How Would You Like to Get Paid $6,650.00 an Hour?
As you know, I usually think about different blog topics while I’m working out on the treadmill. Well this one is no different. I was reading the business section of the Dallas Morning News and just read the story about J.C. Penney Co.
Let me state that I have never worked for the company, don’t know anyone who works there and don’t own any shares of stock.
Let me fill you in with the details.
J.C. Penney Co. announced they terminated the contract of Catherine West, the Chief Operating Officer. News like that happens all the time, but the real story to me is she was paid a $10,000,000 severance package. Yes that is ten million dollars! Yes the number 10 followed by 6 zeros! By the way, did I mention Catherine was only on the job for…six months?
Based on a 60 hour work week she was paid $6,650.00 per hour.
Here is what I don’t understand:
- How much strategy could they develop in six months?
- How much strategy could be implemented?
- How much could one person in a publicly held company accomplish in six months?
Don’t most executives join a company, scope out the lay of the land and then make decisions? Doesn’t that take a little time? Reminder: this isn’t a severance package for someone who was a long standing employee. She didn’t work there for 25 years, not even ten or six years – it was only six months.
- How do you think James Cash Penney would feel if he knew that someone was at the company he founded for six months and for whatever reason didn’t work out and was paid $10,000,000 to leave!
- How do shareholders feel?
This story isn’t that different than many others and this posting isn’t directed at Catherine West and J.C. Penney. This happens all the time and I can only think of two reasons why it happens and will continue to happen:
- People take care of their own – Corporate boards take care of each other and if it happens to them they want the same in return.
- If they don’t pay large severance packages, executive search firms might not be able to recruit executives to the company because it could tarnish the image of the company
How do you feel?
January 7th, 2007 at 11:48 am
Home Depot paid Bob Nardelli $210 million severence when they fired him after six years as CEO. That’s more than 20 times what West got for a period that is only 12 times what she worked at Penney.
No matter how you do the math, there is something way out of whack with golden parachutes!
January 8th, 2007 at 9:55 am
Have they found a replacement?
January 8th, 2007 at 11:56 am
Ian took the words right out of my mouth. For the stock challenge, I picked Home Depot. I thought after Bob Nardelli got $210 million, hopefully there would be enough money left over to pay the replacement, and bring the stock back up. HD’s stock consistently went down during Nardelli’s tenure. So how does one get paid $210 million for a hard edged management style and declining stocks? Sign me up…
January 8th, 2007 at 11:57 am
And Merrill, I want to know how they got a picture of you on the treadmill… I love it!
January 8th, 2007 at 11:59 am
James Cash Penney was notoriously frugal. When he started his company, he had two salesmen share a desk because he reasoned that one would be on the raod all the time. Reportedly, the first Mrs Penney died of neumonia following a tonsilectomy becuase she took a bus home from the hospital rather than a cab.
JCP used to be a very “inbred” company-you started out in the stores and worked your way up the corporate ladder. Promotion was almost always done from within. They changed their philosophy in the late ninties, but I imagine there is still a struggle between the old Penney guard and the executive “outsiders”.
January 9th, 2007 at 7:51 pm
In my opinion its criminal and the share holders should be suing the board of directors for allowing such a thing to happen on their watch. There is no possible reason for 10 million dollars in 6 months other then to cover up nafarious doings that this person may have found at their company. In any event, the shareholders should stand up for themselves.
I can only hope that those of us that have the opportunity to sit on Boards of Directors or to influence them can help stop the madness. While you may be hoping for quid pro quo, this pyramid scheme can only go on so long before the revolution begins!
January 10th, 2007 at 9:16 pm
This was on Andy Borowitz’s blog today and underscores the point:
Home Depot Pays Salesclerk $12 Million to Go Away
Largest ‘Golden Parachute’ for Incompetent Low-level Employee Ever
One week after paying its former CEO Bob Nardelli a severance package worth $210 million, Home Depot raised eyebrows in the business community again today by paying an incompetent salesclerk $12 million “to go away forever.”
In an official statement released to Wall Street analysts this morning, Home Depot said that it was paying the former salesclerk, Lucas Rekson, 24, the unprecedented sum on the condition that “he never shows up to work again.”
The $12 million severance package for Mr. Rekson of the company’s Torrance, California store is believed to be the largest of its kind ever for a low-level incompetent employee, industry experts said.
During his two-month tenure as a salesclerk at Home Depot, Mr. Rekson made his mark by repeatedly spilling boxes of nails on the floor and accidentally banging into customers with large pieces of lumber.
In defense of the Mr. Rekson’s gargantuan severance package, company spokesman Carol Foyler offered this rationale: “If it means that Lucas will never work for Home Depot again, then $12 million is a bargain.”
Reached at his home, Mr. Rekson was taking his place in business history in stride, telling reporters that after a brief vacation in Aruba he would start looking for work again.
“I’d like to get a job at Office Max,” he said. “After a couple of months working there, I wonder how much they’d pay me to go away?”
January 11th, 2007 at 12:05 pm
I should convass my employees and see how much they’re willing to raise to have me go away. I think I’d be lucky to work up coffee money. Perhaps I should take that as a complement.
It’s a different economic strate these folks live in. It’s the same with athletes, but at the end of the day, the P&L Statement reigns supreme and I’m sure the bean counters feel you have to pay this kind of money to get the top talent. Unfortunately for every Andy Grove/Steve Jobs, there are 100’s of Catherine West’s.
January 14th, 2007 at 11:14 am
Retirde educator looking for work!
April 11th, 2007 at 2:29 pm
i dont understand why did the person get fired