Comments on: I Don’t Understand Severance Pay

By: Sean Z

Sean Z — Sat, 16 Feb 2008 20:06:09 +0000

Maggie Raye, I don’t think you could be further from the truth. SOX is a terrible piece of legislation that is the poster child for why private enterprise needs to self-regulate, if they don’t the government will step in and make up the most asinine rules that add costs to the consumer and make domestic companies less competitive with foreign competitors.

Indeed, CEO severance packages are extreme in some cases but the solution is up to the shareholders. The packages have their place as shown by the deal given to Aloha Airlines CEO Dave Banmiller (http://starbulletin.com/2005/07/27/business/story2.html) but should be examined closely by the Board before approval and made sure to be tied to company performance versus peers.

By: Maggie Raye

Maggie Raye — Mon, 28 Jan 2008 18:28:45 +0000

I believe this foolishness has become a horrific business practice which has lead to the undermining of American business. The footings of businesses are being pulled out from beneath them. It is also happening at univesities across the country. These are sad times indeed when blackmail and greed of such magnitude is acceptable.

I believe a review and validation on salary and severances – is needed just as Sarbanes-Oxley was so sorely needed.

By: lorax

lorax — Wed, 07 Nov 2007 02:29:51 +0000

Some are clearly worth a lot: Steve Jobs comes to mind. Most are mediocre and deserve pay tied to performance. They don’t deserve overcompensation because they are members of the country club network. And they certainly don’t deserve excessive compensation when they are fired!

By: Jordan

Jordan — Tue, 06 Nov 2007 18:52:37 +0000

Oh one company that I wanted to mention as being top notch when it comes to CEO’s pay is Ben and Jerry’s. They have a policy in place that the highest salary in the company cannot be more than 8 time the lowest. So if a CEO wanted a Million a year, the lowest employee has to make at least 125k this excludes stocks and stuff i believe, but it is a nice way to keep everyone in a good place.

By: JACK

JACK — Tue, 06 Nov 2007 18:43:58 +0000

Of course they are. Anyone who has ever had to write one of these contracts or deals with c-level types all the time knows the answer can only be yes.

This all comes down to one thing: bargaining power. Very few of us have employment contracts. Most of us are at-will employees. These execs have guaranteed contracts that define very narrowly what termination “for cause” means. It’s the same thing in sports. Do you think athletes would make anywhere near the money they do if they didn’t have guaranteed contracts?

The ability to get a guaranteed contract comes down to bargaining power. Pure and simple.

By: Ed

Ed — Tue, 06 Nov 2007 16:45:38 +0000

I seem to recall that Jim Sinegal, CEO of Costco “only” receives $350k in salary yearly. Less than some of his fellow board members. True he gets a bonus and already owns millions in stock due to his co-founding status, but his yearly salary and bonus is less than $1m.
A recent interview on 20/20 ish type show quoted him as saying why should he get 15x more than the average hourly employee?
As a shareholder, I would vote for him to get a raise.

By: Foobarista

Foobarista — Tue, 06 Nov 2007 07:15:34 +0000

The problem is that if you don’t give these sorts of things, you can’t hire another CEO. Would an A-list manager want to be Citibank’s CEO if he knew that he’d get zilch when things go south, as they inevitably will?

Very few modern CEOs actually retire or step down voluntarily.

By: muddlehead

muddlehead — Tue, 06 Nov 2007 05:13:59 +0000

surprised by some of the answers. of course, ceo $$ packages are obscene. no other way to put it.

By: Day 555: Looking Forward to a Protracted Writer’s Strike

Day 555: Looking Forward to a Protracted Writer’s Strike — Tue, 06 Nov 2007 03:26:38 +0000

[...] What do we get? Nothing. JLP takes a look at some recent CEO severance packages. {via: All Financial Matters} [...]

By: PRGal

PRGal — Tue, 06 Nov 2007 01:05:54 +0000

I got laid off in May from an advertising agency. I made 50K as a PR Account Executive, and I left with my stuff in a bag. After I mailed the company my ID badge and parking pass, I got a wopping one week of pay along with another week’s worth of vacation I hadn’t taken. That’s it. Oh, and the best part, they laid me off AFTER they found out I DIDN’T have breast cancer.

Know what I asked them as they shoved the “separation agreement” in my face?

“Tell me … would we be sitting here if my results had been different?”

Note to readers: I had traveled to Johns Hopkins for a second opinion and surgery – that’s how they knew.

Note to self: NEVER, EVER share your business NO MATTER THE SUBJECT with employer EVEN IF THEY SEEM SYMPATHETIC AND HUMAN. They’re not.