Hewlett-Packard's CEO Mark Hurd is resigning in lieu of a sexual harassment claim. His severance package is reportedly
in excess of $35 million, including a cash payment of $12.2 million.
This thread isn't about Mark Hurd, or the circumstances that led to his resignation. What I want to know is, what is the reasoning behind these huge "golden parachute" packages when a CEO resigns or is drummed out? By all accounts, Hurd actually did a very good job piloting HP, but it doesn't seem to matter--CEOs that leave their companies in shambles seem to get similar huge paydays when they are run off. Why would companies agree to these terms? Are they insuring that CEOs won't run to competitors with trade secrets? Are competent people so hard to find that companies must acquiesce to these packages to secure the leadership they need? Why do companies agree to this, making failure as profitable, or nearly as profitable, as success? Where's the motivation for a CEO to perform?