Consider the situation outlined at the beginning of the chapter in the Professional Judgment in Context feature. The situation described concerns the aggressive growth strategy pursued by former CEO Dave Jones of Rayovac Corporation, which was renamed Spectrum Brands after the company purchased a variety of other entities and accumulated $2.5 billion in debt. Ultimately, those mergers did not work, Dave Jones left the company, and Spectrum Brands is now nearing bankruptcy and is facing delisting from the NYSE. At the same time, executives at the company are being paid handsomely to stay with the company. For example, the new CEO, Kent Hussey, will get a $2 million bonus if he remains with the company through December 31, 2009, and the board of directors approved bonuses for four top executives totaling $1.6 million.
Required
What ethical issues do you see for Spectrum Brand's board of directors (including its compensation committee)? Is it fair for the top executives to receive handsome pay packages when the company is in such a dire financial condition? Use the ethical decision-making framework outlined in Chapter 3 to formulate your answer. Recall that the steps in that framework are
(1) Identify the ethical issue(s);
(2) Determine who are the affected parties and identify their rights;
(3) Determine the most important rights;
(4) Develop alternative courses of action;
(5) Determine the likely consequences of each proposed course of action;
(6) Assess the possible consequences, including an estimation of the greatest good for the greatest number, and determine whether the rights framework would cause any course of action to be eliminated;
(7) Decide on an appropriate course of action.