In light of the big severance contract Hewlett-Packard
Maybe in most instances they are carrying out their fiduciary responsibilities as careful stewards, but in too many cases they seem to be merely looking out for their fellow executives. After all, many board members run other companies with their own boards, and if they start bucking the chummy camaraderie, they just might find their own compensation and benefits challenged.
Poked with soft cushions
Executive employment agreements typically spell out, exactly, under what conditions compensation, bonuses, benefits, perks, and severance packages will be awarded. But too often, all that seems to go out the window and new agreements are written so that golden parachutes with platinum ripcords and palladium-lined crash helmets are handed out. It's more like the Monty Python skit where they're tortured with the comfy chair.
Hurd isn't the only executive to get a sweet deal upon exiting and leaving his company a shambles. Countrywide Financial CEO Angelo Mozilo reportedly got $115 million in severance despite his role in the mortgage lender's downfall and the subprime mortgage debacle, although he did give up $38 million worth of the package. And American International Group
In the wake of the Enron scandal, it was revealed that Duke Energy
Sayanora, see ya tomorra!
In a situation reminiscent of Hurd's, Boeing
Several years ago, Pegasystems'
Sometimes there's no scandal associated with a departure, at least none publicly disclosed, but you're left scratching your head anyway. Recently, Molina Healthcare's
Act like you care
In the years since Sarbanes-Oxley was passed, we were supposed to see a more careful accounting of shareholder money. Maybe we've seen a few more "material deficiency" notices included in filings, but has it really resulted in better stewardship by the boards?
There's a three-legged stool here and each leg is wobbly. Executives are not performing up to expectations; boards are rewarding management for misfeasance, malfeasance, and nonfeasance; and shareholders are shirking their duties when it comes time for proxy voting.
Our boards are broken and they need fixing. We can do more than just rail about excessive pay and outrageous severance deals. Every year you get a chance to decide who sits on the board of directors, and if your company's board is broken, vote the bums out!
Editor's note: A previous version of this article incorrectly referred to the CEO of Pegasystems rather than the president. The Fool regrets the error.