Don't these guys ever learn? Didn't the ouster of Harry Stonecipher at Boeing
A personal and apparently romantic relationship with a female employee does not rise to the level of criminality, and affairs of the heart are often difficult to control. But when you're in charge of a multibillion-dollar corporation and answerable to shareholders for the effects that your actions may have, people have a right to ask, "Man, what were you thinking?"
There's no hint that the relationship between the CEO and the employee had any effect on the company's operations, and the company said its investigation did not reveal any impact on financial results. But shareholders need to ask what sort of package Pearson is going to get in the wake of the turmoil.
When Stonecipher was forced to resign at Boeing, he got a nice going-away present to soften the blow: He still got to receive his $1.5 million salary, was given a $2 million incentive bonus, and still had use of the company car and jet. It's unfortunately not all that uncommon for shareholders to foot the bill for a CEO's less-than-ideal exit. For example, former Krispy Kreme
Unfortunately for shareholders of Carbo Ceramics, the leading manufacturer of ceramic beads used to extract oil and gas from the ground, Pearson had the earmarks of an excellent CEO and contributed much to the company's leadership position in its industry. Carbo Ceramics has a 50% market share in the ceramic proppant market. ("Proppants" are ceramic beads or granules of sand that "prop" open fractures in rock to help extract oil and natural gas from beneath the surface). Shares of the company almost tripled in price on his watch.
Even so, that's no cause for directors to give away the store as a severance package. Executives might learn from their predecessors' mistakes if they weren't richly rewarded when they're shown the door.
Reward yourself with these related Foolish articles:
- Another Blotch for Boeing
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- More Proppants, Please
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