Nobody could have anticipated the failure of greed to serve as a positive capitalistic force! And yet, I bring you the former CEO of Hewlitt-Packard, who has walked away from 11 months work with a $23 million+ golden parachute, leaving his company in tatters:
It’s hard to fault Mr. Apotheker for taking what H.P. offered. But among the many questions shareholders should be asking the board is why it approved an employment agreement for Mr. Apotheker that arguably made it more lucrative for him to fail — and the sooner the better — than to succeed.
But … but … but …. Ayn Rand told us greed was good! And self-interest rawks!
“It’s a great irony that spectacular failure is rewarded lavishly,” John J. Donohue, a professor at Stanford law school and the president of the American Law and Economics Association, told me. “It is a terrible mistake to set up a structure where the top person walks away with millions even if the company is laid waste by their poor decision-making, yet this is what’s happening. It’s a shocking departure from capitalist incentives if you lavish riches on the losers.”
He added that it’s especially shocking at H.P., which fired its previous two chief executives before Mr. Apotheker and had to make multimillion-dollar payments as a consequence. “After what H.P. had gone through, you’d think the board would have been on their toes rather than asleep at the switch again,” he said.
Well yes, you’d think. Furthermore, the article tells us that Apotheker came to Hewlitt-Packard after being fired after just seven months as CEO of German software company SAP. If this were the world of “Atlas Shrugged,” Hewlitt-Packard’s gross incompetence would have dragged it down into a cesspool of insolvency while some plucky start-up took its place in a great survival-of-the-fittest display of how to be king of the capitalist jungle.
But that’s not what happened. That’s why, children, we don’t let fiction serve as a guide for crafting public policy. But I digress.
It gets better for Mr. Apotheker:
In an S.E.C. filing this week, H.P. said that 424,000 of Mr. Apotheker’s performance-based rewards remained in effect, and that payment would depend on whether H.P. met certain performance goals. So Mr. Apotheker could be awarded even more as a result of someone else’s performance. H.P.’s board even kicked in some additional benefits that weren’t in his contract, like relocation expenses and up to $300,000 to cover his loss on the sale of his California residence.
Bear in mind that Mr. Apotheker had already been paid “relocation benefits” of $4.6 million and a signing bonus of $4 million on Nov. 29 of last year, so his payments — almost $10 million after he signed on and just over $13 million to leave — would total at least $23 million for 11 months of work. An H.P. spokesperson declined comment on Mr. Apotheker’s contract, but said, “We credit Léo for having made important contributions to the company’s future. We appreciate his efforts and service to H.P.”
Compensation experts say that the primary argument for such lavish termination guarantees is to lure top executives from secure, highly paid positions elsewhere.
I’m sorry, WTF? This guy sounds like a con artist, not a corporate CEO. Of course, in this day and age, is there a difference? I’m thinking … not.
These are the “fighter pilots of capitalism,” the folks claiming they are entitled to every benefit and perk and tax cut the bottom 99% trickle up their way because, by God, they keep this country humming! It’s a very small, insulated world, and you can see that incompetence is not just rewarded but perpetuated. Because no matter how badly you’ve fucked things up, you’re a member of the club. Once you’re in, they look after their own. Because they run things, they can. You have to hit full Defcon Madoff before your invitation into this rarefied world is rescinded.
If this sounds like class warfare, so be it. That’s exactly what it is. You’ve got a lot of people in this country who have been laid off from their shitty jobs, been denied an extension of their unemployment benefits, and been forced out of their homes and into bankruptcy as a result. Meanwhile, Republicans in Washington claim that more tax cuts for the Apothekers of the world will get things moving along again.
I’m just not seeing it.