The disgraced former H&R Block CEO responsible for the company’s disastrous foray into subprime mortgage lending, Mark Ernst, will receive a $2.5 million dollar cash bonus, stock options, and free health care until 2010. [Reuters]
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I read about these different CEO’s fucking up companies and wish I could get paid so well for making such terrible decisions.
Nice work if you can get it.
Scumbag.
At the time it was a pretty good decision based on current profit taking.
I’ll remember this if I ever get fired for screwing up a relatively small project at a large corporation.
no matter how wealthy he may be, he has to live with himself.
also, based on his documented decision making skills, he will probably just blow it on a fleet of hummers.
@chili_dog: Given how many industry insiders should have known better and didn’t, I’m inclined to agree with you. He would’ve been hard-pressed to find someone who would tell him it was a bad idea.
Still doesn’t mean he should get a sweet severance package, though.
@CumaeanSibyl: Sure it does. He negotiated a great deal, in a time when things were peachy. The company would likely be in breech if they didn;t pay him this.
Now deserve to get….. that is the real problem, and I blame the hiring committee and board for allowing a contract without a compensation draw down for poor performance. But then again, most boards will hire a CEO based on “friendly” support and not even think of putting that in in fear of alienating some political/friendly association.
@mammalpants: You’re assuming the toad has a conscience. If he did, he wouldn’t have tried scamming in the sub prime arena…
@goller321: He’ll be employed with another company within a year…count on it
Ernst is minor-league. Never forget the toilet-bowl genius of Bob Nardelli and his $210+Mil payout for screwing up and being fired from Home Depot. He had another CEO job (likely lined-up before his scripted ouster) within a few months, at the helm of Chrysler.
How long before the lynchings begin? I’m game.
@chili_dog:
Bullshit.
@mopar_man
Unless you’re an H&R Block shareholder, this has absolutely nothing to do with you.
Will we now start having threads about how much Ben tipped the waitress at dinner last night, and whether she was really good enough to justify it?
@JustAGuy2: I wonder if corporations pay shills to come to sites like this and troll, or if the troll is simply a loser jerk with some mental deficiency…
@chili_dog: It is typical modern American business: go for a short term profit and screw the long term. Better to make $5 million in profit now than avoid $500 million in losses next year.
It might stop of the shareholders stopped falling for it because this is almost always driven by the shareholders.
@sburnap42: it’s not just modern american business… humans are concerned about immediate survival and reproduction, not long-term benefits. Heck, so are most animals.
Bonus??? WTF?
@goller321:
Wow, that was original. Do you actually have a response to my point, or are all your posts so devoid of content?
Customers don’t pay the staff. The owners do. If this were an investor blog, executive pay would be relevant. It’s not, and it’s not.
@sburnap42:
Remember also, that taking the route that guarantees the long-term success of the company isn’t always the right thing to do.
If a CEO has the choice between:
A. an action which will make $100MM this year, and then put the company into bankruptcy.
or:
B. a course that guarantees a $9.5MM profit every year, forever.
His responsiblity is to choose A, which maximizes the value of the company to the investors.
@JustAGuy2: For all I know I am an H&R Block shareholder, by way of my mutual funds.
Even if I’m not, the logrolling attitude that makes bullshit deals like this common is bad for any stockholder.
@RvLeshrac: You don;t have to like it, but it’s true.
Now here’s a thought. Perhaps the company ought to just ignore a union contract when things get tough. Because we all know that union members will “go the extra mile” when the chips are down.
@JustAGuy2:
No, the CEO’s responsibility is B.
A does not ‘maximize the value of the company to the investors,’ because bankruptcy causes the company’s stock to become worthless. Creditors come first, investors come last.
@chili_dog:
That he “did the right thing at the time” is bullshit. WWBD. If Buffett wouldn’t take a particular course of action, it isn’t good for business.
The oldest companies have survived because they consistently take the *right* course of action, not the most profitable. Enron and Worldcom both took actions that ‘maximized the value of the company to investors’ and ‘were the right decisions at the time,’ according to their management. Lying, cheating, and stealing are never the right courses of action – and neither is loan-sharking. Sub-prime mortgages are dangerously close to all of the above.
@RvLeshrac:
You didn’t read my example. A company is a set of cash flows. Using a 10% discount rate, the DCF of A is higher.
Think of an extreme example: I’ll give you $1MM today, or $0.01/year forever. Which do you take?
@JustAGuy2: Devestating the US economy is EVERYBODY’S business, not just investors. And this is exactly what CEOs like this one are doing. If you don’t care about the state of the US, then fine, but go somewhere else and whine. As it stands the people that RUN this website deem it forum worthy. Until you are said person, STFU.
People here don’t seem to understand that he worked this package out BEFORE HE EVER ACCEPTED THE JOB. A company can’t get a CEO unless they promise this sort of thing, regardless of his actual performance (he would have made a LOT more if the company had performed well).
@goller321:
If I own it, it’s my right to do with it as I will. If I want to smash my Lexus with a sledgehammer, that’s my call, not yours. By the same token, the business decisions of a company you don’t own are none of your concern. So, to use your eloquent phrase, STFU.
justaguy…
Maybe thats why investors are crying about ROI???
There is not ONE person worth a million dollars a year that is a CEO. Name one that creates or produces something that does anything worth real spendable currency.
V
@RvLeshrac: And the oldest companys survive because they don;t do the CEO flip every 2-4 years. Just look at some of the tenures of the biggest companies today and see that it’s the ones that have no internal direction for performance.