Executive Memo: Your Golden Parachute Is Showing

Think about what happens to an ordinary employee who fails badly. A sales rep who games the numbers. A project lead whose bad call costs the company a major client. A manager whose team quietly breaks the rules for years on their watch. In most companies, that person gets written up, put on a plan or fired, often walked out the same day with their things in a box. Nobody issues a statement praising their years of dedicated service. Nobody calls it a retirement.

Now watch what happens when the person who failed sits at the top.

They don't get fired. They "step down." They "retire." They leave "to spend more time with family" or because "new leadership is appropriate at this time." The company thanks them for their contributions. Their contract pays out. And in many cases, the hardest consequence they face is a few bad headlines and a long vacation.

I've written about Canva's layoffs and the severance agreements that keep people quiet. This post is about the thing underneath both: a double standard so normal that most of us have stopped noticing it.

Same failure, different rules

The clearest example I know is Wells Fargo.

In September 2016, the public learned the bank had fired about 5,300 employees over several years for opening as many as 2 million accounts customers never asked for. Those employees were under heavy pressure to hit aggressive sales goals set by the bank. Many were low-level branch workers. Some later said they were fired after reporting the problems, not for causing them.

The executive who ran that consumer banking division for years wasn't fired. According to the CEO's own testimony to Congress, she was told the bank was "going in another direction" and allowed to retire with her stock options intact. The bank later took back millions from her as well.

The CEO himself retired a month after the scandal broke. He received no severance and gave up about $41 million in unvested stock, which deserves noting. He still walked away with stock and retirement benefits that one executive-pay research firm estimated at about $134 million.

Real consequences did come eventually. The board later clawed back another $28 million. In 2020, more than three years after he left, federal regulators banned him from the banking industry for life and fined him $17.5 million. But notice who finally held him accountable: an outside regulator, years later, not the company he ran. The 5,300 employees didn't get three years and a hearing. They got fired.

Wells Fargo isn't an old exception. The pattern is still running.

In December 2024, Intel's board pushed out CEO Pat Gelsinger, reportedly giving him the choice to retire or be fired. That same year, Intel cut about 15,000 jobs. Officially, he retired, and his separation agreement guaranteed him at least $7 million in severance, with the potential to reach about $10 million.

That August, Starbucks replaced CEO Laxman Narasimhan after 17 months in which the company lost about $32 billion in market value. The board chair thanked him for his contributions. Starbucks' own filings show it paid him $21.5 million for that year, including a $4.2 million severance payment, with another $4.2 million due 18 months later.

And in February of this year, Workday announced it was laying off hundreds of employees, about 2% of its workforce, at the same time its CEO stepped down after roughly a year in the job. His separation agreement included about $2.6 million in cash severance, roughly $941,000 more in bonus severance and accelerated vesting on tens of thousands of shares.

The shield

None of this happens because one bad person breaks the rules. It happens because the rules were written for them.

Executive contracts are negotiated before anything goes wrong, when the company is eager to land its new leader. The boards that approve those contracts often include sitting or former executives, many of whom serve on other boards and have, or will want, the same protections. The exit itself is handled by communications and legal teams whose job is to protect the company's reputation, which in practice often means protecting the departing leader's reputation too. Hence "retired," "stepped down" and "thanked for years of service."

Sometimes the shield is almost literal. In September, TechCrunch reported that during the 33 hours Automattic's CEO was on leave, the company's interim CEO and its chief legal officer each signed the other's severance agreement, giving both a year of salary and extra stock vesting if their departures qualify. TechCrunch noted that isn't necessarily improper. That's exactly the point.

Each layer is legal. Each layer has a reasonable-sounding explanation. Stack them together and you get a shield that turns a career-ending failure for anyone else into a well-paid transition for the person at the top.

The fair counterpoint

To be fair, a lot of the money in these exits isn't a reward for failing. It's pay the executive had already earned: stock granted in earlier years, pension benefits built over decades. Contracts are contracts, and a company that tore up its agreements every time things went wrong would struggle to hire anyone. There's also research suggesting some exit protections serve a real purpose, such as keeping executives from blocking a sale that would be good for shareholders.

But that's exactly the point. These packages are designed in advance to make failure survivable for one group of people and not for everyone else. Nobody writes a contract guaranteeing a branch teller her pension if the bank she works for collapses under someone else's decisions. The protection flows up. The consequences flow down.

What owning it looks like

Owning a failure isn't complicated. It's saying "I was responsible" in plain words, without "mistakes were made." It's giving up the bonus, the stock or the title before someone forces you to. It's accepting at least as much pain as you're asking of anyone below you. And it's doing it at the moment it costs you something, not three years later when a regulator makes you.

A few leaders have done versions of this, and I wrote about some of them earlier in this series. They're memorable precisely because they're rare.

If you run a small business

Here's the one advantage small-business owners have over every Fortune 500 CEO: there's no shield. No board of friends, no communications team, no contract that pays you to fail. When something goes wrong, your customers and your people see exactly who made the call.

That's a gift if you use it. Owning a failure out loud costs you something in the moment, and it builds a kind of trust that no press release has ever bought.

I learned that lesson early, from my high school football coach. When we won, he sent us to celebrate and went to the locker room to prepare for the next game. The one time we lost, he sent us to the locker room to rest, and then he and his staff stood on the field for an hour and took the criticism from the fans, the press and everyone who thought they could do better.

The victories belong to the team. The losses belong to you.

That's the job, at every level. When you fail, own it.

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