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Entries in Severence Pay (2)

Tuesday
May282013

Feds Reject Airline CEO's Severance Deal

Photographer: Andrew Harrer/Bloomberg via Getty Images(NEW YORK) -- Too darn high! That’s the unofficial reaction to a sweet severance deal for the CEO of American Airlines.

The proposed merger of American and US Airways Group calls for CEO Tom Horton to lose that job and become chairman of the new company. US Airways boss Doug Parker would run the carrier. American has proposed severance pay of almost $20 million, along with lifetime flight benefits.

The objection filed by the U.S. Trustee’s office says American’s bankruptcy plan does not explain why Horton should get so much money. The objection says Horton’s contract calls for him to get $6.4 million if he had left at the end of last year, and raises the question of why he should get so much more money now.

The case will be decided by a federal bankruptcy court in New York.

Copyright 2013 ABC News Radio

Friday
Jan272012

Report: 21 CEOs Landed $100M Plus in Separation Packages

Nick M Do/Getty Images(NEW YORK) -- While TV viewers may love to hear the words, “You’re fired,” from Donald Trump, few would ever want to have that conversation with their own boss. But if they're the boss -- and managed to negotiate a hefty separation package -- getting fired could score them millions.

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, Paul Hodgson, Chief Communications Officer and Senior Research Associate for GMI.

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.

[CLICK HERE TO SEE THE FULL 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 Hodgson, 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," he said.

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.

Copyright 2012 ABC News Radio







ABC News Radio