Or, in my specific situation, my manager (and the manger above them) were terrible at handling intrapersonal conflicts. They would just ignore it until it went away and hating confronting anyone about anything. At least one of them also "liked" the "dead wood" in question or had at least worked with them for a long time. I understand all of that. But at the end of the day, it was bad managers. Even if you somehow manage to clear the "dead wood" (good luck, they hold on longer that performing members in my experience) you are still stuck with bad managers and you'll be right back in the same place in little time.

From the CEO's point of view, line managers and employees are basically an undifferentiated mass of potential dead wood. Getting managers to "do their jobs" is exactly the intention of a policy like this.