WASHINGTON, Oct. 7 (UPI) -- The average person has a great deal of trouble understanding why and how a board of directors can fire the chief executive officer after less than one year on the job -- and award him $13 million in severance for screwing up.
The way Hewlett-Packard's Leo Apotheker's contract was written made it more profitable to fail than succeed.
And this believe-it-or-not, pay-for-failure news came just three years after Wall Street's chief executives walked away with hundreds of millions of dollars after plunging their companies into a sea of red ink -- and driving the economy into a tailspin.
A top trader at the height of the 2008 recession was awarded $70 million as a year-end bonus, which he turned down, complaining that it cheated him out of what he should have been rewarded by one of America's most prestigious Wall Street firms. So he walked out, started his own hedge fund and made $200 million for himself the first year.
These outlandish sums for one individual go on in most financial houses -- and produce little for the economy.
Oswald Grubel, the head of Switzerland's largest bank -- UBS -- was recruited out of retirement in 2009 -- and canned two months ago after one of his employees blew $2 billion in unauthorized bets on stock index futures. And this was after his board told him top priority should go to wealth preservation at the expense of speculative plays.
Bank of New York Mellon, the world's largest custody bank, was sued for $2 billion by New York state and city officials for allegedly defrauding pension funds with currency transactions.
Lightning-quick trades with dernier cri sophisticated speed-of-light machines are elevating individuals to private plane-big boat-big house status in pricey gated communities in choice locations at home and abroad.
U.S. companies have hoarded a massive $2 trillion in cash as a hedge against recession, which has led to under-investment. And fewer jobs for the companies that didn't hoard and are trying to borrow to expand -- and create new jobs.
The Wall Street Journal reported that the gap between what workers and top executives make "helps explain why income inequality in the United States is reaching levels unseen since the Great Depression."
At Discovery Communications, CEO David M. Zaslav's compensation rose from $7.9 million in 2008 to $11.7 million a year later to $42.6 million in 2010, making him the highest paid executive in the Washington area. And at Countrywide Financial, then CEO Angelo Mozilo earned $180 million "as he led his company to the brink of ruin during the five years before the housing bust," the Journal reported.
Next to this slice of America there are many who can't find work, have lost their homes and are on food stamps -- 26.4 million.