Thursday, February 10, 2005

I Want To Become A CEO So I Can Get Fired

Techdirt reports on an article in Business Week that says that Carly is negotiating a $21 million dollar severance package from HP.

Read that again. $21 million. For getting fired. That's more money than HP project managers - you know, the people at HP who actually get stuff accomplished - see in an entire lifetime. And it would support all those Compaq people that Carly laid off for years.

I am a capitalistic, pro-business kind of guy, but when I see stuff like this, it makes me realize how corporate governance has really broken down. There is a club of CEOs and board members who keep scratching each other's back by looting corporate coffers. Shareholders hold so little stock, or hold it indirectly through 401Ks, mutual funds and the like, that it is impossible for them to fix outrages like this. The mutual fund and money managers who do control the voting stock are in on the game themselves (check out who is on the HP board for example), so they have no incentive to change anything. So we keep seeing - and will keep seeing - outrageous pay packages for failure.

I don't think the solution is the government, however. Time and again government regulation has created far more problems for shareholders than management (Sarbanes-Oxley being the latest example of shareholders losing corporate value in the government's attempt to "help"), so I don't know what the solution is at this point.

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