Shares of my pick for 2012's dividend of the year Veolia Environnement (NYS: VE) were hit hard on Tuesday. The waste and water specialist is rumored to be considering a shake-up in the executive suite, and as I'll show below, that's not good news for the company or its shareholders.

A little history
Former CEO Henri Proglio thought he was making a powerhouse of Veolia as he expanded the company's presence to over 70 countries while going on a spending binge as CEO from 2003 to 2009. There was a problem, though: the moves left the company struggling under a mountain of debt.

Current CEO Antoine Frerot has been tasked with righting the company's balance sheet. This has forced him to propose abandoning about half of the countries Veolia currently does business in, including many to which Proglio expanded. Frerot also wants to sell off the company's transport division in an effort to divest itself of around 5 billion euros in assets by 2014.

Though he apparently isn't making a bid to return to his former post, Proglio -- who still sits on Veolia's board -- is aiming to unseat Frerot at the company's Feb. 29 board meeting. A Paris-based banker who spoke with Reuters on the condition of anonymity summed up the situation succinctly: "It's unbelievable. The problems there are all related to Proglio being president. Proglio thought he had put a yes-man in his former job." Proglio may feel like his legacy is being attacked, and he's doing what he can to fix it.

Make no mistake about it, if these reports are confirmed and Frerot is ousted for his smart, practical, and necessary business moves, Proglio will have only saved his ego -- and it could have dire consequences for shareholders.

The danger of egos
A study by professors at Penn State made several conclusions about the alarming damage such executives have, but none more so than this: "Narcissistic CEOs tended to make more acquisitions at higher valuations than their not-so-narcissistic counterparts. Nothing can kill shareholder value quicker than using cash on hand (or going into debt) in order to purchase a company that -- 10 years down the road -- won't add an ounce of shareholder value."

In my original article on the matter, I explored how acquisition-happy companies Microsoft (NAS: MSFT) and Hewlett-Packard (NYS: HPQ) had ruined shareholder value over time. Both companies had shown a ridiculous lack of restraint, be it from Mr. Softy's spending $1.2 billion on a company that was later raided by the IRS on fraud charges, or HP's choice to spend cash equivalent to 20% of its market cap on a questionable acquisition.

I could just as easily have written about Proglio when he was at the helm of Veolia. And with yesterday's news, apparently we need to include "narcissistic ex-CEOs" to the list of villains.

What's an investor to do?
For the time being, I'll being holding my shares to see how things shake out at the Feb. 29 meeting. If Frerot remains in charge and his cost-cutting plans remain on track, I'd see no reason to sell. If things turn out that way, the company's 7.5% dividend yield looks like a great bonus (even after its proposed dividend cut).

But for investors looking for a little more safety within the sector, I think waste specialists Waste Management (NYS: WM) and Republic Services (NYS: RSG) are better bets. Remember, one of the most important things as an investor is to be comfortable with your investments. Though these two companies offer smaller dividends -- 3.9% and 3%, respectively -- they are solid businesses throwing off lots of free cash flow, which is then passed on to shareholders.

And if you're looking for a few more dividend ideas, I suggest you take a look at our special free report: "Secure Your Future With 11 Rock-Solid Dividends." Inside, you'll get the names, tickers, and stories behind all of these companies worthy of your consideration. Get your copy today, absolutely free!

At the time this article was published Fool contributor Brian Stoffel owns shares of Veolia Environnement. You can follow him on Twitter at @TMFStoffel.The Motley Fool owns shares of Microsoft and Waste Management. Motley Fool newsletter services have recommended buying shares of Waste Management, Microsoft, Veolia Environnement, and Republic Services, as well as creating a bull call spread position in Microsoft and writing a covered strangle position in Waste Management. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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