The Wall Street Journal is an indispensable guide to the values and ethical standards that govern American business. In a story on Aug. 28, the Journal offered a classic picture of how corporate boards deal with failure. The Journal reports that Proctor & Gamble saw its sales and stock price fall in 2014, as net income dropped by 40%. The paper notes that CEO A. G. Lafley failed to meet any of the performance goals set by the board for 2014. The board responded to this dismal record of performance by paying Lafley $18.3 million. The Journal notes that Lafley also spent $500,000 of the stockholders' money flying the corporate jet from P&G headquarters in Ohio to his home in Florida. He was running the company, of course, but couldn't be bothered to live within 2,000 miles of the office. Why should he, when the board was willing to fly him around and pay him millions while he was tanking the company? Which is the way things work in the corner suite at American corporations. If the company performs well, the CEO is richly rewarded. If the company's performance stinks, and stockholders lose a ton of money, the CEO is still richly rewarded. This brings to mind the rich rewards showered upon Carly Fiorina when she was CEO of Hewlett-Packard. The company got in deep financial trouble under her leadership; she responded by laying off 30,000 (!) American workers. Many of those jobs were moved to factories in China. How did the board punish Fiorina for this cruel failure? Well, they fired her. But they also paid her some $40 million to soften the blow. And how much of that $40 million did Fiorina donate to the employee fund created to help those who lost their jobs? Zero. Fiorina's view --and it's common in corporate America--is that CEOs should be paid mega-millions if they succeed, and mega-millions if they fail. And if tens of thousands of people lose their job because of her failure--well, as she says, "sometimes you have to make the tough decisions." Incidentally, this is why Fiorina won't be elected president. The Democrats know how to beat her. You just run ads showing a few of the people who lost their livelihood because of her incompetence --while she was taking home millions. When Fiorina ran for the U.S. Senate, she looked at first like a serious contender. Then the Democrats started running ads with the people whom she laid off; Fiorina lost in a landslide. '
↧