Bad Bosses: How Inept Execs Got Away With Mismanagement and Scandal In 2012
A look at the corporate leaders who got fat bonuses stapled to their pink slips.
This article was written by David Schepp and originally appeared on AOL Jobs.
Companies lay off vast numbers of workers with such depressing regularity that you may not have noticed the announcement. Last week Citigroup Inc. (NYSE:C) said it would lay off 11,000 workers worldwide, citing a need to reduce expenses. Yet, at the same time, the company revealed that it gave top execs hefty "incentive awards," including $6.7 million to Vikram Pandit, Citi's former CEO.
The bank, which disclosed the payment in a regulatory filing Friday, also paid its former chief operating officer, John Havens, who left Citi last month along with Pandit, $6.8 million. As The Associated Press reports, the executives will get 40% of the money right away, and the rest will be paid in installments through 2017.
The company said Pandit and Havens will continue to vest in deferred stock and deferred cash incentive awards previously granted to them. Those were worth $8.8 million for Pandit and $8.7 million for Havens.
The outsized payments to the Citi execs aren't isolated examples. Numerous other leaders at other companies who presided over huge financial losses, disasters or other mismanagement, have escaped job loss, criminal charges or steep fines -- the kinds of punishment deemed appropriate in such failures.
In fact, some also walked away with golden parachutes worth millions of dollars, and found new and sometimes even better jobs.
The regularity with which such instances occur raises important questions: Why aren't executives being held accountable? Are the financial reforms that were put in place by Sarbanes-Oxley in 2002 to protect shareholders and the general public from accounting errors and fraudulent practices a failure?
Nell Minow, a longtime shareholder advocate and corporate governance expert, believes the reforms are too weak. They "haven't done very much to discourage illegal behavior," says Minow, founder of GMI Ratings, a firm that publishes risk ratings for public companies based on factors that include governance.
There is ample evidence of a lack of accountability, exemplified by the increasing disconnect between pay and performance at the highest levels of corporations, Minow says. What's more, executives in the corporate world are held to different standards than their counterparts in government.
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