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Golden Parachutes: 21 CEOs Landed $100M Plus

By Dan Kloeffler | ABC News – Fri, Jan 27, 2012

While TV viewers love to hear the words, "You're Fired," from Donald Trump, few would ever want to have that conversation with their own boss. That is, unless they are the boss and managed to negotiate a hefty separation package.

So-called golden parachutes are contractual provisions that compensate executives, if they are terminated without cause. And according to a first-of-its-kind report, the payout practice has guaranteed several outgoing chiefs with nine-figure landings to help soften the fall from their corner offices.

The biggest parachute according to GMI Ratings Report? More than $400 million awarded to Jack Welch, after he served as General Electric's CEO from 1981 to 2001. While Welch is widely credited with turning GE into a global conglomerate powerhouse, the report does not compare an executive's performance with the amount of their compensation. Rather, its authors say the purpose of the survey was to cast light on the amount of compensation that was awarded above and beyond the salary provided during the CEO's tenure.

'He [Jack Welch] was already paid for that performance, while he was acting as CEO. These parachutes are awarded after the fact, after they've left,' said Paul Hodgson. Hodgson helped gather data for GMI's report that included executive packages from 2000 until 2012. While the company has been gathering information on executive compensation since it was founded in 2000, this is the first time the findings have been published in a comprehensive report.

According to the study, 21 CEOs received more than $100 million each in "'walk away" packages. In all, companies like GE, Exxon Mobil Corp., AT&T and Home Depot Inc., have collectively provided nearly $4 billion in golden parachutes. But according to Hodgeson, those figures could be on the low-side.

'These numbers don't include the perks - the use of the corporate jet, the corner offices - a lot of the compensation that doesn't get listed on the public files.'

But despite the staggering amounts, golden parachutes serve a purpose when it comes to wooing a potential CEO to take the helm.

"The first thing someone asks is, 'What happens if I get fired because of a merger or the company gets sold?' These provisions compensate for taking that risk," said Bill Catucci, adjunct professor at Fordham University Graduate School of Business.

Catucci, a former CEO himself, explained that golden parachutes also encourage CEOs to act objectively when facing a decision that could ultimately lead to their termination. Some of the examples in the GMI Report include instances where CEO's elected to pull the cord on their golden parachute, after their companies either merged with or were acquired by other firms.

But is that worth $100 million?

Catucci concedes that not all cases are the same but that in many instances, the outgoing executive fulfilled their obligation as leader of the company while generating huge value for shareholders.

"Some of these CEO's that have increased a company's value by hundreds of millions or even billions of dollars, they see these golden parachutes as justified."

21 CEOs over $100 million Company CEO Tenure Total Payout General Electric John F. Welch Jr. 1981-2001 $417,361,902 Exxon Mobil Corp. Lee R. Raymond 1993-2005 $320,599,861 UnitedHealth Group William D. McGuire 1991-2006 $285,996,009 AT&T Edward E. Whitacre Jr. 1990-2007 $230,048,463 Home Depot Inc. Robert L. Nardelli 2000-2007 $223,290,123 North Fork Bank John A. Kanas 1977-2006 $214,300,000 Merck & Co., Inc./Schering-Plough Fred Hassan 2003-2009 $189,352,324 IBM Louis V. Gerstner Jr. 1993-2002 $189,005,929 Pfizer Inc. Hank A. McKinnell Jr. 2001-2006 $188,329,553 CVS Caremark Corp. Thomas M. Ryan 1998-2011 $185,415,435 Gillette Co. James M. Kilts 2001-2005 $164,532,192 Target Corp. Robert J. Ulrich 1994-2008 $164,162,612 Merrill Lynch & Co. E. Stanley O'Neal 2002-2007 $161,500,000 U.S. Bancorp Jerry A. Grundhofer 2001-2006 $159,064,090 Omnicare, Inc. Joel F. Gemunder 2001-2010 $146,001,476 Wachovia/South Trust Wallace D. Malone Jr. 1981-2004 $125,292,818 United Technologies Corp. George A. L. David 1994-2008 $122,631,309 eBay Inc. Margaret C. Whitman 1998-2008 $120,427,360 WellPoint Health Leonard Schaeffer 1992-2004 $119,041,000 XTO Energy Inc. Bob R. Simpson 1986-2008 $103,485,972 Viacom Thomas E. Freston 2006 $100,839,772 (Source: GMI) Also Read

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3,225 comments

Yoohoo • 3 mths ago
Many workers parachutes failed to open when they were laid off by these companies.
- sg 3 mths ago
  I think the brick they fold into the middle of it had a little something to do with it.
- Don 3 mths ago
  Workers parachutes are designed to open on impact.
- Dong G. 3 mths ago
  WORKERS HAS NO PARACHUTES.
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Reply
TRADE REDD NOW • Amsterdam, The Netherlands • 3 mths ago
Wow. America...where monumental failure is rewarded with mountains of cash.
- Rick 3 mths ago
  Only the failures of the rich and powerful. If you're working class and get fired, you're lucky to get two weeks pay. The 1%errs cover each others #$%$ even when, as you point out, they utterly fail. There is no consequence and no personal responsibilty in that crowd.
- Capt AHAB 3 mths ago
  Sheeit son, I'm sure it happens in the Netherlands too, not just US business. Sheeit son, remember to toke, toke & pass when in the LEGAL POT cafe's
- A Yahoo! User 3 mths ago
  We are ruled by the glorious ROYAL RICH and their servants in congress, you people be good loyal citizens and bow down and adore them, You Private Sector Serf's should be glad for the jobs they create for you, like cut their grass & wipe their arse.
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Reply
CDoyle • 3 mths ago
Count how many healthcare related companies are on this list and then ask yourself "Why is healthcare so expensive?"
- Kid 3 mths ago
  The sad reality is that people make tons of money off of war and people being sick.
- NNF 3 mths ago
  Insurance companies too
- grover_downs 3 mths ago
  Why is the cost of Lasik surgery declining? Because no one of the 50 states has mandated that insurance cover it. As soon as you tell the consumer something is free, prices soar. The real cause of higher health costs is the notion that it is free. Only a free market can fix health care.
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Reply
coyote • 3 mths ago
Just remember, last year GE didn't pay any Income Tax on its earnings.
- grandpaez 3 mths ago
  Don't forget the bailout money.
- James Avett 3 mths ago
  i have NOT... i will need a new dishwasher soon. i will send my receipt to GE letting them know they lost my business... i will never, ever buy GE again.
- . 3 mths ago
  They didn't pay taxes last year because they offset against losses the prior years. Not quite the full story, Bub!
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mytwocents • 3 mths ago
All those Golden Parachutes are given to them in stocks, so when they cash them in its capitol gains and they 15% in taxes, nice racket.
- life in CA 3 mths ago
  Yes it is a nice racket. The other employees who must survive by withdrawing from their 401K will pay a 20% penalty plus their going tax rate! (Been there and done that in 2000)
- JohnM 3 mths ago
  You got it.
- leftw 3 mths ago
  Paid in stock because if the value of the company does not go up, the stock isn't worth anything. If they were paid as salary, it's guaranteed, not performance based.
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Reply
sivdog • Mililani Town, Hawaii • 3 mths ago
these guys get golden parachutes....the average american gets a golden shower....
AKQJ10 • 3 mths ago
It doesn't make a bit of difference if the CEO does a good job or a bad job. They still get multi-millions even if they are "resigning to pursue other interests" (business speak that means they were fired). Name a CEO that walked away with nothing when the stock tanked.
mike • Orlando, Florida • 3 mths ago
And the mentally retarded worker was fired over .20 cents after 25 years of loyal service to the grocery store.Is there something wrong in this picture or maybe I'm wrong?
Kenneth • Crivitz, Wisconsin • 3 mths ago
cororate greed goes hand in hand with the slimeball politicians in washington. they don't think its wrong to get paid and do nothing and then live the good life after one term. the working class is stuck in the middle. we have the rich rich andd then the freeloader and ilegal dirt bags and the working class has to support all of them. they say tighten your belts and prepare for another golden screw job from washington.
timmmmm • 3 mths ago
wow! 100 million!! these ceos must be helping cure cancer! oh wait they dont? well maybe they are helping to end poverty and homelessness in this nation! oh wait they dont? well maybe they are adopting many orphaned children! oh wait they dont? well maybe they fight crime and save lives! oh wait they dont? well maybe they are defending this nations borders from enemies foreign and domestic! oh wait, they dont do that either?!?!?! so what do they deserve all that money for?
Tired • Marietta, Georgia • 3 mths ago
That same $100 million could put more than 2,000 people back to work at a salary of $40,000 to $50,000 a year. NO ONE, and I mean NO ONE is worth $100 million.
joel • Dallas, Texas • 3 mths ago
While Nardelli was getting his $223 million golden parachute his biggest contribution to the company was to cut the wages of the oldest and best employees. His next was to cut the number of employees. There goes the job creator argument out the double hung aluminum clad wood window.
Bull O'Reilly • 3 mths ago
Meanwhile, we, the taxpayer, often subsidize their workforce with food stamps and health care, so the corporations can "afford" such golden parachutes.
g • Southfield, Michigan • 3 mths ago
I know this might mean that I "hate capitalism," but it seems like our system presently suffers from a disconnect between one's compensation and the value of one's contribution.
Bryan • Pittsburgh, Pennsylvania • 3 mths ago
21 people, 4 billion. I don't see how anyone can think this is right in any way.
CDoyle • 3 mths ago
Not to worry... The trickle down is coming... Can't you feel it???
Susan M • Marquette, Michigan • 3 mths ago
Tell me there is no class warfare!
DM • 3 mths ago
""Some of these CEO's that have increased a company's value by hundreds of millions or even billions of dollars, they see these golden parachutes as justified."" - Yeah they did it all by themselves. A CEO is nothing but a glorified manager for the board of directors. Who along with other officers really do nothing but look at paperwork or are briefed and make decisions. They have little to do with day to day operations. The people who really make a company profitable are employees and customers. The CEO just takes the credit for other peoples work. AND the CEO is still controlled by the shareholders. So really its a #$%$ position. They really control nothing.
Joe B • Philadelphia, Pennsylvania • 3 mths ago
And to think I would just like enough to pay off the mortgage, go figure .
Mr. RD • 3 mths ago
And yesterday I read a story on how much money the taxpayer still owes the government. Wonder how many of these CEO's recieved money from a company that took the bailout money??? Can someone get that info and reply.

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