What Color is Your CEO’s Parachute?

Okay, before I get all lathered up about the latest outrages in the CEO suite, let me assure you that I recognize completely that the majority of top executives are honest and good people trying their best to lead their organizations to success. And that the CEO's I will be talking about represent the extreme of executive limit pushing. Still, these are people who work the system to their great benefit and represent a type of leader that can easily lead even the most successful company to ruin.

These executives are not criminals, nor are their employment deals considered unethical by regulators (at least not yet). But make no mistake - to the average Joe and Jane toiling throughout corporate America, they are jerks with a capital ‘J’.

At least four kinds of "Jerks" can be observed prowling about the CEO suite:

The Slick Messiah

These are leaders with superb platform and elocution skills who are so charismatic that they mesmerize their boards and employees and have Wall Street and the media eating out of their hands. But at some point their mystique wears off.

The most recent high-profile example of this type of CEO is Carly Fiorina the ex-head of Hewlett-Packard. Carly was a controversial figure within HP throughout her reign, er...I mean tenure, who achieved rock star status with the media and apparently other executives. According to a Boston Globe article published last February:

“When Fiorina, for example, joined HP as chief executive in 1999, she knew she had to re-energize the old computer company or lose ground to nimble competitors. She engineered the 2002 acquisition of Compaq Computer Corp. for $24 billion but it backfired. Said Judy George, chief executive and founder of home furnishings retailer Domain, who sits on several boards: 'She knew the game, and I loved that she took the risk. I love that she walked away with $21 million.'"

Excuse me – did you say risk? What risk? That her ‘bet-the-ranch’ deal would fail and she would have egg on her face and lose her job? Twenty-one million (plus pension and other perks) is one hell of a safety net and goes a long way in the wound licking department as well.

The Sell-Out Swami

In the interest of gender equal time - Mike Capellas, the former CEO of Compaq who co-engineered the ill-fated HP-Compaq merger was less charismatic than Carly but just as loose in taking high stakes risks that lined his pockets but left scores in unemployment lines. He left the combined firm with a overstuffed packet well before the post-merger integration was completed to join Worldcom (for a hefty salary) as CEO to clean up the mess made by Bernie Ebbers. Slick Mike immediately changed the company's name to MCI and then sold it to Verizon a few years later, raking in a couple more piles of gold in the process.

But Carly and Mike are small time operators compared to Jim (King) Kilts who orchestrated the sale of Gillette to P&G last year. Kilts stands to walk away with $150 million plus as his payoff for doing the deal. Even if P&G's stock price takes a huge hit, he is still likely to make over $100 million. Not bad, huh?

And just this week, it was announced that Wachovia’s vice chairman Wallace D. Malone Jr. is stepping down just 15 months after selling SunTrust Bank (where he was CEO) to Wachovia. His platinum parachute is reported to total a Kilts-like $135 million. Combining Gillette's products with P&G's global marketing and distribution system or SunTrust’s customers and operations with Wachovia’s may be compelling strategies to Wall Street wonks, but Kilt’s and Malone’s platinum parachutes are suspiciously difficult to ignore as a drivers of these sell-outs, er...I mean deals.

The Mahogany Machiavelli

The Phil Purcell soap opera that played out at Morgan Stanley in 2005 was as ugly as it gets. Following the merger of Morgan Stanley and Dean Witter in 1997, Purcell angled himself into the CEO role and ruled like a corporate version of Kim Jong Il, obstinately pursuing a failing synergy strategy as the company lagged and fell behind its rivals. Rather than admit a mistake and change course, Purcell instead engaged in inside power politics – stonewalling his critics, stroking his board cronies and pushing all opposition out the door. Amazingly, Purcell forced so much high-profile talent to leave the firm that shareholder and media pressure ultimately made him walk a gold-inlaid plank to the tune of $44 million.

The Bankruptcy Bloodsucker

Glenn Tilton of UAL Corporation, parent of United Airlines was recruited from the oil industry allegedly to save the company. He took it into Chapter 11 bankruptcy three years ago, and has slashed and burned pay, benefits, pensions and people ever since. A reorganized UAL is expected to emerge soon from bankruptcy with a new stock offering. The bankruptcy court is allowing company management to receive about an 8% of the newly floated shares. Tilton’s cut is estimated to be worth about $40 million (this does not include the millions he’s already received in salary). Not exactly chump change for destroying a company in order to save it.

Who's At The Controls?

Each of these situations is disturbing enough in its own right, but when we think of the challenges that global competition pose to the American economy and workforce, it's hard to feel any sense of comfort in knowing that these sorts of leaders may be making critical decisions that affect us all. Can they be trusted for example to invest in this country's human capital and the communities in which they do business? Or will they instead maneuver, wheel and deal, stonewall, sell out and seek only short term gains (for themselves)?

There is a world of difference between leaders who are deal-makers and operators and those that are stewards of the total asset and representatives of the interests of all stakeholders. The former, fly by the seat of their pants, confident in the knowledge that regardless of the outcomes of their decisions, they can gently glide to their next gig or a country-club retirement hanging from a golden or platinum parachute. The latter however, wear the same flimsy white parachutes as everybody else.

What color is your CEO’s parachute? If it's gold or platinum, maybe you should bail out first before they do.