When it comes to CEO compensation, I usually don’t make a big fuss about multimillion dollar paychecks. I understand the job comes with a ton of pressure and responsibility. But this is just ridiculous:
On June 2nd, Bill Johnson assumed the position of CEO of Duke Energy. Within 24 hours, he had resigned.
Despite his short-lived tenure, Mr. Johnson will receive exit payments worth as much as $44.4 million, according to Duke. That includes $7.4 million in severance, a nearly $1.4 million cash bonus, a special lump-sum payment worth up to $1.5 million and accelerated vesting of his stock awards, according to a Duke regulatory filing Tuesday night.
At what point do companies like Duke need to start rewriting their corporate governance guidelines? Would you still invest in a company with such glaring issues?
This takes the term “cashing in” to a whole new level. Still, there are two sides to every story. Here’s the “this was a rational decision” side:
Mr. Rogers's advocates (he’s replacing Johnson as CEO) viewed him as a consensus builder whose style was better suited to the task of bringing two firms together, one person said. He also had run the larger company. The board informed both men of its decision after the meeting and came to an agreement that Mr. Johnson would step down, people familiar with the matter said.
Ok, so maybe it was a strategic decision. And it looks like Mr. Johnson was fired rather than resigning, so it’s not really his fault for walking into $44 million. Here’s the “this situation is nuts” side:
So assuming that [Johnson] worked for a full eight hours on Monday, that comes out to a nice $5.5 million an hour — some 765,000 times the national minimum wage. His relocation alone is over half the average annual salary for an American worker. Hopefully he didn’t move too near any of his former colleagues. How embarrassing to run into them at the country club, what with Johnson being unemployed and all!
Johnson’s replacement is former Duke CEO Jim Rogers, just starting his fourth day on the job. He’s probably walking around the office, bragging about his longevity.
Again, I usually don’t have too much of a problem with CEOs getting paid so much. What I do have a problem with is this guy worked for one day. He had absolutely no positive (or negative) impact on the company, and left with $44 million. This is money that Duke Energy could have used for R&D, dividends, or—here’s a crazy thought—they could have saved a bunch of money and criticism by simply having some foresight and keeping Jim Rogers at CEO in the first place. Ultimately, this whole situation falls somewhere between comical and infuriating.
What are your thoughts on this?