Largest Non-Founder CEO Retirement Packages of Modern Business History
Corporate governance issues are sometimes a blessing for shareholders, but they also can crush the rights of shareholders in many cases. Tracking CEO pay of large public companies is now considered open hunting season, since the wealth gap has grown ever wider over time. After Aubrey McClendon's big "retirement package" at Chesapeake Energy Corp. (NYSE: CHK) came to light, we wanted to know just how a sum of $45 million for leaving a public company compared to other high-profile CEO exit packages.
24/7 Wall St. has reviewed the largest golden parachute packages going back to the year 2000. To keep this uniform, we only used examples in which these CEOs with golden parachutes were not founders of their companies. Aubrey McClendon was co-founder of Chesapeake, and that at least makes up for some of the headline folly that might be there. If a founder goes out and builds up a company from scratch into a multibillion business, then creating major wealth is expected. But what about when non-founders acting as mere guardians get tens of millions or hundreds of millions when they decide to call it quits?
Investors and the public often have very different opinions over what one man (or woman) is worth. A machinist in a factory may view the creation of wealth by rising to be the guardian of a company much differently than a hedge fund manager or an investor who became wealthy by investing in that company during his or her tenure. Also, many CEOs who get these tens and hundreds of millions as golden parachutes are often viewed very favorably by employees and management of their companies.
There are two sides to the wealth effect story. Much criticism still continues over bonuses and high compensation on Wall St. High-growth sectors like technology, Internet and biotech have created armies of what are called "stock-option millionaires." How many millionaires were instantly created the day that Facebook Inc. (NASDAQ: FB) came public? The social media giant had a very hyped-up and high-profile IPO, and employees were allowed to sell stock right at the IPO to unsuspecting investors who got burned. In short, this wealth effect swings both ways.
Is it fair to bash every CEO who walks away with a huge golden parachute upon retirement or resignation? No. Some of these CEOs were true visionaries who made significant change and brought about great gains for shareholders. Some other golden parachute packages will look absolutely ludicrous on the surface. Here are 10 of the largest CEO golden parachute packages going back to the year 2000. Due to large discrepancies over stock options and share price issues around a CEOs exit, some large golden parachutes were not included. Even in early 2012, a report from GMI Ratings showed that more than 20 CEOs walked away with retirement packages of more than $100 million. The grand tally was about $4 billion from those exit packages alone.
Not all packages are made directly in cash payments. That means that the packages do not come directly out of the pockets of shareholders at once, and in many cases these will have accumulated for years ahead of the awards. These retirement packages go way beyond cash and may include stock grants, stock options, noncompete compensation, pensions, benefits, security, country club fees, jet use and apartment fees, and more. The size of each exit package goes back to the report from GMI in 2012, but we have added additional color that may shed more light on the sheer size of our selections of non-founder CEO retirement packages. We also have shown how these high-end golden parachutes compare to the market values of these companies as they stand today.
Filed under: 24/7 Wall St. Wire, Activist Investor, Annual Report, Compensation, Conglomerates, Corporate Governance, Drug companies, Earnings, Economy, Editor's Picks, Labor, Management Change, Mergers & Acquisitions, Mergers and Buy Outs, Personal Finance, Regulation, Shareholder Issues Tagged: AAPL, AVP, AXP, BKU, CG, CHK, COF, CVS, FB, featured, GE, GM, HD, IBM, MCD, MRK, PFE, T, TWX, UNH, XOM