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Peter Hart

Peter Hart

Peter Hart is chairman of Hart Research, a firm that does the public opinion polling for NBC/Wall Street Journal.

Hurd shouldn't get a golden parachute

Q: In forcing out its successful chief executive, Mark Hurd, did Hewlett-Packard directors over-react to what, given his overall compensation, appears to be a modest abuse of his expense account? Or did the board under-react by allowing Hurd to resign with his full contracted severance package rather than firing him for cause?

The question posed to us by the leadership board seems so natural--keep Hurd or dump him? But this question misses what really concerns the American public: why in the world should these leaders, from Tony Hayward to Mark Hurd, be rewarded for incompetence or criminal behavior?

Today, nearly 90% of the American public has little or no confidence in large corporations. One reason why corporations do not have the support of the public is that workers give their company a lifetime of service, play by the rules, and are promised a pension and health benefits only to find out that the company cannot live up to its obligations and the retirement pension for a worker is either adjusted or eliminated.

Then along comes a Mark Hurd, who is dropped by the board but floats away with a $34 million golden parachute because he falsified his expense account, among other things that likely will emerge with further review. The key is not whether to let these people go, it is whether or not to get rid of executives' golden parachutes. There is a great deal of talk about stockholders' rights, and their right to demand that their corporation give no golden parachutes to executives.

Rewarding competent executives with full compensation is fair, but if they leave, they leave only with what they have earned in salaries, bonuses, and stock options. Companies can attract the leaders they want, and the public will feel a lot more kindly toward the company that does not reward negligent executives with golden parachutes. In the end of the day, it is rebuilding the public's trust and respect in the corporations that will be golden not the parachutes.

By Peter Hart

 |  August 13, 2010; 8:52 AM ET
Category:  CEOs , Corporate leadership Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati  
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This kind of behavior, and rewards for it, will only cease when the shareholders say "enough is enough!" or from the movie Network "I'm mad as hell and I'm not going to take it anymore!". The $14B came out of their pockets/portfolios. Shareholders seem complacent about CEO compensation on the way up (whee, we're all getting rich!), but outraged when something goes wrong (who can we blame for this mess?). Can't have it both ways folks!

If this catastrophe at HP doesn't get the shareholders off their collective asses, then nothing will.

The B.O.D. I feel was negligent in that they allowed Hurd to be Chairman and CEO...too much consolidated power. HP needs a strong visionary CEO and a solid operational COO. HP is a huge complicated company! Carly had the "vision thing" but zero operational sense, Hurd is the complete opposite. The BOD can't seem to get the right formula at HP. Bill and Dave understood this and would never allow anything even approaching this to occur at HP when they ran it.

Posted by: Loeb1 | August 16, 2010 6:26 PM
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