A few days ago, Bank of America announced that it is acquiring Countrywide Corp. The CEO of Countrywide, Angelo Mozilo has a 'golden parachute' package that will pay him over $100 million when he steps down as CEO when this deal is done. The news of this Bank of America take over will not be as sweet for thousands of other Countrywide employees as cutbacks and layoffs will most likely follow soon after this deal is complete. Some Members of Congress have urged Angelo Mozilo to give back much of his severance package in order to help Countrywide customers that are struggling to pay home mortgages through that company. However, if Mr. Mozilo does so it will be a surprise to almost anyone that watches the world of CEO's.
Every few months or so there is another big deal on Wall Street that earns CEO's that ran their companies into the ground millions of dollars in rewards for doing a bad job. No where else in American capitalism is poor performance rewarded more than with CEO's in public companies. While it would be easy to blame this problem on CEO's, in reality it is the board of directors at these publicly traded companies that need to be held to account for offering these crazy severance packages to CEO's in the first place. For too long, CEO earnings have not been tied to company success and this is wrong. When a CEO makes bad business decisions and a company suffers financially, usually it is the hard working employees below him or her that suffer.
The job of a Fortune 500 CEO is a win/win situation for the CEO because they are rewarded if they do a good job and sometimes they are rewarded even more when they make big mistakes that cost the company money. It is not only wrong, but in my view it is un American for board of directors at huge companies to continue to reward CEO's with $100 million plus 'golden parachutes' when they leave the company. The capitalist American in me says that the sky should be the limit when it comes to pay for a CEO that does an exceptional job managing a major company. However, if they lose the company money – they should be fired with very little future compensation just like the rest of the employees of that same company. I'm not trying to pick on Angelo Mozilo because only a fool would turn down a package like the one that was offer to him. However, I do fault the Countrywide Board of Directors for offering him such a package in the first place.
Read more about the Economy:
Michael Dell Rebuilding His Computer Company
Wall Street Could Once Again Face - 'Black Monday'
Are American's Recession Fears Justified?
Stan O'Neal's 'Golden Parachute' Worth $160 Million
Merrill Lynch CEO Stan O'Neal Out?