Let me try to answer Matt Cooper’s question:
How come Warren Spector has been fired from Bear Stearns, but
Jimmy Cayne is still there?
The answer is very simple: it’s all to do with the management structure at
public companies. The CEO serves at the pleasure of the board, and the employees
all basically serve at the pleasure of the CEO. It’s common to find CEOs on
boards, but it’s unheard-of to find any other employee on a board.
The reason politicians resign is that there is no easy way of firing them.
In contrast, CEOs have very little job security these days. Cayne has more than
most, because he has a very strong grip on the board, and is the single largest
shareholder in the company. But even he can be fired, and it’s the board’s job
to fire him if he’s not performing up to scratch.
Cayne’s job, at least as he sees it, is to fire any employee who doesn’t perform
– and Spector was directly responsible for the loss of billions of dollars
in shareholder value. So he got fired. Simple as that.
CEOs don’t resign when they do a bad job. Bob Nardelli didn’t:
if he simply resigned, he wouldn’t have got a $210 million pay-off. Lord
Browne did genuinely resign, but he was very close to retirement anyway,
and had a lot more class than either Cayne or Nardelli, and in any case the
reason for his resignation had nothing to do with the way he did his job.
Cooper thinks that Nardelli resigned because Home Depot "tanked".
I think that Home Depot was actually doing pretty well, in terms of its results,
when the board fired Nardelli because of the press that he was getting and because
he wasn’t moving the share price. There was no tanking, and no resignation.
Just a common-or-garden CEO ouster.