Want a big payday? Get fired

If you're a captain of industry, the day you leave may be the most profitable day of all.
April 30, 2003: 9:09 AM EDT
By Gordon T. Anderson, CNN/Money Contributing Writer



NEW YORK (CNN/Money) - What's more lucrative than landing a job as CEO of a major U.S. company? Getting fired from it.

Just when shareholder anger is peaking on the issue of overly generous CEO salaries, along comes a related bit of boardroom villainy. Executive severance agreements, it seems, can be even loonier than pay packages.


During the past two years, the average severance package at an S&P 500 company amounted to $16.5 million. That's according to a recent study by Paul Hodgson of the Corporate Library, a research clearinghouse on corporate governance issues.

What's more, the report probably understates the total cost of CEO termination. Companies often skimp on the details when it comes to the value of such things as early vesting of restricted stock and options, benefits, and perks like office space and administrative employees.

The Corporate Library studied the severance agreements of 367 companies. Of those firms, 55.5 percent pay total salary, bonus, and equity awards for at least three years following the departure.

"With CEOs receiving an average $15 million to start, and $16.5 million to finish," said Hodgson, "they hardly need to make any money in between."

Learning Jack's lessons
Last year, retired General Electric chief Jack Welch got unwanted publicity when divorce proceedings revealed the details of his sumptuous retirement package. He was eventually forced by public pressure to give up such perks as a private jet, box seats to Red Sox games, and an $80,000 a month corporate apartment in New York.

The charismatic Welch, however, has admirers and imitators across Corporate America. Here are some current and former heavyweights stealing a page from Captain Jack's book:


Home Depot Home Depot (HD: Research, Estimates). CEO Robert Nardelli, whom Home Depot lured from a high-profile position working for Welch at GE, would take home cash and bonuses worth $82 million if he were dismissed. That includes an upfront cash payment of $20 million, due within his first 30 days of unemployment. (Click here to see Nardelli's employment agreement.)


Clear Channel Clear Channel Communications (CCU: Research, Estimates). CEO L. Lowry Mays would receive base salary and bonus for seven years, which works out to some $28 million, not counting other equity-related goodies. Clear Channel also employs Mowry's two sons, Mark and Randall, as COO and CFO, respectively. If Dad were forced out and neither son succeeds him, all their separation packages double.


El Paso Corp. El Paso (EP: Research, Estimates). William Wise, fired in March as CEO, may sue over the skimpiness of the $9.4 million in severance the company has agreed to pay him. That's in addition to more than $15 million in retirement benefits he is set to receive.


Gemstar Gemstar-TV Guide (GMST: Research, Estimates). Former CEO Ed Yuen, also recently terminated, may pocket up to $30 million in severance fees, despite an SEC inquiry into his stewardship of the company's finances.


Conseco (delisted). A few years back, ousted founder Stephen Hilbert made headlines with a $72 million separation agreement. Replacement CEO Gary Wendt was hailed as a savior worth every penny of his $45 million signing bonus. After Conseco declared bankruptcy, Wendt departed with no severance but a $17 million pension.

NuPwrSoul said:

Golden ass-fucking for shareholders.

IceNine said:

and you aint lyin.

NuPwrSoul said:

These guys get millions of dollars for doing a shitty job and when they prove that they are doing a shitty enough job and get fired, they get MILLIONS more!

IceNine grabs some KY lube and calls a broker

NuPwrSoul said:

They should get a golden shower on their way out the door...

CEO's have been jukin the little peoples for hundreds of years. Now that EVEYBODY'S getting juked it news

applekisses said:

:LOL: It's called GREED and it ain't nothing new. They make workers take big pay cuts or lay them off. Then they take the money saved from that action and put it in their bank accout. Phuck up greedy bastards. I'm glad they're exposed.

Blackcat said:

Uhhh... it only applies to the shareholders of the companies, but okay.

It's great to see that the workers, who are the lifeblood of any company, nearly always get stuck without nothing but a pile of shit when they are let go.

Isn't it amazing that these CEOs skip away with millions while workers are told there isn't enough money in the budget for a 2% raise.

I'm glad the CEO of American Airlines resigned. Can you believe the bonuses and retirement cushions for executives while all the workers throughout the company were agreeing to taking cuts in pay and benefits. It's sick.

Like I said in another thread, It's amazing that many conservatives, or at least the ones that have the platform in making the difference in the corporate arena, are more consumed with matters of sexuality and sexual morality than they are with the absolute immoral cheating, tax dodging and fraud committed by the corporations they support and own. This includes the unbelievable severance packages for people who deserve to be thrown out on their ass!

IceNine said:

Anybody with a half way decent job with retirement benefits getting juked, I'd say that's just about EVERYBODY.



And if Bush has he way, and privatize Social Security we all gonna get juked for sure!
[This message was edited Wed Apr 30 12:07:02 PDT 2003 by Blackcat]