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Jun
2013
13

These 13 CEO Severances Would Total $2 Billion If They All Failed Miserably at Their Jobs at Once

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We spotted this infographic from Bloomberg Businessweek that exposes the $100+ million severance packages that would be awarded to 13 CEOs should they fail miserably at their jobs.

Talk about support for the argument that executive pay does not reflect executive performance. These days, screwing up can make you rich!

There appears to be little to lose when you’re on (the very, tippy) top. How could you second guess your own decisisons (or mind shareholders’ interests) when the only onsequence of failure is success? Paul Hodgson, a director at corporate governance researcher BHJ Partners, touches on this in the BB piece:

If you have a safety net of this type of gargantuan size, it starts to undermine the CEO’s desire to build long-term value for shareholders.  You don’t really care if you’re fired or not.”

These padded severance packages are coming under fire from unions who frequently invest in companies as part of their members’ retirement plan management strategy.

The AFL-CIO, which represents 12 million union workers and sponsors pension plans holding $480 billion in assets, is pressuring companies to limit awards to the value of stock and options that were already vested, says Brandon Rees, acting director of the AFL-CIO Office of Investment. Pressure has worked in some cases. Simon Property Group (SPG)amended the contract of CEO David Simon, cutting the value of his severance to $86 million from about $165 million if he’s fired before 2015 and the full value of his long-term incentive plan is paid, according to its proxy. Shareholders, who rejected Simon Property’s initial pay package with 71 percent of votes cast in 2012, approved the revised agreement this year with 55 percent in favor, according to executive compensation tracker Equilar. Hugh Burns, a Simon Property spokesman, said the company had no comment.

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