18 June 2017

They Would Have to Put Half a Dozen Children on a Spit and Toast Them at the Flame That Comes out of Their Mouth?

Over at the New York Times, Gretchen Morgenson observes that the CEO of United Airlines was fired for paying bribes to politicians, and was allowed to keep his performance bonuses, and asks, "How Badly Must a C.E.O. Behave Before His Pay Is Clawed Back?"

You see, Jeffery Smisek got to keep his bonuses and his generous golden parachute:
United Airlines’ contempt for customers was on full display in April, when it dragged a passenger from an overbooked plane, bloodying him in the process.

Since then, shares of United Continental Holdings, the airline’s parent, have rebounded smartly, so perhaps investors consider the incident an anomaly.

But those who do may want to check out a lawsuit unfolding in Delaware Chancery Court, one that involves the former chief executive of United and a prime figure in the Bridgegate scandal that has dogged Gov. Chris Christie of New Jersey. The facts of the case reflect a similar disdain for United’s shareholders by the corporate board members who are supposed to serve them.

At the heart of the lawsuit is the refusal by United’s directors to retrieve any of the $28.6 million received by Jeffery A. Smisek, United’s former chief executive, when he was defenestrated in 2015 amid a federal corruption investigation.


These tawdry events have disturbed at least one of United’s institutional shareholders: the City of Tamarac, Fla., Firefighters Pension Trust Fund. In a litigation demand, it requested that the company’s board claw back the severance pay given to the executives who took part in the bribery scandal. By doing so, United’s board would correct its breach of fiduciary duty and prevent “the unjust enrichment” of company executives.

Seems fair enough. But United’s board has refused. Its justification for not recouping the pay is, well, pretty rich.

In a letter to the pension fund, a lawyer for United explained that it would harm the company to give the board “unfettered discretion to recoup compensation” in cases involving wrongdoing. “Where such discretion is out of step with industry norms,” the letter said, it would “make it difficult for United to recruit and retain top talent, particularly at the senior management level.”
Murder parent? Check.

Ask for mercy as an orphan? Check.

We really need to start throwing executives in jail for this sh%$.


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