Let’s Reward Failure, Once Again - By John Hendrie

Talbots, Inc., the upscale Retailer, has just announced the retirement of its CEO, Ms. Trudy F. Sullivan.  Sadly, she could not reverse their marketplace slide in her four plus years of tenure.  So, let’s give her a $5 million good-bye package, which also includes, according to the Wall Street Journal:  “… pro rata annual bonus for the fiscal year in which she retires, continued medical, dental, disability and life insurance for up to 24 months following her departure; accelerated vesting under the company's supplemental executive retirement plan; accelerated vesting of stock options; and 24 months of continued vesting of restricted stock.”  Shares, on Monday, were up 5.8% at $1.63. They have lost 86% over the past 12 months.  This is the most recent showcase of corporate lack of  balance and accountability. 

Man, sign me up!  I have a savvy lawyer, who knows how to cut deals.

Some might say she should only be eligible for Unemployment Insurance, like the rest of us.  Maybe, she might not even counter the threshold of discharge for cause (the ruination of a Brand).  We can rail about all we want, but this is just the latest example of corporate impunity, and the Talbots’ Board of Directors should be highly embarrassed.  Their action is obscene.  How can any Sales Associate have faith and pride in that Brand, particularly, when they are paid schlepping wages, and their leader spirits away in a limousine of lucre? Major disconnect!

Every time I read an annual report or receive a slate of candidates for the Board of Directors or even stockholder petitions for executive and Board  accountability, I wonder how long will our romance with the Executive Suite last.  It is pitiful what we have seen in the last several years, and we all pay for it in some fashion – low dividends, stock value erosion, dismal performance, downsizing, plant and store closings, disenfranchised employees. 

Risk and reward.  We have seen how that works on Wall Street and the big banks.  The huge swings of Dow Jones, the unrest in Europe, the strength of new global economic power-horses - all against the backdrop of an oncoming year of politics, campaigning  and bickering– time to tighten the safety belt and get a neck brace for this rocky road.  It is time for some sanity.

 “We the people”, whether you are the Tea Party, the Occupy movement, stockholders or voters. Remember our history and the dialogue which started in Faunces Tavern in New York and meeting places in Boston and Philadelphia several centuries ago.  Some similar conversations occur nightly around the kitchen tables of America.  It is time to be heard, again, or, at least, sharpen the pitchforks!


Logos, product and company names mentioned are the property of their respective owners.

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