I'm not sure how you can characterize reducing costs and making short term profits a "risk-taking". If anything, it's the safest thing Hurt could do. Research is risky. Big, ambitious projects are risky. Selling toner isn't.
Also, most CEO's incentives are medium to long term, anyway. Compensation is usually a mix of cash and restricted stock, all of which goes down the drain if the company tanks. Take Ed Whitacre as an example - his pay is $1.7M in cash + $7.3M in restricted stock. His fortune is strongly tied to the medium-term (several years) value of GM.
The amount of risk isn't as important as the kind.
R&D project: if it fails, you paid people to do something that wasn't commercially viable. You have a lot of talent and knowledge under one roof. If it succeeds, upside potential is tremendous. You can move those smart people to another project that might have better odds of taking off.
Laying people off, not because you need to, but because you don't have the vision to make decisions you didn't study in business school: saves costs and usually pops the stock price for a few months, but causes the best people to leave when they can, trashes the culture, and fills the company with mediocrities and yes-men. Upside is minimal; downside is potential loss of the whole company.
When you phrase it this way, there is no incentive for anyone (CEO or shareholder) to prefer layoffs to a big R&D project.
With the R&D project, the CEO gets a big payoff if it succeeds, and loses only his stock options if it fails horribly and takes down the company. Big upside, no downside. With layoffs, the stock price pops for a few months and goes back down years later when the CEO's restricted shares are allowed to be sold. The upside to the CEO is truly minimal in this case.
You write as if the CEO is malicious and willing to lose money in order to ruin a perfectly good company.
Actually, it's more like this. Most CEOs aren't going to start R&D projects because (a) they'll pay off later, during a successor's tenure, and (b) vision can't be taught in MBA programs.
On the other hand, cutting the R&D projects and saying that "unprofitable operations" (even if they were profitable) were slashed will pop the stock price in the short term.
You're naive if you think CEOs don't have ways to benefit from temporarily popped stock prices even if their restricted shares can't be sold until much later. If they want to be a bit sleazy and secretly sell early, they can ask a spouse or sibling to short-sell or buy puts on the open market. Or they can use foreknowledge of the pop to hand one-day gains over to their friends. Illegal? Probably. (The reason I don't say "yes" is that insider trading has a technical meaning that most violations of the law's spirit don't meet.) Unethical? Yes. Likely to lead to jail time? No. Common as dirt? Yes.
It's pretty rare for people to commit insider trading violations for their own accounts, because it's easy to get caught. Instead, they tell their friends what is about to happen as a means of favor-trading. With that, it's pretty much impossible to get caught.
I don't think most corporate executives are malicious, so much as avaricious and narcissistic. Will they help their companies if it suits them? Yes. Will they hurt their companies if it suits them? Most of them will. The "we are the nobility and you are the peasants" mentality prevents most of them from caring too much either way about their companies; they care more about themselves, their friends, and maintaining their social class.
Also, most CEO's incentives are medium to long term, anyway. Compensation is usually a mix of cash and restricted stock, all of which goes down the drain if the company tanks. Take Ed Whitacre as an example - his pay is $1.7M in cash + $7.3M in restricted stock. His fortune is strongly tied to the medium-term (several years) value of GM.
http://finance.yahoo.com/news/GM-CEO-Whitacre-receives-9M-ap...