Case Study: Ford and Nasser
Step 1 Read the scenario.
In 2002, Ford made public some of the details related to the firing of the former CEO Jacques A. Nasser, which followed a $5.4 billion loss during his last year in the job (Mullaney & Darnell, 2002). In addition to an annual pension for life of nearly $1 million, the 53-year old ex-CEO received performance bonuses through 2003. He also received full payment on stock granted to him in 2001. It isn't known how many shares he received, but his 2000 award was worth $5.8 million in January 2002 (Business Week, January 14, 2002). This type of "sweet severance? package is not unusual when a corporation terminates a CEO for lackluster performance.
Step 2 Answer the questions.
Based on the scenario, answer the following questions:
Why do you think boards of directors approve of such deals for disgraced CEOs on their way out, when most employees who are laid off receive at the most a few weeks' severance pay?
Is this practice in the company's best interest? Explain.
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