Imagine being hired as a CEO to run a large national company that employs almost 100,000 workers.
And let’s say you agree to an annual salary of $1.4 million, plus millions of dollars in bonus, along with millions more in stocks, for a total compensation of… let’s go with $17.4 million.
Pretty sweet gig, right?
Your job description as CEO is this: As the highest-ranking executive in your company, your role is to make critical corporate decisions and manage the overall operations and resources of your company.
Translation: Make your company more successful.
Sure, it’s definitely a massive responsibility. But so is your pay. That’s why the board of directors have decided to invest millions of dollars in you — your skills, wisdom, and that big fat ego of yours.
Now, let’s say that after more than a year on the job, during a period of economic growth, you end up failing miserably.
The talents that the board of directors saw in you, were just a mirage. In other words: As the CEO of your company, you suck.
The majority of the 100,000 employees, who’s average yearly pay is less than $15,000 will need to be laid off because you weren’t smart enough to make the right decisions.
The millions of dollars that your company owes to creditors have now skyrocketed even higher because of your incompetency.
And the financial statements that you were supposed to have cleaned up are just as messy as before.
Your solution at this point? Agree to file for Chapter 11 bankruptcy. Genius.
Actually, the real genius part is not filing for bankruptcy, but agreeing to receive millions of dollars in bonus PRIOR to filing for bankruptcy.
Now that’s smart.
And why not? Can’t a person get a little reward for all the hard work involved in destroying a company?
Okay, so this sounds way too hypothetical to be true, right?
Meet Jill Soltau, CEO of JCPenney. In October of 2018, she was hired by JCPenney to lead the company “to its rightful place in the retail industry.”
She was offered a $17.4 million package, which included a base salary, signing bonus, and equity. Naturally, she took it.
Unfortunately, the company wasted its money on her.
Sales fell almost 8% to $3.4 billion within a one-year period, while income plummeted from $75 million to $27 million.
On May 15, 2020, JCPenney decided to file for Chapter 11 bankruptcy protection.
Soltau’s excuse was a predictable one: Coronavirus.
According to Soltau, “The Coronavirus (COVID-19) pandemic has created unprecedented challenges for our families, our loved ones, our communities, and our country. As a result, the American retail industry has experienced a profoundly different new reality, requiring JCPenney to make difficult decisions in running our business to protect the safety of our associates and customers and the future of our company.”
So, how did the board of directors feel about their CEO after all that? Boy, they must have been so disappointed.
In mid-May of 2020, after having laid off and furloughed more than 80,000 employees and missing two debt payments, it was reported that Soltau will receive a $4.5 million bonus, while several other clowns with fancy acronyms attached to their job titles will share another $5.5 million among themselves.
According to the company, Soltau and the other executives’ leadership will be critical to the company in the future, right after the company is done dealing with creditors who will try to adjust loan terms without forcing them to liquidate company’s assets.
JCPenney deems the $10 million compensation package to its executives as “in line with those of other companies in similar situations.”
Imagine that — Screwing up so badly on your job, and getting handsomely rewarded for it.