The “Free Market” Takes Its Pound Of Flesh, But Never From The Failed CEO

Continued from previous page

During his six-year stint as CEO of Home Depot, Nardelli created absolutely no value for the company’s shareholders. I am not exaggerating: on December 4, 2000, the day before Nardelli was named chief executive, shares of Home Depot closed at $40.75; on December 29, 2006, the last day of trading before he announced his resignation as CEO, the stock closed at $40.16. For lowering Home Depot’s stock price by 59 cents over the course of six years, Nardelli received “$210 million in cash and stock options, including a $20 million severance payment and retirement benefits of $32 million,” upon his separation from the company. [emphasis added here]

Or, Charlie Prince of Citibank (from “ The Audacity of Greed”):

Then there is Charles Prince of Citigroup. In his four years as CEO, Prince oversaw a financial return that averaged a negative 2.5 percent per year. Yes, that’s right, a negative return—compared to a 12 percent a year return for the Standard & Poor’s 500 index during the same time period.14 When he resigned from his job in November 2007, after a nearly $6 billion write-down because of mortgage securities’ risks, Prince said, “Given the size of the recent losses in our mortgage-backed securities business, the only honorable course for me to take as Chief Executive Officer is to step down.”

Apparently, Prince’s “honor” did not prevent him from accepting a $10.4 million discretionary bonus, which the board of Citigroup could have said no to, but didn’t. The board also let Prince keep more than $28 million in unvested stock and options. In addition, Prince also walked away with pensions and retirement benefits worth $1.8 million. All this for generating a negative financial return for Citigroup’s stockholders during his run as CEO. [emphasis added]

And one more cretin — though I could fill endless pages of examples of this shit because this is the story of corporate America — in the personage of E. Stanley O’Neal, he of the now-evaporated Merrill Lynch (from  “The Audacity of Greed”):

Thanks to the financial collapse of Merrill Lynch, thousands of people lost their jobs—mainly secretaries, administrative assistants, clerks and a whole host of other regular workers who only knew what a multi-million dollar bonus was by reading about it in the newspaper. The fate of the company’s management? E. Stanley O’Neal, who, as chairman and CEO from 2003 to 2007 was at the helm of the company when Merrill posted a $2.24 billion loss in the third-quarter of 2007 because of a mind-boggling $8.4 billion write-down on investments in junk mortgages and risky debt securities—the largest quarterly loss in the company’s nearly 100-year history—walked away with a “retirement” compensation package worth $161 million. (And what was O’Neal doing while his company was suffering record losses? Playing golf—including three rounds on three different courses in a single day.) [emphasis added]

$161 million retirement. For destroying a company.

So, it is particularly galling to hear politicians and yappers in the media, who sat by while the real culprits of incompetence, mismanagement and robbery walked away with vast fortunes, continue to pontificate about Detroit workers needing to share the pain. Workers in Detroit, and elsewhere, have already shared the pain — and then some.

But, never a CEO. No giving back multi-million dollar pensions (the likes of which an ordinary person could only dream of). No indictments for criminal action. No demand that they relinquish, in the financial crisis mess, top jobs in return for getting hundreds of billions of dollars in taxpayer money to fix the mess they made. Nope. The opposite. Most of those guys kept their jobs or moved on to other jobs, pocketing tens of millions of dollars.