By Paul Hodgson – CCO and Senior Research Associate
Late last week I got a call from Rick Newman, an author with US News and World Report asking me if I thought the number of top executives resigning signaled a new trend in the US. He was writing a blog detailing the heads rolling at the top of America’s corporations; Ina Drew resigning from JPMorgan, the chairman and the CEO both resigning from Best Buy, or Best Buy Bye as we are now calling it, Scott Thompson resigning from Yahoo! for falsifying his resume, Aubrey McLendon being removed as chairman from Chesapeake Energy (and from being CEO soon if the firm carries on like it has been doing). It’s true, that’s a lot of resignations among a group of employees not best known for owning up to mistakes.
At the same time, Reuters blogger Felix Salmon pointed out in his blog that CEOs in the UK are dropping like flies as a result of negative Say on Pay votes; AstraZeneca’s David Brennan, Trinity Mirror’s Sly Bailey and Aviva’s Andrew Moss have all recently resigned this year because of a lack of shareholder support for their compensation packages. It’s an interesting reaction – you’re rubbish and you’re paid too much, so resign. This is even more unusual because, unlike the US where being resigning seems to end up with CEOs being paid more than they would if they kept the job, most UK CEOs might get a year’s salary in severance if anything at all.
My response to Rick was as follows:
I think we do have something of a trend here. It’s by no means universal. And I don’t see it always affecting CEOs, either. Dimon is still at JPMorgan, and Pandit still heads up Citigroup, so the night of the long knives it isn’t.
Indeed one wonders why any senior executive still retains his or her post at any of the investment banks, but perhaps they are now waking up to the fact that responsibility is not just for other people.