Labor & Employment Law

Job Failures Result In Big Rewards

By Dobin & Jenks

Is it me? The CEO of Merrill Lynch steps way out of line, while presiding over a disastrous business strategy, and he gets $160 MILLION dollars when he's shown the door. In very recent news, the now-former chairman, president and CEO of H&R Block will receive a package worth $2.55 Million, including his health benefits. This kind of corporate gifting to inept CEOs is outrageous.

In our labor and employment practice, we regularly represent individuals who have been terminated for no reason. Under Florida law, absent other circumstances, an employee can be fired "at-will." No $162 Million severance packages to cushion the fall. Sometimes our clients are living paycheck to paycheck when their boss decides that our client is no longer useful. Other times, clients come to us because the boss decided to not pay overtime or their last paycheck. The disparity in treatment is offensive.

What, exactly, did Mr. O'Neal do to deserve the $162 Million? Was it Merrill's expensive failure in the subprime market? Perhaps it was the disastrous purchase of Advest? No, according to press reports, it was neither. He spoke to executives at Wachovia about a possible business combination without the approval of the Board of Directors. I sincerely hope that I can get fired and be paid $162 Million for speaking without permission. It used to simply result in dirty looks from my parents.

And Mr. Ernst from H&R Block, what was his offense? Subprime mortgages, too. He must feel like a piker, only getting 1.5% of the deal that Mr. O'Neal received. My goodness, how will he be able to raise his head in pride at the club?

It was also just announced that Mitchell H. Caplan, the former chief executive of E*Trade Financial Corp., will receive $10.9 million in severance pay. And the cherry on top of his cake is that he is receiving $10,000 to reimburse him for legal fees to negotiate his severance from the firm. And a good thing, too. Otherwise, his severance would have only netted him $10.89 million. That extra $10K could mean the difference between 19" and 20" wheels on his next BMW.

When the pundits say that Wall Street is out of touch with Main Street, they need only look at the obscene severance packages paid to the bigwigs. While foreclosures in this country are trending alarmingly upward, it is unlikely that deposed Wall Street honchos will have that worry. But if you ask the folks that were working in their respective mortgage divisions who are now without jobs, the answer is quite different.

That's the outraged view from The Law Planet, Jupiter, Florida.

Full post as published by The Law Planet Blog on January 07, 2008 (boomark / email).