Shares of Huntsman (NYSE: HUN) fell 86% in 2008 in the wake of a canceled going-private transaction. The company sued Apollo Management after that firm backed out, but then settled for $1 billion. But investors were none too pleased, and the stock shot down 49% the day the settlement was announced.So how is chairman Jon Hunstman faring in all this?
He got paid a $15 million bonus for "negotiating" that settlement. Nolan Archibald, a Huntsman board member and the head of its compensation committee, told (subscription required) the Wall Street Journal that "Jon singlehandedly negotiated this settlement and, I believe, saved the company in doing so." Oh really? So Huntsman didn't bother sending any lawyers to work on a 10-digit lawsuit?
This is so messed up and indefensible, and a perfect example of the corporate governance travesties that dragged us into this disaster and will continue to threaten America's competitiveness.
Paying someone $15 million for negotiating a settlement that sent the stock down 48% would be pretty ambitious in any situation, but what makes it inexcusable is the that fact that Huntsman was the chairman of the board. He had a fiduciary responsibility to shareholders and the stock's 86% decline indicates that he wasn't doing too well in that regard. Why should he get a bonus? And as a major shareholder, isn't that incentive enough to negotiate for the best interests of the company?
The other thing that makes this so shady is this: If Mr. Huntsman was acting outside of his role of chairman of the board in negotiating the settlement, why couldn't they find someone else to negotiate and avoid the whole appearance of impropriety? And if no one other than the chairman of the board could negotiate the deal, then maybe negotiating was part of Mr. Huntsman's job and he shouldn't have received additional pay for doing it.
No matter how you look at it, paying the chairman of a company whose stock was down 86% in one year a $15 million bonus for an action that led to a one-day decline of 48% is pretty hard to defend.
Paying someone $15 million for negotiating a settlement that sent the stock down 48% would be pretty ambitious in any situation, but what makes it inexcusable is the that fact that Huntsman was the chairman of the board. He had a fiduciary responsibility to shareholders and the stock's 86% decline indicates that he wasn't doing too well in that regard. Why should he get a bonus? And as a major shareholder, isn't that incentive enough to negotiate for the best interests of the company?
The other thing that makes this so shady is this: If Mr. Huntsman was acting outside of his role of chairman of the board in negotiating the settlement, why couldn't they find someone else to negotiate and avoid the whole appearance of impropriety? And if no one other than the chairman of the board could negotiate the deal, then maybe negotiating was part of Mr. Huntsman's job and he shouldn't have received additional pay for doing it.
No matter how you look at it, paying the chairman of a company whose stock was down 86% in one year a $15 million bonus for an action that led to a one-day decline of 48% is pretty hard to defend.
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Reader Comments (Page 1 of 1)
3-30-2009 @ 8:26AM
Eğitişim Kariyer Enstitüsü said...
İs 15 enough for that share?