Step 1 Read the scenario. In 2002, Ford made public some of the details related

Question

Step 1 Read the scenario.

In 2002, Ford made public some of the details related to the firing of the former CEO Jacques A. Nasser, which followed a $5.4 billion loss during his last year in the job (Mullaney & Darnell, 2002). In addition to an annual pension for life of nearly $1 million, the 53-year old ex-CEO received performance bonuses through 2003. He also received full payment on stock granted to him in 2001. It isn't known how many shares he received, but his 2000 award was worth $5.8 million in January 2002 (Business Week, January 14, 2002). This type of "sweet severance? package is not unusual when a corporation terminates a CEO for lackluster performance.

Step 2 Answer the questions.

Based on the scenario, answer the following questions:

Explanation / Answer

THE CEO WAS DISMISSED FROM THE COMPANY AFTER HIS SUCH A DISSAPOINTING PERFORMANCE OF HIm (i.e. a $5.4 billion loss)

Even after such a dissappointing performance and making such a huge loss to the company he is paid an annual pension for life of nearly $1 million, receives performance bonuses through 2003,receives full payment on stock granted to him in 2001and his 2000 award was worth $5.8 million.

I think the only reason why boards of directors approved of such deals for disgraced CEOs on their way out, when most employees who are laid off receive at the most a few weeks' severance pay is that THERE MUST HAD BEEN A CLAUSEIN THE AGREEMENT BETWEEN THE COMPANY AND THE CEO AT THE TIME OF APPOINTMENT OF THE CEO THAT IF THE CEO IS TERMINATED FROM THE JOB HE WOULD BE PAID SUCH type of "sweet severance package WHATEVER MIGHT BE THE SITUTION. i.e EVEN IF HE MAKES SUCH A lackluster performance.

SUCH A POLICY ADOPTED BY THE COMPANY IS COMPLETELY AGAINST THE COMPANY'S INTEREST SPECIALLY AGAINST THE INTEREST OF ALL THE STAKEHOLDERS OF THE COMPANY. THE COMPANY SHOULD ADOPT STRICT RULES AGAINST SUCH TYPE OF DIRECTORS.THEY MUST INCORPORATE STRICT CLAUSES IN THEIR AGREEMENT WHILE APPOINTING SUCH HIGHER RANKING POSTS AS CEOS.

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.