Despite the uproar at the height of the 2007-2009 financial crisis over executive pay and golden handshakes, super lucrative severance packages are still the name of the game both on Wall Street and in the tech world.
At the end of August, Robert Kelly, chief executive of Bank of New York Mellon was given a golden handshake worth $17.2 million in cash and stock after being at odds with board members and senior managers.
In the technology industry, Yahoo! awarded chief executive Carol Bartz a $10 million severance package, while HP just rewarded ousted chief Leo Apotheker with $13.2 million, in addition to a sign-on package worth around $10 million.
From the NY Times:
"We repeatedly see companies' assets go out the door to reward failure," said Scott Zdrazil, the director of corporate governance for Amalgamated Bank's $11 billion Longview Fund, a labor-affiliated investment fund that sought to tighten the restrictions on severance plans at three oil companies last year. "Investors are frustrated that boards haven't prevented such windfalls."
Several years ago, the Securities and Exchange Commission turned a brighter spotlight on severance deals by requiring companies to disclose the values of the contracts in regulatory filings. More recently, the Dodd-Frank financial reforms required that public companies include "say on pay" votes for shareholders to express opinions about compensation -- including a separate vote for golden parachutes initiated by a merger or sale. "
Despite the outcry a few years ago, however, few investors have actually taken an active stand. The Times reports that only 38 of the largest 3,000 companies had their executive pay plans voted down, and even then, the votes are nonbinding.
So until investors and regulators take a much more feisty and efficient stand - it looks like it will continue to pay big bucks to get fired - at least for some.
Melanie Rodier has worked as a print and broadcast journalist for over 10 years, covering business and finance, general news, and film trade news. Prior to joining Wall Street & Technology in April 2007, Melanie lived in Paris, where she worked for the International Herald ... View Full Bio