Friday, July 22, 2005

How Do They Live With Themselves?

I’m totally disgusted. In my June 21 blog I wrote about the decline of Morgan Stanley under CEO Philip Purcell, and why I wasn’t surprised that even his docile puppydog board finally gave him the heave. But what I didn’t count on was his “punishment” for having decimated the morale of the company, for creating an environment that led to massive defections of top talent, and for destroying nearly half of the company’s market value. That punishment —are you ready for this—is a $113 million goodbye payoff, which includes $44 million in cash! And if that’s not sufficiently outrageous, his ally Stephen Crawford, who was promoted to be “co-President” (whatever that means) just three months ago, was given a $32 million payout even though he was never any sort of a rainmaker in the firm. To all those investor groups who have initiated legal actions against those decisions as well as proxy actions to remove the board, I can only say: Yes!!!

The utter corruption of governance is obvious: I can’t imagine why the Morgan Stanley board would act with such spinelessness or stupidity, any more than I can explain the weakness (or is it stupidity) of the HP board for having given Carly Fiorina a $21 million payoff for sabotaging a once-great brand and guiding the company, like Purcell did his, to a halving of market value during her five year reign.

But now I’ve got a different question. How can these people—Purcell, Fiorina, and so many other deposed CEO’s—even take the money in the first place? I know that sounds naïve, but can I at least ask the question? Their efforts have been disastrous, their ineptness has been publicly outed, and despite all their failures they’ve already received millions in total compensation which is theirs to keep. So since it’s not like they “need” the money, it would seem to me that if they had either a sense of integrity, or at least some conscience, or at least some fear of public disdain and ridicule, that they’d never accept a big fat multimillion dollar payout. I guess I am being naïve, because after Gil Amelio almost destroyed Apple, he not only took the $10 million severance but then had the gall to write a book explaining why he, the CEO, wasn’t at fault.

I know people can rationalize anything, but I like to believe I’d be way too embarrassed to take the farewell sums that Purcell, Fiorina, Amelio et al have taken. I suppose these people just view the world differently. I’m on the board of a couple companies and I can tell you that if there’s some test or interview question that can help me predict this mindset (or is it a personality trait?), I’d sure like to know it before we pick our next CEO. At the very least, I’d sure like to understand what makes these people tick.


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