Timely Retirements, Outrageous Bonuses, and Other Epic Executive Handouts

Posted by: Dan Beucke on December 21, 2011 at 8:10 AM

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Experienced financial reporters know that the best dirt on executive excess isn’t found in a press release or annual report, but gets buried deep in routine reports corporations file with the U.S. Securities and Exchange Commission. The folks over at the footnoted website make it their business to sift through that corporate fine print so you don’t have to. They are very good at finding the hidden gems and — just as difficult — explaining what it all means in an entertaining manner. Recent postings chide Yahoo for the absurd lengths it’s taken to obscure even mundane details of a deal with Microsoft; McGraw-Hill executives for almost tripling their own layoff benefits as they cut workers; and Disney directors for juicing up their pay package.

Now it’s time for footnoted’s yearly contest to name the worst footnote of the year. Together the 2011 candidates make a strong case for why pay equity has emerged as a powerful issue. (Executive pay and perks have been off the charts for years, of course; the mild surprise is how well they have survived the slowdown.) The list also gives more ammunition to those who contend that the outsized gains of top earners in recent years have more to do with executives’ ability to strike favorable deals with compensation committees than with any gains in corner-office productivity.

Without further ado, here are the candidates, in footnoted’s words:

  • MF Global agreeing to pay then-CEO Jon Corzine a $1.5 million retention bonus months before the company imploded.
  • Clear Channel Media Holdings paying $3 million a year to a company controlled by Bob Pittman so that Pittman can fly in a Mystere Falcon 900 that Pittman owns for both business and personal use.
  • Leo Apotheker collecting around $25 million in severance and other benefits from Hewlett-Packard, including relocation back to France or Belgium after less than a year on the job.
  • IBM’s outgoing CEO Samuel Palmisano becoming eligible for as much as $170 million in retirement benefits, just by waiting until he was past 60 to announce his retirement.
  • Nabors Industries agreeing to pay outgoing CEO Eugene Isenberg $100 million in severance on his way out the door.

Vote here. A winner will be announced on Dec. 30. My vote goes to Pittman (that’s him in the photo, above). His isn’t the largest payout by any means, but in some ways it’s the most artful. He convinced Clear Channel to pay his leasing company $3 million upfront so he could fly his own jet — and it will cover taxes, insurance, and operating costs, too. And just look at some of the places Pittman’s jet has been over the past three years: two dozen trips to Telluride, Paris seven times, Montego Bay, and Las Vegas.

Well played, sir!

Update: Wendy Goldberg, executive vice president for marketing and communications at Clear Channel, sent the following on Tuesday evening:

I did want to respond to your article quoting footnoted as it relates to Bob Pittman and the plane he owns and flies. His compensation agreement and aircraft lease arrangement with Clear Channel represent a significant value for the company’s stakeholders, especially when compared to the typical level of compensation for the CEOs of major media companies. The aircraft lease arrangement was negotiated because Mr. Pittman is an accomplished pilot and, where possible, prefers to fly himself to business meetings.

Update (Jan. 1, 2012): The votes are in, and footnoted’s readers have handed the crown to Leo Apotheker, the ex-HP CEO. They were swayed by his epic pay for negative performance — an estimated $36 million of total compensation for 11 months of work, during which HP’s stock price fell 40 percent. Outrage over Apotheker’s payout has had one benefit, forcing the company to amend its severance plan so that executives who are fired “without cause” now have to return unvested restricted shares and stock options. But as one pay expert points out,, HP will still let those execs exercise vested options for up to a year after they’re fired.

(Photographer: Emile Wamsteker/Bloomberg)

 

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