Saturday, 22 October 2011

Mike Laphen's rewards for failure at CSC

CEO Mike Laphen's massive lifetime rewards for failure at CSC
Mike Laphen's departure from CSC is overdue given the disastrous results of his period of "leadership", but he is being royally rewarded for his repeated failures.
CSC has submitted an 8K filing to the SEC outling the terms of his departure and the Succession Agreement it has signed with him.
Mr Laphen will receive:
� earned base salary, annual bonus for a completed fiscal year, and benefits under the Company's employee benefit plans for all of FY2012
� a pro-rated annual incentive award for FY2012,
� a severance payment of two times the sum of (i) base salary plus (ii) target annual incentive award estimated at $6.75 million
� COBRA premiums for 18 months following the Retirement Date.
Mr. Laphen will be also entitled to retirement benefits resulting in an estimated annuity of $81,000 per month for life
Full details of the SEC filing are disclosed on  http://biz.yahoo.com/e/111019/csc8-k.html
 And no, it is not a typo. He really will get $81,000 per month for the rest of his life.
Shareholders have seen the value of their investment drop by 50% during Mr Laphen's tenure. Employees have lost their jobs or had their salaries reduced during this time.
So there are no prizes for guessing their views on Mr Laphen's severance package, unless they think a cost of around $40million for his departure is good value for CSC.
posted by Littlejohn
 

7 comments:

Anonymous said...

Mike Laphen's severance package is inappropriate given the damage suffered by the company due to his failure as CEO.


Integrity should have dictated that he waive his severance package out of respect for the employees and shareholders. After all, he has been massively rewarded over the past 4 years already.

But expecting any such gesture from him is naive and unrealistic given his track record of maximising his own personal remuneration and benefits while reducing the employee costs to the maximum.

Oldtimer said...

Given the damage he has caused and continues to cause, $40m almost seems like good value for money. I mean, how many jobs will his departure save and how much will the share price increase?

Now the question is if the mugs that let Laphen do such damage have the gumption to recognise that they need an absolutely exceptional CEO (Gerstner-style) to turn the company around.

JBG said...

I agree with Old Timer.

This time the Board of Directors must select someone with a real CEO skill set, ie strategic vision, charisma, client interface skills, ability to build a top-class management team, restore the culture of teamwork and trust and earn the respect of the employees.

The Board has started in the right direction by splitting the CEO and Chairman positions, which they should have done before Mike Laphen's nomination into both roles.

They should also appoint a separate Chief Operating Officer so that the new CEO can focus on being CEO and address the critical issues, rather than being embroiled in this quarter's numbers.

CSC must appoint a CEO who will also "take ownership" of the legacy of Mike Laphen, the class action suits, the SEC investigation, the accounting issues, the troubled high profile flagship projects in UK, Denmark and US, the management deficiencies, the employee discontent and so on.

A CEO with an attitude of "I'm looking forwards not backwards" and/or "Those problems did not happen on my watch" will get CSC into even more difficulty.

Anonymous said...

That's just outrageous.. beyond expression (for a non-native speaker like me)

Anonymous said...

Well seems like a senior management clearout is on the way, starting with Andy Williams President of EMEA..

Hopefully they willnot stop there..

Anonymous said...

No wonder CSC can't afford to pay it's staff bonuses and give them pay rises, when it squanders it's available cash on incompetent leaders.

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