Carly Fiorina, former chairman and CEO of Hewlett Packard, wrote an interesting editorial in today’s Wall Street Journal, entitled, Corporate Leadership and the Crisis, CEOs seeking bailout should be willing to resign. According to Fiorina,
In a fast-paced, hypercompetitive, technology-driven world, common sense, good judgment and ethics matter more than ever. The American people expect leaders to have sufficient wisdom and perspective to buck the crowd and defy conventional wisdom when necessary, even if it isn’t popular at the time. Quarterly earnings and share price cannot be the singular purpose of business or metric of success for CEOs. Shareholders are not the only constituency a CEO and board serve. Businesses have equally important obligations to employees and customers. A CEO’s job is to balance the competing requirements of all of these constituencies.
Business has an important role to play in rebuilding confidence and restoring credibility. To strengthen accountability, boards should put all aspects of CEO pay up for shareholder vote on an annual basis. Clawback provisions, which require a CEO to return compensation to shareholders if promised results aren’t delivered following their departure, should be included. CEO pay should be based on a balanced scorecard that reflects customer satisfaction and investment in employees, in addition to achievement of financial goals
Every board seat should be voted on annually and board membership should be regularly refreshed to ensure that tough questions continue to be asked. And when CEOs go to Washington and ask for taxpayer money, they should also be prepared to submit their resignations and those of their boards. To earn a bailout, a CEO and board should be held accountable for the decisions they’ve made — or perhaps the actions they’ve failed to take.
Fiorina, who I am not a fan of, has defined a number of proposals the new administration should take under advisement and consider implementing as we move further into the ongoing financial/credit crisis. Please read her entire editorial, she has a number of very worthwhile ideas to consider.
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