Monday, January 08, 2007

Bag Inspection

In high school I worked as a cashier at a now-defunct downscale department store called Korvettes. My employment began with an orientation period during which I was welcomed into the "Korvettes Set" and taught how to make change. (Yes, youngsters, we did it in our heads.) Upon graduation I was rewarded with a locker key and a see-through plastic envelope to use instead of a purse so they’d know I wasn’t shoplifting.

I guess some department stores are nicer to their employees than others. In June of last year, J.C. Penney Company, Inc. (JCP) gave a warm welcome to Catherine West as its new EVP and Chief Operating Officer. In addition to a nice contract and generous pay package, they gave her a signing bonus of $1 million and a year's free housing.

Unlike me (quite a good little cashier, really), Ms. West got herself fired, following what turned out to be a six-month "orientation period." The canning came right before New Year’s, but no details emerged until last Friday’s 8-K. It was worth the wait. In a departure from the customary gentility of such announcements, the company said bluntly: "Ms. West was terminated involuntarily due to her failure to satisfy performance objectives that were established for her orientation period, which related primarily to gaining an understanding of the Company’s operations."

Luckily for Ms. West, her inability as chief operating officer to understand the company’s operations didn't constitute "cause" for firing under the employment contract adopted last year for all company bigshots. So off she trotted with a clear plastic envelope containing $10 million bucks: A little over 2 in cash, about 7.8 in options and restricted stock, and the rest in odds and ends like insurance premiums (grossed up for taxes, which will make Michelle Leder at especially happy). They even threw in $25,000 for outplacement.

You know how I’m always moaning about executives whose contracts are designed so they get big severance packages no matter how badly they screw up? Even if they've only worked for half a year? Why do I keep repeating myself? Is anyone even out there?

All in all, I’d say Ms. West made the most of her brief orientation period. I wonder if, like me, she took advantage of her employee discount.