Since folks are arguing that business exist to make money, I went back and looked at the primary entity mentioned in the OP, Hewlett Packard (
HPQ), and reviewed their stock over the last year. The company's stock has a 1-year change of -9.25% since Aug 2008. They reached a high in late-March of nearly 55 points (54.75) for the 52-week period, but since then have dropped to just over 40 points (40.34) when the markets closed on Friday (9/03/10).
A quote from the article in the OP reads:
The report, from the Institute of Policy Studies, found that
the 50 layoff leaders received $12 million on average in 2009, compared with an average compensation of $8.5 million for chief executives of companies in Standard & Poor's 500. Each of the 50 companies examined in the report
laid off at least 3,000 workers between November 2008 and April 2010.
“Our findings illustrate the great unfairness of the Great Recession,” said Sarah Anderson, lead author of the study, “CEO Pay and the Great Recession,” the latest in a series of annual “Executive Excess” reports published by the institute, a progressive think tank. “CEOs are squeezing workers to boost short-term profits and fatten their own paychecks.”
Those CEOs include
HP’s Hurd, who slashed 6,400 jobs in 2009 — a year when his compensation amounted to $24.2 million.
Atleast where HP is concerned, the arguments for their CEO walking away with millions for underperforming does not hold water. He didn't make money for his company's shareholders. He lost them money, yet still managed to walk away with $24.2 million dollars!
Another company, Johnson & Johnson (
JNJ):
William Weldon, who
took home $25.6 million — more than three times the average CEO compensation for big U.S. companies — even as
the health care giant was slashing 9,000 jobs and facing a massive drug recall scandal.
Their 52-week high was 66.20 points; 1-year ago their stock was at 61 points. They closed 9/03/10 at 58.93. One-year change, -1.27. Not nearly as bad as HP, but still they company lost money for their shareholders.
How does underperforming and mismanaging their companies justify their multi-million dollar payouts?