The recent logo-change upheaval at Cracker Barrel has brought to mind something I think about periodically: executive compensation. As in, who deserves mega bucks and why. And what happens when they don’t deliver on their job?

When it comes to executive compensation, the business press and accompanying corporate press releases talk about how brilliant the men earning those multi-million-dollar salaries and accompanying stock options etc. Experts justify the exorbitant packages by describing how smart, skilled, innovative, and forward-thinking the executive is.

The Unanswered Compensation Question

But the one question that never gets asked is: what exactly does a CEO do to earn that kind of money? Can any person contribute enough to be worth an eight- or nine-figure salary? And what happens to him if he doesn’t succeed?

It would seem simple to look back over the last five years and ask in what way the CEO changed the company, improved profits, decreased costs, or innovated new products that makes him worth the megabucks.

On the other hand . . .

We could look at the failures, the bad decisions, the resistance to looking ahead, the deals not made, the opportunities wasted and ask in what way they demonstrated such brilliance.

The Not-So-Brilliant Choices

Thus, I offer a list of executives who have made spectacularly bad choices and profound errors of judgment but still brought home a truckload of money.

I found enough examples to eliminate those whose error included sexual harassment or infidelities and other personal peccadilloes. While these mistakes certainly affected their businesses, the CEOs did not make them with business in mind. No, I wanted examples of major-league FUBARs.

And here are four of them. To avoid any accusations of preference, I have listed them by company name in alphabetical order.

Apple: John Sculley

Mr. Sculley shifted the company’s focus away from innovation, which had been Apple’s hallmark. He received ~$2.2 million a year in the 1980s when the average employee earned ~$25K–$35K a year. His compensation package included stock options because Apple was growing at the time. Afterward, it began to stagnate. He ousted Founder Steve Jobs but Apple continued to lose ground until the true visionary, Steve Jobs, returned.

Result: Mr. Sculley stepped down amid internal disagreements, including opposition to licensing Macintosh software and talks about splitting Apple into two entities. He co-founded Sculley Brothers LLC and began investing in tech startups.

BP: Tony Hayward

Tony Hayward mishandled the Deepwater Horizon oil spill and became infamous for saying “I’d like my life back.” He earned ~$4M/year in 2010. Oil field workers bring home bigger paychecks because the work is often dangerous, so the average BP worker compensation was ~$40K–$60 a year. He received a $1.6M exit payout after the Deepwater Horizon disaster. In other words, he was rewarded for botching the response to an event that created massive environmental damage. During the crisis, Mr. Hayward became known as, “the most hated man in America.”

Result: Due to public backlash, he was “replaced.” He retained a position in BP’s joint venture in Russia after stepping down.

Eastman Kodak: Kay Whitmore

Kay Whitmore Ignored digital photography, despite Kodak inventing it, and missed the tech shift to the digital wave. She was earning ~$1.5M in the early 1990s. That seems like a paltry amount given the level of today’s executive compensation, but Kodak was still profitable. The average employee made around $30,000 a year.

Result: Mr. Whitmore was removed by the board after disagreements over the pace of cost-cutting and strategic direction. He Became deeply involved in initiatives like Rochester Brainpower, a coalition to improve public education, which earned recognition from President George H. W. Bush.

Enron: Jeffrey Skilling

Mr. Skilling’s aggressive accounting and risk-taking led to one of the biggest corporate frauds in history. He was making ~$13M a year in the early 2000s and cashed out ~$70M in stock before Enron collapsed. The average employee earned ~$45K a year.

Result: He resigned but was Indicted on 35 counts including conspiracy, securities fraud, insider trading, and making false statements. He was found guilty on 19 counts; sentenced to 24 years in federal prison and fined $45 million. Mr. Skilling served a total of 12 years in prison.

Nokia: Stephen Elop

In a massively bad reading of technology, he chose the Windows phone over Apple. Mr. Elop was earning ~$25M in 2013. He was widely criticized because Nokia’s decline was linked to his strategy. Due to his bad decision, the company’s market share collapsed. It was later acquired by Microsoft.

Result: After Nokia’s $7.2B sale to Microsoft, Mr. Elop became Executive VP of Microsoft’s Devices & Services division, overseeing Lumia phones, Surface tablets, and Xbox. He left the following year during a major leadership shakeup and his departure marked the end of Microsoft’s push into mobile hardware.

The Unasked Questions

These are just a few of the most egregious examples. There are many, many more. Yet no one ever seems to ask, “How could someone who was making so much money as a reward for his/her brilliant business decisions make such a poor choice?”

Or, perhaps: “How could a person who made such bad decisions walk away with a small fortune? How about: “Why did he join the acquiring company’s executive team?” Or “How did he get to keep his job?”

It brings to mind William Hurt’s famous line in A History of Violence

Don’t get me wrong: Anyone can make a mistake or misjudge a market. But these guys were paid megabucks specifically not to do that.

No Compensation Clawbacks

We all know what happens to people at lower corporate levels who make a mistake, so it’s a mystery to me when executives get away with it. I can’t understand how some are even rewarded as they walk out the door. But, then, I’m not privy to the details of executive compensation packages and contracts.

It seems more logical that companies would try to claw back some of those millions, cancel the stock options, or rip up the whole compensation package. Some of it involves saving the corporate image, of course. Admitting that they made a major blunder in hiring the emperor who had no clothes can affect valuations and stock prices.