HP is learning painfully expensive lessons (3, Insightful)

ceoyoyo (59147) | more than 2 years ago | (#37517138)

"but we are talking about the one in a million type person/personality types. Just like there is little chance any kid you went to school with would ever be a NBA/NFL star or Hollywood A-lister (or even B and C) their chance at this level is equally small."

Hm... maybe that's the problem. HP (and other companies) should stop hiring one in a million, self-important sociopaths with overly inflated egos and try some normal, competent people.

Re:So HP is learning painfully expensive lessons (3, Insightful)

peragrin (659227) | more than 2 years ago | (#37517448)

Normal people arent competent.

Competent people are harder to find than 1 in a million.

Re:So HP is learning painfully expensive lessons (2)

NeutronCowboy (896098) | more than 2 years ago | (#37517428)

I won't even pretend to think I would ever be at this level, but I would love to sit in a room and watch how they work one day as a fly on the wall. Just what does set these people apart?

Newsflash: they're people like you and me, and eat and shit the exact same way we do. They even work the same way we do. The difference? They were at the right time, the right place to use their particular skills (marketing/design/direction in the case of Jobs, identification of long-term market trends in the case of Gerstner, etc). Most of them are smart - some even scary smart. But not 1:1000000 smart, and certainly not that exceedingly knowledgeable. From what I've seen, what sets CEOs apart from others is that they are very, very good at schmoozing. 1:1000000 good. Otherwise, they'd never have been in the right place at the right time.

Hey, you. (0)

Anonymous Coward | more than 2 years ago | (#37516868)

You did a bad job, here is 25 mil.
We will also use you as an example for others, to see that working hard is the way to go.

Why does this happen? (4, Insightful)

MrCrassic (994046) | more than 2 years ago | (#37516878)

Why is it that even poorly-performing CEO's get incredibly huge severance packages? I can understand CEOs that actually helped raise a company getting nice parting gifts (like Lou Gerstner and Bill Gates), but shouldn't leaders that, effectively, failed to lead? get much, much less?

Re:Why does this happen? (1)

Anonymous Coward | more than 2 years ago | (#37516922)

LOL. Its called "capitalism". Pay based on performance is for the losers who do all the actual work. Btw there will be no raise again this year, sucker.

Re:Why does this happen? (1)

Riceballsan (816702) | more than 2 years ago | (#37516992)

The problem is the CEO is more or less the head of making decisions. So the first CEO ages back made the decision that CEOs should get a ton of money when they leave, regardless of the reason, the only way such a boneheaded policy can be removed is if the next CEO pushes for it. The problem is... where on earth do you find a CEO that will fight against giving himself money.

Re:Why does this happen? (4, Interesting)

TheSpoom (715771) | more than 2 years ago | (#37517146)

The problem is the CEO is more or less the head of making decisions. So the first CEO ages back made the decision that CEOs should get a ton of money when they leave, regardless of the reason, the only way such a boneheaded policy can be removed is if the next CEO pushes for it. The problem is... where on earth do you find a CEO that will fight against giving himself money.

Replace CEO with politician and the same applies (which is also why you see the two interchange so often).

Re:Why does this happen? (1)

Uberbah (647458) | more than 2 years ago | (#37517638)

Applies, how. Joe Lieberman is a widely loathed politician, but he wont be collecting an 8-digit severance package when he's tossed out of office next year....

Re:Why does this happen? (0)

Anonymous Coward | more than 2 years ago | (#37517360)

The Board of Directors decide the payment/severance packages in most US corporations. You would be right if the CEO and Director of the Board are the same person, which does happen.

Re:Why does this happen? (1)

alexo (9335) | more than 2 years ago | (#37517450)

The Board of Directors decide the payment/severance packages in most US corporations. You would be right if the CEO and Director of the Board are the same person, which does happen.

CEOs sit on each others' boards.

Re:Why does this happen? (1)

maxume (22995) | more than 2 years ago | (#37517134)

The perception is that the right CEO can increase profits by tens of millions of dollars a year.

This gives the 'right' candidate lots and lots of negotiating power.

Re:Why does this happen? (1)

NarcolepticPenguin (586989) | more than 2 years ago | (#37517458)

For some reason, the wording here makes me think of some twisted corporate lottery being played by HP. The right ticket can net you billions an billions in profit. Each ticket costs you 10-40 million. Most tickets are not the right one.

Re:Why does this happen? (1)

Surt (22457) | more than 2 years ago | (#37517486)

Yes, that misperception is the source of many troubles. A better statement of the situation would be that the wrong CEO can cost tens of millions of dollars in profits. The difference between how much money they can make with a competent CEO and a superstar CEO isn't that high.

Re:Why does this happen? (1)

roc97007 (608802) | more than 2 years ago | (#37517230)

I'm guessing, because it's cheaper than defending yourself in court.

Re:Why does this happen? (3, Interesting)

Surt (22457) | more than 2 years ago | (#37517512)

But Leo took a huge risk taking on HP. I mean he failed, and so he will literally never work for more than $10 million per year again. To get him to take that job, they had to negotiate it so that no matter how he left he'd be taken care of for life. Otherwise, who would take that kind of risk?

Re:Why does this happen? (2)

Evro (18923) | more than 2 years ago | (#37517514)

Probably because the severance is agreed upon when they're hired, not when they're fired. After firing one, it may be hard to find someone willing to lead - maybe they assume the board is prone to firing CEOs, so they're reluctant to take the job? - and the huge severance is considered insurance against that outcome?

I'll agree that it's sickening to think that a CEO who tanks his company and fails at his job gets a severance many times more than the lifetime earnings of probably 50% of the US workforce.

Re:Why does this happen? (1)

ISoldat53 (977164) | more than 2 years ago | (#37517582)

Often it's cheaper to pay off the CEO than to have them losing the company money. Considered over the yearly revenue, the CEO pay is not always that significant.

Re:Why does this happen? (1)

Andy_R (114137) | more than 2 years ago | (#37517664)

Boards judge potential CEOs on their negotiating skills. The only negotiation the board has with potential CEOs is their pay and severance package. Therefore, boards agree to being swindled out of huge pay and severance deals because the fact that the new CEO talked them into it is cast iron proof that he's exactly the kind of money-oriented cutthroat negotiator they want.

Re:Why does this happen? (1)

nine-times (778537) | more than 2 years ago | (#37517686)

I believe that part of the problem is that it's often negotiated ahead of time. When they hire the CEO, there may be part of the contract negotiations that include huge payouts if they're fired.

The bigger question in my mind is, could these CEOs possibly be worth it? When you pay one of these yahoos $20 million, are you really getting $19 million more in value than if you hired the best $1 million CEO? With some of these CEOs, I doubt it.

Underbidding (1)

ElmoGonzo (627753) | more than 2 years ago | (#37516882)

If you pay me just half a million I won't work for your company either. It's less money than Notre Dame had to pay to get their previous coach not to work for them.

Careful (1)

PPH (736903) | more than 2 years ago | (#37516976)

When the news of HP's troubles gets out, there will be a line around the block of people applying not to work there.

On the other hand, they could charge people just to come in and watch. How many BOD members can they fit in that tiny little car anyway?

I for one (0)

Anonymous Coward | more than 2 years ago | (#37516884)

I, for one, welcome our new plutarchic overlords

stop hiring out side MBA's and promote people (0)

Joe_Dragon (2206452) | more than 2 years ago | (#37516972)

stop hiring out side MBA's and promote people from with in.

It may be better to get people who have / are working at HP to do CEO and VP level work then some out side person who does not know a lot about what goes on in the inside of HP.

Re:stop hiring out side MBA's and promote people (1, Troll)

inviolet (797804) | more than 2 years ago | (#37517068)

stop hiring out side MBA's and promote people from with in.

It may be better to get people who have / are working at HP to do CEO and VP level work then some out side person who does not know a lot about what goes on in the inside of HP.

That only works if your corporate culture is healthy. Unfortunately, personality pervades an organization from the top down, and HP has spent years under some comically dysfunctional personalities. Anyone who presently occupies a post in HP upper managment is, ipso facto, the problem rather than the solution.

Re:stop hiring out side MBA's and promote people (1)

poofmeisterp (650750) | more than 2 years ago | (#37517092)

stop hiring out side MBA's and promote people from with in.

*GASP* That's BLASPHEMY! There's nothing that can make [our] stock go down faster than that! What are you smoking today?
/sarcasm :)

Re:stop hiring out side MBA's and promote people (4, Interesting)

dkleinsc (563838) | more than 2 years ago | (#37517434)

It may be better in terms of long term performance, but consider this approach to making money if you're on the board of a company:
1. Hire a perceived "rock star" CEO.
2. Stock goes up on the announcement.
3. Sell some of your stock right after the announcement (nothing suspicious about that, just collecting a gain)
4. If "rock star" CEO doesn't work out (as seen in some of the quarterly reports, so you aren't insider trading illegally) buy up some company stock as the price gets lower.
5. Fire bad CEO, stock goes up on the announcement.
6. Form CEO search committee, go to step 1.

This will eventually run the company into the ground, but a director could make a lot of gains on the way down. And they can continue to hold their seat on the board by timing things so that board elections happen between steps 4-6.

Re:stop hiring out side MBA's and promote people (1)

Surt (22457) | more than 2 years ago | (#37517460)

Actually, what you really want is to fire not just the CEO, but everyone about 3-4 levels down from there, all at the same time. Otherwise you just have the people who supported/enabled the failed CEO running the show.

Taking Turns (2)

na1led (1030470) | more than 2 years ago | (#37516988)

Sounds like the Board Members are taking their turns at some expensive cash outs. Who's the next volunteer to be CEO for a year and get millions in payout?

As usual... (2)

hesaigo999ca (786966) | more than 2 years ago | (#37517020)

This problem will always be there if non eof the CEOs are held accountable for their bad decisions, some make them on purpose, as insider information makes dipping stock prices easy for another company paying a hidden fee to buy into another one. Yes it is punishable should it come to light, but hell, none of these things ever come to light except when someone happens to stumble upon something and raise a flag to the right people.

I hate to say this, but if we started keeping tabs on the actual work that CEOs did in terms of good work vs. shody work and say have it in the clause that should there be any badly managed portions of their work, they could be held accountable to pay a fee, of which could be based on the amount of the screw up.

CEO pay should be determined by stockholders (2)

Animats (122034) | more than 2 years ago | (#37517128)

The way CEO pay for publicly held companies should work is that shareholders should enter the amount on the proxy. The share-weighted median is the CEO's total compensation. (And no default value for unvoted shares.)

Also, voting rights should pass through as far as the tax break does, so mutual fund managers have to pass voting rights through to their shareholders.

Re:CEO pay should be determined by stockholders (1)

ThatsMyNick (2004126) | more than 2 years ago | (#37517536)

Would anyone vote for more than 0?

To quote Mel Brooks... (2)

HockeyPuck (141947) | more than 2 years ago | (#37517160)

"It's good to be the king."

It's all part of the business model (1)

roc97007 (608802) | more than 2 years ago | (#37517172)

???

Profit!

Stock? (1)

phantomfive (622387) | more than 2 years ago | (#37517182)

Hope they sell that stock as soon as possible.

First read the subject as "HP Bent Over..." (1)

spads (1095039) | more than 2 years ago | (#37517264)

:)

Political cover (2)

psydeshow (154300) | more than 2 years ago | (#37517350)

So at this point, Hewlett-Packard is just a shell company that exists to funnel the long-term campaign contributions of conservatives into Meg Whitman's war chest by means that are not subject to contribution limits or public oversight... right?

Why would anybody invest in HP if not to directly support the new CEO's compensation package?

Re:Political cover (2)

140Mandak262Jamuna (970587) | more than 2 years ago | (#37517708)

She does not have to go through this elaborate scheme to get campaign contributions. We are in the post Citizens United decision world. Any one can simply set up a private corporation, it can collect money from various people, send the money to the campaign, vote itself out of existence by the time disclosure window rolls around. At that point there is absolutely no way for any one trace where the money for the campaign came from.

Here is the kicker. Mitt Romney has already done it. At least once. Probably three times.

the word is failed not futile (1)

Surt (22457) | more than 2 years ago | (#37517412)

The two words have a meaningful difference, and her bid was hardly futile.

The reason for this lies in share speculation (1)

janimal (172428) | more than 2 years ago | (#37517520)

I know this may sound like a troll, but this might be worth a thought: the shareholders don't give a flying f..k who runs the company and how much they get paid to leave. They make money on soap opera type information and herd mentality of small "investors". I wonder how much of HP shares are in hands of shareholders who care about how HP *does* in the future as opposed to how will HP's short to mid-term share price do? Does anyone have the numbers?

I bet that for any company whose shareholders are distributed enough among speculators and the individual day-traders, the company profit stops being an issue... which means that "market makers" may ruin companies by providing liquidity.

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