Hey! Where's MY Golden Parachute?

Clearly, I've not followed the right career path.

I never got my M.B.A. from Harvard. I've never been employed as the CEO of a multi-billion dollar company. And I'm never going to get my golden parachute.

A golden parachute is, essentially, a ridculously rich severance package for executive-level staff who've lead their company straight down the crapper. In today's economic crisis, the daily papers feature story after story about CEOs sneaking away with millions like thieves in the night, leaving behind the smoking ruins of the giant corporations they ran.

While the concept of the golden parachute is certainly not new, here are a few examples of the golden parachutes awarded in recent years:

Carly Fiorina - Photo courtesy www.hp.com
Carly Fiorina - Photo courtesy www.hp.com

Carly Fiorina, Hewlett Packard

In 2005, on the heels of layoffs of 20,000 Hewlett Packard employees, HP CEO Carly Fiorina was fired. Along with walking papers, Fiorina also received roughly $45 million, including $21 million in severance pay and another $21 million buyout of her pension benefits and company stock options.

Kerry Killinger / Alan Fishman, Washington Mutual

Another victim of the subprime lending disaster, WaMu ousted Kerry Killinger just weeks before it was taken over by J.P. Morgan Chase. Killinger reportedly took home a $44 million consolation prize.

Killinger's successor at WaMu, Alan Fishman, enjoyed just three weeks at the helm of the floundering giant before the government stepped in and facilitated the sale to J.P. Morgan. Fishman was eligible for $11 million in severance pay and was entitled to keep his $7.5 million signing bonus. $18+ million for three weeks work? Not too shabby!

Angelo Mozilo - Photo by Susan Walsh, AP
Angelo Mozilo - Photo by Susan Walsh, AP

Angelo Mozilo, Countrywide Financial Corp.

As the CEO at the top of the subprime mortgage debacle that initiated the economic tailspin that we now all enjoy, Angelo Mozilo voluntarily forwent his $37.5 million severance package. However, he still bagged $44 million when Bank of America bought out Countrywide - this in addition to the roughly $140 million he made from sale of Countrwide stock in 2006 and 2007.

Charles Prince - Photo by Haruyoshi Yamaguchi/Bloomberg News
Charles Prince - Photo by Haruyoshi Yamaguchi/Bloomberg News

Charles Prince, Citigroup

Charles Prince announced his resignation from Citigroup during an emergency board meeting, in which he said "Given the size and nature of the recent losses in our mortgage-backed securities business, the only honorable course for me to take as chief executive officer is to step down." That step down was undoubtedly softened by the $99 million he took with him in the form of pension and stock holdings.

Robert Nardelli - Courtesy: The Home Depot
Robert Nardelli - Courtesy: The Home Depot

Robert Nardelli, The Home Depot

Robert Nardelli, who began his reign of The Home Depot in 2000, made his exit in January 2007. Stock prices at the time of his departure were at the same level as at his arrival seven years earlier. Nardelli was awarded $210 million in severance, retirement benefits and stock.

Sadly, this list is far from complete.

Unfortunately, a Google search of the phrase "golden parachute" will yield far more names than I've included here, and too many of these stories are recent. In some cases, the shareholders who've been done wrong have filed lawsuits, largely unsuccesfully, to try to stop these colossal payouts to executives who clearly don't deserve them.

Don't get me wrong - the term "golden parachute" was not necessarily coined with intent for negative connotation. There is absolutely nothing wrong with paying for GOOD performance, and I'm sure that there are top corporate executives out there who've received huge payouts upon their departures for jobs well done. Those guys and gals just don't make the news as readily, especially not these days.

The bailout package recently passed does have provisions to prevent companies being bailed out from using taxpayer money to reward their top executives with golden parachute-style severance packages, but the limitations are widely considered to be largely illusory. Under the plan, golden parachutes are only prohibited if employment agreements are written during the rescue period, and if the company sells more than $300 million in assets to the government. If the severance language already exists before the rescue then the new law will not help.

I guess we had better get used to reading about executives getting rich[er] from their failures, while the employees they lead hit the unemployment lines.

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Comments 16 comments

NYLady profile image

NYLady 7 years ago from White Plains, NY

Fascinating piece. Makes you angry, right? My husband works at Merrill Lynch, and fears for his job every day. No gold parachute for him if he gets his walking papers, I guarantee! Yikes.


Em Writes profile image

Em Writes 7 years ago from Upstate NY Author

"Angry" works for me. I currently work in healthcare, where the concept of "Pay for Performance" is now becoming an issue as Medicare/Medicaid will no longer pay for patient treatment where it appears that the illness/injury was either caused by or not correctly diagnosed by the provider. I used to work in retail management, where my compensation was directly tied to my store's sales performance. This is what I'm accustomed to - the better you perform, the better you are paid. This notion of rewarding incompetence is, to me, repulsive.

This is a scary time for everyone, but for some it hits a little closer to home. Best wishes for your husband (and you, too, of course) and his employment.


Mighty Mom profile image

Mighty Mom 7 years ago from Where Left is Right, CA

Makes you wonder how much they stood to make if their companies did well!! Seems like the financial equivalent of "worth more dead than alive." But it sure would be nice if the hard-working employees got even a fraction of that, instead of a pink slip and maybe 2 weeks.


Em Writes profile image

Em Writes 7 years ago from Upstate NY Author

Agreed, Mighty Mom. The concept would be a lot less offensive if the money went back to the employees and/or shareholders. When I was reading about this, I came across an interesting article about a golden parachute that Yahoo filed with the SEC when they were facing buyout by Microsoft... thought it was a great idea. Here's the link, if interested: http://news.cnet.com/8301-10784_3-9874578-7.html


Benson Yeung profile image

Benson Yeung 7 years ago from Hong Kong

Dear Em,

thanks for the great read. Hope you don't feel as bad after writing about it.


Shadesbreath profile image

Shadesbreath 7 years ago from California

Even if I had a golden parachute it probably wouldn't open when I needed it. Nice hub though. Depressing, but nice.


Em Writes profile image

Em Writes 7 years ago from Upstate NY Author

Benson & Shadesbreath - Thanks for stopping by and reading!


countrywomen profile image

countrywomen 7 years ago from Washington, USA

I saw a news item where the erstwhile AIG paid recently half million dollars to its top performing folks in hotel expenses in a california resort. AIG maybe poor but the AIG folks aren't.... That's life.


Christoph Reilly profile image

Christoph Reilly 7 years ago from St. Louis

It's enough to make a body mad. Nowadays, it seems a golden parachute is more of the D.B Cooper variety: Thief jumps out of plane and disappears with the loot.

Great and timely hub! Thanks!


Em Writes profile image

Em Writes 7 years ago from Upstate NY Author

countrywomen & Christoph - Thanks for stopping by and reading!


mikewitt profile image

mikewitt 7 years ago from Davenport, Iowa

Great hub and information, thanks for sharing.

Mike


nancydodds1 profile image

nancydodds1 7 years ago from Houston, Texas

Good stuff about golden parachute. I had gone through your hub its very informative.


Em Writes profile image

Em Writes 7 years ago from Upstate NY Author

Hi, Nancy! Thanks for stopping by!


Em Writes profile image

Em Writes 7 years ago from Upstate NY Author

Just a quick note to Hub regulars: Please be advised that our own Rochelle Frank has accepted a golden parachute herself as CEO of the team of hubbers seeking govenment bailout.

http://hubpages.com/forum/topic/9452?page=2#post10...

Thank you.


Rochelle Frank profile image

Rochelle Frank 7 years ago from California Gold Country

Thanks so much-- but I will only be using the parachute if Misha is piloting the coroprate jet.

Thanks, Em.


Kram Redarsh 5 years ago

Where the f*** is mine? Apparentyly I am not worthy even though I can do as much for a company as any of those worthless sacks of shi*t's can. Something has to be done. Something has to be done. It seems odd that they are poor mouthing us yet they can gush money at their former ceo's. I WANT MINE. And if they won't give it, I'll Take it

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