Two Stories of Corporate Compensation: One to a Bad CEO, One to the Workers
Call me old-fashioned, but when I read stuff like this quote from Business Week's Talk Show column (November 14, 2005)
After the Securities & Exchange Commission launched a probe of accounting irregularities at Dollar General, Cal Turner Jr. in 2002 returned $6.8 million that he had been paid for results that were eventually restated; he then stepped down as CEO. The gesture was lauded by BusinessWeek and others. But in the two years since, Turner has remained employed by -- and paid by -- Dollar General, based in Goodlettsville, Tenn. After retiring as chairman in June, 2003, Turner stayed on as an adviser to the board: In 2004 he received $275,000 plus $113,000 in perks.
On Oct. 18, Turner fully retired and got another big payout. In an SEC filing reported on the Web site Footnoted.org, Dollar General disclosed that Turner is getting a lump-sum retirement payment of $1 million, access to the company's box suite at Tennessee Titans games, title to a company-owned 2004 Audi A8 that he drives, and up to $100,000 to cover legal and consulting expenses. Dollar General also is making a "gross up" payment to cover taxes on the package. Turner directly owns 3.3% of its shares, worth $200 million.
I get pretty disgusted. Why do corporate boards persist in rewarding ethically questionable and/or poor management decisions? Is this the model we want to present to the next generation? I don't think so, and I think he should give any penny of the cash and gifts back to the stockholders, and the board that allowed this should all resign.
My thanks to David Batstone for calling my attention to this.
Interestingly, the same Business Week column notes that every Ecuadorian employee at Occidental Petroleum's Ecuadorian facilities got a bonus of $130,000 to $150,000, thanks to that country's profit-sharing law. Yes, the janitors, the secretaries, the field technicians. With an average annual income of just $2180 nationwide, these 350 individuals could make a significant dent in the quality of life in their families and villages.
And don't feel sorry for Oxy; its $464 million in locally-generated profits can easily fund the 15 percent payment to its workers. The US, with its rampant overpayment of poorly-producing CEOs (as cited above), could learn some lessons here.
Shel Horowitz's Business Ethics Pledge models a different--and healthier--way to conduct business.