Tenet Ex-Director Lashes Out on CEO Pay

The former CEO of Toys R Us TOY has accused Tenet THC of playing games with shareholder money.

Robert Nakasone recently told The Wall Street Journal that he resigned from Tenet's board because he opposed, among other things, the company's adoption of a generous executive bonus policy. He said that 100 Tenet executives, led by CEO Trevor Fetter, are now in line to collect huge payouts this year, even if the company's dismal performance fails to improve. Nakasone also told the Journal that he never wanted to hire Fetter in the first place and even supported discussions, carried out during last year's CEO search, that might have led Tenet to merge with a smaller company.

Instead, the board apparently dropped the merger negotiations, chose to hire an insider as its permanent CEO and then raised the minimum for this year's annual bonuses. According to Tenet's latest proxy statement, eligible employees will receive at least 50% of their target bonuses -- up from 25% last year -- if they meet certain financial and "other discretionary" performance goals.

"In 17 years of service on large public company boards, I have never witnessed such a sense of executive entitlement," Nakasone wrote in a resignation letter provided last week to the Journal.

In Tenet's defense, Chairman Edward Kangas told the Journal that the company "would have to significantly exceed its anticipated performance" for executives to collect their bonuses this year. But Tenet has already told investors to expect little financial improvement -- and no positive cash flow -- from the company in 2004.

"After nine months on the board, I am personally frustrated by the lack of progress on all fronts," Nakasone wrote in his resignation letter, supplied to the Journal after Tenet failed to disclose the reasons behind his departure.

Nakasone told the Journal that he threatened to resign from the board "unless certain conditions were met" by the company. But Kangas countered by describing Nakasone as a difficult board member -- prone to revisiting old decisions and even arguing over boardroom minutes -- who was asked to step down from his post.