In 2002, Ford made public some of the details related to the firing of the forme
ID: 384038 • Letter: I
Question
In 2002, Ford made public some of the details related to the firing of the former CEO Jacques A. Nasser, which followed a $5.5 billion loss during his last year in the job (Mullaney & Darnell, 2002). In addition to an annual pension for life of nearly $1 million, the 53-year old ex-CEO received performance bonuses through 2003. He also received full payment on stock granted to him in 2001. It isn't known how many shares he received, but his 2000 award was worth $5.8 million in January 2002 (Business Week, January 14, 2002). This type of "sweet severance package is not unusual when a corporation terminates a CEO for lackluster performance. Why do you think boards of directors approve of such deals for disgraced CEO's on their way out, when most employees who are laid off receive at the most a few weeks' severance pay? Is this practice in the company's best interest? Explain
Explanation / Answer
CEO occupied a higher position in an organization and the board of directors reposed greater faith on the CEO.If the business doesnot perform well then definitely CEO has to take the responsibility and it it not an easy task for the board to sack the CEO as and when it wanted.CEO have also negotiated with the board about the severance pay because the position demand to take dynamic decision.Some decision may be materialize properly and some amy lead to disaster.It also be noted that most of the decision of CEO is backed by the board.To protect the goodwill of the company and not to indulge in unnecessary lawsuit such sweet severance package is given.
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