If you examine the way directors and chief executives are connected through the board network you won’t be surprised to see the social relationships and expectations that come into play with these type of compensation packages...
Palo Alto, CA (PRWEB) November 30, 2011
Douglas Y. Park, a corporate governance attorney based in Silicon Valley, and Principal of DYP Advisors, was recently interviewed by Corporate Secretary magazine on the collapse of investment firm MF Global. MF Global recently filed for bankruptcy protection after losing big on bets on European debt.
Jon Corzine, former Chairman of Goldman Sachs and US Senator from New Jersey, was CEO of MF Global at the time of the firm’s bankruptcy filing. One question that arose concerned Mr. Corzine’s $12 million severance package. In the wake of large severance packages granted to former Hewlett-Packard CEO Leo Apotheker and Gene Isenberg of Nabor Industries, critics have questioned the reasoning behind these compensation packages.
Mr. Park provided his view on large severance packages granted to CEOs whose performance is questionable: “Boards are approving these kind of packages and it's not clear what rationale there is for that. In fact there is no clear economic or financial reasoning behind their decisions."
Mr. Park continued: “If you examine the way directors and chief executives are connected through the board network you won’t be surprised to see the social relationships and expectations that come into play with these type of compensation packages and because every other board is doing it, this trend seems okay to board members.”
Mr. Corzine has decided not to pursue the severance payment to which he is entitled.
In response to a question about potential legal consequences for Mr. Corzine, Mr. Park stated: “Corzine will face many legal inquiries, including multiple investigations by government agencies (CFTC, SEC, FBI) and a complaint brought by the bankruptcy trustee. The trustee is going to subpoena Corzine and other top MF Global executives.” In addition, members of the board of directors will likely be interviewed and subpoenaed.
Mr. Park has been mentioned on corporate governance matters in leading publications, including TheWallStreetJournal.com, Time.com, Agenda, a Financial Times service for corporate directors, and Reuters.
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