Bob Chapek, who ran Disney for just two years, will pocket a reported $20 million in severance for a largely lackluster performance as CEO.
If there’s a more generous welfare program in America, I don’t know what it is.
One of the record holders in this regard is former WeWork CEO Adam Neumann, who received about $445 million to stop running the company.
By that measure, Chapek’s get-outta-town deal is pretty much par for the course.
But it highlights the lunacy of corporate boards agreeing in advance to lavishly reward CEOs for failure.
Chapek received total compensation of $32.5 million in 2021 after taking the big chair in the Mouse House.
Last year he received about $24 million.
And now, after being elbowed aside by his predecessor, Bob Iger, Chapek will get another $20 million — or more, depending on Disney’s stock performance.
The company’s board said in a proxy filing that Chapek “was no longer the right person to serve in the CEO role.”
But here’s millions of dollars for your trouble, dude.
CEO pay is completely out of whack. Average compensation for the top dog has skyrocketed by nearly 1,500% since 1978, according to the Economic Policy Institute.
As of 2021, the organization found, the average CEO of a large company received compensation of $27.8 million.
That’s about 400 times the pay of a typical worker.
Maybe (but probably not) such generosity is warranted if a company is doing fabulously well. Yet when a business stumbles, and when the CEO is handed his hat, that’s clearly a different matter.
If you screw up on the job, you’ll likely be shown the door with no additional goodies to sweeten your departure.
But top execs, like movie stars, have their contracts negotiated by agents and lawyers, and a fat severance package is routinely included in most deals.
This is, of course, ludicrous — for other employees as well as for shareholders.
The thinking is that companies can’t attract the best leaders without such contract provisions. But that just bows to greed.
The standard should be that a business can reward its CEO as ridiculously as it pleases so long as the profits are rolling in and shareholders are happy.
But when a CEO proves no match for his or her responsibilities, that should be that.
Showering money on such folk is financially foolish and terrible for corporate morale.
“The significant developments and change in the broader macroeconomic environment over this period informed how the board viewed the appropriate leader in light of the rapidly evolving industry and market dynamics,” Disney’s board said of Chapek’s ouster.
His goofy severance shows that the industry isn’t evolving much at all.