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Political Cartoons
Measly Corporate Severance Packages
By Cartoon: Pat Bagley, Salt Lake Tribune
Project: Cynthia Kirkeby, ClassBrain
Nov 4, 2007, 22:25 PST

© Pat Bagley, Salt Lake Tribune 2007


Measly CEO Severance Packages

Merrill Lynch was almost destroyed by its latest CEO. The company was forced to take an $8 Billion (yes Billion with a capital B) write-down after its CEO Stan O'Neal lead the company down a disastrous path in the mortgage markets. But does the CEO pay a price for his horrific business decisions and the damage done to the company? No, he's rewarded for them.

Stan O'Neal is being fired but his severance package remains entact. He leaves the company with a windfall of $160 million in stock and retirement benefits! In the past few decades there has been a move towards the pre-negotiation of huge contractual windfalls for CEOs of large public companies. Regardless of their performance on the job, they reap bizarre benefits to the detriment of the companies they work for and the stockholders who have relied on them. Stockholders have had enough and are now asking tough questions, which are being dodged at every turn.


Questions to Ponder

  • Why aren't the Board of Directors negotiating a performance requirement into the severance packages of the incoming CEOs?

  • Should the SEC step in and create new rules on what can be reasonably contracted for in a severance package?

  • Is the severance package justifiable?

  • Should a CEO get a windfall when they have performed horrifically and put their company in jeopardy?

  • "During the past two years, the average severance package at an S&P 500 company amounted to $16.5 million." (CNN Money.com) What is wrong with this picture?


Learning Links

Merrill CEO out as loss crushes veteran
A Special Report
Source: MarketWatch

Want a big payday? Get fired
"During the past two years, the average severance package at an S&P 500 company amounted to $16.5 million." Take a look at some current and former heavyweights.
Source: CNN Money.com

Seeing Red Over a Golden Parachute
Home Depot's CEO Resigns, And His Hefty Payout Raises Ire
Source: Washington Post.com

Is Merrill Lynch’s CEO Exit Package Too Rich?
StateSafe: Preventing Crime & Violence in California
Source: Harvard Business Online

How to Fight CEO Severance Battles
A step by step outline of how to deal with this sort of corporate lunacy.
Source: eHow



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