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If you were suddenly laid off, how much should you get to help you survive until you could find your next job? If you are a CEO of a major corporation, then you would be expecting something in the tens (if not hundreds) of millions of dollars.

The rich (CEOs) are different from you and me. They don’t have to depend on UI to help them out in a “downturn”. Instead, they negotiate a golden parachute up front; so that regardless of their performance they will never have to worry about a foreclosure should they suffer “job loss”. And, unlike you and me, they don’t have to be idle due to “lack of work” to collect. In fact, gross malfeasance usually doesn’t prevent the parachute from deploying. Nor do they have to “create jobs”.

Last month, for example, former CEO Anne Mulcahy formally left Xerox with a severance package worth an estimated $31.4 million. But wait! She earned it. She was there over eight years, a great deal longer than many other CEOs getting the gilded handshake. Long enough to lay off about 20,000 Xerox workers.

Times are tougher for CEOs with the recession, of course, and not everyone gets to keep their salaries while going on an extended vacation. When Robert Nardelli left Chrysler in April 2009, he got nothing. Still, the circumstances were special. Chrysler went bust. So, how could they pay him severance?

But, don’t feel too sorry for Mr. Nardelli. When he left The Home Depot in January 2007, the New York Times estimated his “exit package” at $210 million. Very likely he was still flush in 2009.

(And, his performance at Home Depot wasn’t rated especially high. During his six-year reign, Home Depot shares “languished” while competitor Lowe’s stock about tripled in value.)

A select few also choose not to pull the rip cord. Angelo Mozilo, who left Countrywide Financial Corporation in January 2008, “announced that he [would] forfeit about $37.5 million in severance pay and perks that were to accompany his retirement.”

However, according to a contemporary report, “despite his decision to forgo the severance money Mozilo will still leave with full pockets. He [is] entitled to a pension plan and an executive retirement plan that was estimated to total $23.8 million in December 2006, the latest information available. He also has over $20 million in deferred compensation and an estimated $5.8 million in company stock”, according to Mortgage News Daily.

This isn’t unusual. When Nolan Archibald left Black & Decker in November 2009, he doffed his parachute in favor of staying with Stanley Works, which purchased B&D.

As head of Black & Decker for 24 years, Nolan D. Archibald was due a little golden parachute in case of severance. When the Towson, Md., power-tool maker decided to merge with Stanley Works of New Britain this week, Archibald was entitled to float away with $20.5 million. Instead, he turned it down.”

Of course, he still stands to make a bundle. I presume he’s still with Stanley, where his new base salary was reported to be $1.5 million, along with bonuses up to $1.9 million per year. And, a special bonus, if the company meets cost-cutting measures, which could pay him as much as $45 million. And, a pension, valued at $35.5 million. And, another $15.7 million in supplemental retirement savings. Plus stock holdings. “Bottom line: Archibald will be well compensated.”

“The average severance package for the chief executive of a major U.S. corporation is three times annual salary, plus bonus and stock awards, according to [Paul] Hodgson.” Hodgson is a senior researcher at The Corporate Library, a governance group.

This is in contrast to a maximum of about $90K that a laid off worker could potentially collect in the best (let’s call it that) circumstances if they collected for the full 99 weeks currently allowed by law—with payments stretching over almost 2 years.

And they lived in Massachusetts.

According to figures from Blogging 4 Jobs, Massachusetts has the highest compensation rate, $900 per week, of any state. So, 99 weeks of unemployment there could entitle you to $89,100. But, pity the poor person in Mississippi, where benefits are reportedly $210 a week.  In two years, you could eke out a little over $20K.

The average state pays about $400 per week. Go figure.

It’s not much to keep up your houses, put your kids through Harvard, and pay for a long vacation in Cabo San Lucas.

So, when your member of Congress comes home empty handed with some kind of sob story about the deficit, tell him/her you know where there’s a big stash of cash he could tap. Hey, shouldn’t you be getting in on the fun? Recessions might be a lot shorter if executives had to go on state unemployment compensation like everyone else when their job took a hike.

Perhaps we could all take a lesson from the tech sector, where you might have to live and die with your company. Out on the tech edge you can find companies without termination agreements: Cisco, Google, Intel, and Microsoft (for example). But note that even CEOs with no severance package can still walk away with millions. “Yahoo's Terry Semel actually resigned with no severance package, but he made over $400 million during the prior three years with the company.”

At least Semel (apparently) worked for his $400 million. In contrast, perhaps the biggest funster of all time is Lee Raymond, ex of ExxonMobil as of January 2006.

“On April 14, 2006, it was reported that Raymond's retirement package was worth about $400 million, the largest in history for a U.S. public company.”

Like Mulcahy, he worked for his money. Raymond was with Exxon for 43 years, and about $11 million of his retirement package was apparently “covered compensation” from his accumulated pension. But, it also included about $32 million in stock granted in the year prior to his departure, according to an ExxonMobile proxy statement, which also reports his actual lump sum pension benefit on his retirement date as over $98 million. This for the guy that presided over the Exxon Valdez debacle.

$400 million to retire on? I bet he’s still having fun.

Update (4:00 am 2 July 2010): As Tardis10 points out, the figure from Blogging 4 Jobs is likely old or inaccurate, and the current number is $629 per week according to I'm leaving the previous numbers up, since they are from the same year and source, and they will be easier to compare with each other.

Originally posted to Liberal Thinking on Fri Jul 02, 2010 at 03:41 AM PDT.


Do corporate executives have more fun between jobs than their workers?

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