- Published: October 31, 2021
- Updated: October 31, 2021
- University / College: University of Pennsylvania
- Level: Middle School
- Language: English
- Downloads: 40
Corporate Governance Question Viehbacher, Sanofi SA’s former CEO, was fired because of hisuncommunicative management style. This made the board of directors lose confidence in his performance (Feintzeig 1-2). One of the directors, Weinberg, noted that their relationship with the CEO was not close and that there was a lack of trust. The board had repeatedly requested for information during meetings and Viehbacher never provided (Feintzeig 1-2).
Notably, the current environment is distinct from the past. In the past, CEO dismissals were masked and regarded as embarrassing (Feintzeig 2). The firing style of the companies in the past can be described upfront as high-profile dismissals (Feintzeig 2). At present, almost all the companies take fulfilment in declaring to the world that they fired an official. This is a way that the board can show that it is awake and willing to exercise its rights in ensuring that the company attains its goals and objectives. Fillings presented to the Securities and Exchange Commission by companies have many cases of CEIO terminations (Feintzeig 3). Companies are coming out declare that they are terminating the services of CEO’s and are giving the reasons for doing so. For instance, the COO of Yahoo Inc. was fired recently because the board and the Chief Executive Officer felt that the company did not need him. All this terminations seem to come after disappointing results and accounting problems such as the Hertz Global Holdings where the CEO, Frissora, was fired (Feintzeig 2).
The firing of the CEO’s is presently seen as a way to show that the board of directors cares about the interests of the shareholders. Though sometimes the company may try to conceal the reasons for an executives firing or resignation, they increasingly give suggestions on what exactly happened (Feintzeig 3). Therefore, the board of directors is responsible for the progress of the organization and the shareholders too.
An executive is fired for cause when he or she is guilty or perpetrates serious offences that affect the progress of the company. In this case, the fired executive loses his or her right to compensation. On the other hand, an executive is fired without cause when he or she is fired without having done any serious offence that affects the company progress or without any reasons or forced to resign by the company. In this case, the executive has the right to compensation and can claim bigger packages (Feintzeig 4).
The stigma of being fired has changed over time. In the recent past, it was deemed as harmful to a person’s reputation and future prospects; however, this has changed presently as the executive’s reputation does not count that much. This is because some of the boards have used the executives as scape goats for failures within a company. Additionally, some organizations are willing to first identify the cause for the termination and whether it really matters to the company. For instance, though Hurd was applauded for revitalizing Hewlett-Packard Company, he was fired for having a scandalous relationship with a female contractor. In this case, some companies would evaluate whether this would affect their company (Feintzeig 4).
The Sarbaned-Oxyley Act has significant contribution to firing of executives. This is because it presents an avalanche of transparency that continues to gain grounds among companies because of its need for financial disclosure (Feintzeig 4).
Feintzeig, Rachel. “Youre Fired! And we Really Mean it!” Wall Street Journal 5 Nov. 2014: 1-5. Print.