NO SUCCESS LIKE FAILURE ON STREET
By TERRY KEENAN
--------------------------------------------------------------------------------
HALL OF SHAME:
When he left H-P, Mike Capellas (pictured here with H-P CEO Carly Fiorina) walked away with $14.5 million in severance, only to take the CEO job at WorldCom six months later with a pay package worth $30 million over three years.
- AP
March 2, 2003 -- IT'S proxy season on Wall Street, that time of year when companies must disclose their dirty laundry to shareholders - including all sorts of fine print on executive pay. And don't be fooled. Despite the headlines about the reining in of executive pay, the gravy train rolls on. This time, with a few clever twists.
In fact, the latest bonanza for the executive set has been inspired by scandal and failure.
With fraud, mismanagement and the tough economy creating a virtual revolving door in the corner office, severance packages have reached record levels for corporate honchos.
On the flip side, when it's time to hire a new CEO to fix the mess, signing bonuses are giving new meaning to the term "Golden Hello."
Take for example, Michael Capellas, one of the architects of the messy merger between Hewlett Packard and Compaq.
When he left H-P in November, Capellas walked away with $14.5 million in severance, only to take the CEO job at WorldCom with a signing package worth some $30 million over three years.
The Capellas payday is increasingly the rule, not the exception. According to a study by the Corporate Library, CEOs of S&P 500 companies who departed in 2002 and 2001 received an average platinum parachute of $16.5 million!
And that only includes cash compensation, not the value of options, early vesting programs or a myriad of perks - such as the use of company planes and offices.
Conversely, CEO signing bonuses have spiralled out of control, notes the Corporate Library, with the average package topping $15 million.
With CEOs earning more than $31 million just to come and go, it's easy to understand why so many don't seem particularly concerned with their performance in-between.
In fact, in most cases the worse the company's performance and the more scandal, the juicier the employment contract.
Lucent, Conseco, Dynegy, Tyco, Quest and AOL TimeWarner top the list of companies most generous when it comes to paying former executives to just go away.
Unfortunately, the rank-and-file who have lost their jobs at these companies (and they number in the hundreds of thousands) haven't been as lucky with many getting as little as a few weeks pay in severance.
During this annual meeting season there will be a record 890 shareholder resolutions on the ballots - many of them protesting this kind of executive gravy train.
Management surely hopes these resolutions will fly under the radar screen - shareholders should use their votes, or the CEOs will continue to get the last laugh.
TERRY KEENAN is senior business correspondent and anchor of Cashin' In, an investing program that appears on Fox News Channel on Saturday mornings at 11:30. E-mail terry.keenan@foxnews.com. |
