I’m Bill Murphy Jr. Welcome to Understandably. Thanks for reading.
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I once thought it would be cool to be a rich and powerful CEO.
Now, I realize that I was aiming too low.
It’s far better to be a former CEO. Maybe even a CEO who was pushed out of the job.
Don’t believe me? Just ask Adam Neumann, whose walk-away package at WeWork was reported to approach $1.7 billion.
I’d be willing to not be the CEO of WeWork for a fraction of that.
At a smaller scale, take a look at the more recent case of Steve Easterbrook, who was pushed aside as the chief executive officer of McDonald’s Sunday.
Beaches are nice
The company said he “violated company policy and demonstrated poor judgment involving a recent consensual relationship with an employee.”
Last year, Easterbrook “got $15.9 million in total compensation,” according to the Wall Street Journal. Now, he’s getting six months’ severance.
I’m not sure if the “six months” is based on just his salary, or other incentives as well. But unless he blew through the millions he’s made over the past several years, he should be set and then some.
Plus, he doesn’t actually have to be the CEO anymore.
He can sit on a beach, or devote himself to charity, or serve on boards and invest and start a company — heck, he could even follow everyone’s dream and write a daily email newsletter.
Of course, it’s the exact opposite situation if you get fired at the lower end of the pay scale.
A decade ago, an Army officer I knew wrote a scathing article about the quality of top U.S. military leadership (a/k/a, his own bosses at the time).
“[A] private who loses a rifle suffers far greater consequences than a general who loses a war.”
Less than voluntary
The Neumann/Easterbrook story sounded familiar.
I started wondering just how many big company CEOs get fired, only to wake up on Post-Fired Day +1, and feel pretty good about the hand life has dealt them.
It turns out there’s a website that tracks this kind of thing.
Daniel Schauber runs exexchange (short for Executive Exchange). The site suggests that more than 50 percent of big company CEOs actually end their tenure on “less than voluntary” terms.
The quotes on “less than voluntary”are mine, and they’re there because it’s often not in anyone’s interest to use terms like “fired” or “asked to leave.”
(Easterbrook’s case is an exception to that rule, mainly because big companies now believe it’s in their favor to show that anything improper between an executive and employee will be a big deal.)
Shauber calculates a “Push-Out Score” for departing CEOs from 1 to 10.
A zero means the departure was voluntary; a 10 falls under the realm of an “openly forced departure.”
So for example, Shauber considered Under Armour founder and CEO Kevin Plank, who announced recently he’ll be stepping down at the end of the year, to have a Push-Out Score of 5.
(The score was calculated before news broke about the federal investigation into Under Armour.)
Over the last 12 months, the site gave several departing CEOs a “perfect” Push-Out Score of 10. Among them:
Gus Antorcha, ex-CEO of SeaWorld. (A filing with the SEC said he left “due to disagreements over the board’s involvement in the decision making.”)
Steven Temares, ex-CEO of Bed, Bath and Beyond. (“Given his choices, there's no doubt Steven Temares would have preferred to stay at Bed Bath & Beyond and see through his plan to revitalize the company. But if you’ve got to go, a $22 million payout seems like a nice going away present,” according to Forbes.)
Eric J. Foss, ex-CEO of Aramark. (“Foss stepped down Monday, on the heels of a large stock purchase by activist investor Mantle Ridge,” as summarized by WHYY.)
In some cases, the golden parachutes are there for all to see. In other cases we’d have to dig deeper into the SEC filings.
But it would be a rare situation in which a CEO leaves without enough of a reason to go quietly.
Nice work if you can get it.
Even better work, it seems, once you’ve had it and it’s taken away.
Here are 7 other things worth reading today:
Speaking of turnover, the new commissioner of the New York City Police Department is the son of Irish immigrants who walked a beat 28 years ago and rose through the ranks. (The New Youk Times)
Krispy Kreme forced a student who was driving 270 miles each weekend to buy doughnuts and sell them in his hometown to quit his gray market business. (Associated Press)
President Trump announced the U.S. is leaving the Paris Climate Accords. (Axios)
Airbnb bans “party houses.” (The Verge)
Microsoft Japan tested a four-day work week. Productivity improved. (The Washington Post)
Employees of a Buffalo Wild Wings in Illinois asked black patrons to move in order to satisfy a racist customer (a “regular”), They’re fired. (Chicago Tribune)
Walmart is up; Amazon is down according to a new study of consumer behavior. (CNBC).