If you take a job, and perform poorly, and are fired, chances are that you walk away with a “goodbye,” and that’s all. Unless you are a corporate CEO. In that case, being fired is a richly deserved bonanza.
Since “highly paid corporate CEO” is, as we all know, the world’s hardest job (suck it, janitors and soldiers), and should be compensated as such, it is of course unremarkable that most big company CEOs have provisions in their contracts that pay them millions of dollars for getting fired—or “terminated without cause,” which is a term of art meaning “terminated for being bad at your job.” It’s only fair. How could a company ever hope to attract a businessman to take a job paying millions of dollars a year if it didn’t also guarantee that person millions of more dollars if they happen to be incompetent?
The Wall Street Journal reports today that there is now a slight rethinking of these so-called “failure parachute” provisions, which shower incompetent CEOs with rainstorms of thousand dollar bills on their way out the door. It seems that some radicals feel the payments need not be quite so lavish? Have anarchists and socialists infiltrated the corporate boardroom at last? I fail to see how, for example, former Mattel CEO Bryan Stockton, who was forced out after the company’s holiday season toy sales fell by 59%(!) in a single year, got anything more than he absolutely deserved:
Terminated without cause, Mr. Stockton received a $9.7 million package that included nearly $3 million in accelerated vesting of his equity awards.
In March, Mattel said it brought Mr. Stockton back as a consultant for a year—an arrangement not covered in its severance plan. He will earn $1.5 million, 30% more than his 2014 salary. His advice will draw “upon his deep institutional knowledge of the Company and experience in the industry,” Mattel’s proxy said.
Ten million dollars on top of a $1.5 million consulting gig to share his “deep institutional knowledge” of how to make sales fall by 59% a year. Everything seems to be in order here, yes.