freckles make me strong.

dihard:

A golden parachute is a clause in an executive’s employment contract that specifies he will receive benefits in the event the company is taken over and the executive is let go. A golden parachute can come in the form of severance pay in cash, stock options, bonuses, etc. The term more loosely refers to an executive’s  severance package - regardless of takeover. Golden parachutes are designed to protect the executive from job loss and to hinder unwanted takeovers.

The origin of the “golden parachute” comes from TWA and Howard Hughes. Shareholders wanted to decrease Hughes’ control of TWA and so appointed Charles Tillinghurst as chariman of TWA. They guaranteed Tillinghurst financial protection (a severance package) if Hughes were to retain control and fire him.

Below is a list of various egregious compensation packages and golden parachutes awarded to Wall Street’s best. They’re listed in chronological order of bank failure. (Numbers may be disputed based upon which CEO pay calculator you use. Some include cash, pension, benefits, accelerated stock and options and other compensation, while some do not. Either way - you get the point.)

Countrywide - Angelo Mozilo was supposed to receive a $37.5 million severance package when Countrywide was acquired by BofA in January, though he declined it. He did, however, cash in on his stock options to make about $122 million.

Bear Stearns - James Cayne sold his stake of Bear shares for $61 million just before the company completely collapsed and was sold off to JPMorgan.

Indymac – Michael Perry, Indy’s CEO & Chairman, was dealt something more like a golden anvil. He’s under investigation for misleading the investing public about IndyMac Bank’s risk profile and financial condition from April 26, 07 until May 12, 2008.

Fannie Mae - Daniel Mudd earned $11.6 million last year and was expected to receive $8 million in a severance package after Fannie was rescued. The Federal Housing Finance Agency (FHFA) denied him that golden parachute.

Freddie Mac - Richard Syron earned $18.3 million last year and was expected to receive $16 million when Freddie went down. Again, the FHFA, which Congress gave the power to limit severance packages of departing executives, said no.

Merrill Lynch - Stanley O’Neal received a $161 million retirement package when we was let go last year after the bank saw huge losses. When Thain came on board, he said he wouldn’t accept any cash severance.  Instead, he took restricted stock, giving him a nice $9 million parachute to fly away from the sale of Merrill to BofA.

Lehman Brothers - Richard Fuld, Lehman’s CEO, received about $22 million in exit packages and earned $354 million in his last 4 years as CEO. He also sold about $490 million worth of LEH stock before it collapsed. Not a bad retirement plan.

AIG - Robert Willumstad was supposed to receive a $22 million exit package when AIG was rescued by the Treasury, but he voluntarily declined. His predecessor, however, was not as humble. Martin Sullivan, who was forced out of AIG in June 2008 received $15 million in severance package.

Washington Mutual - Kerry Killinger, WaMu’s former CEO received $44 million upon his departure on September 8.  He was succeeded by Alan Fishman, who was on the job for 17 days before WaMu went down, but received $20 million.

Goldman Sachs - Lloyd Blankfein, Goldman’s CEO, made $70 million last year.

Morgan Stanley – Mack the Knife received over $1.6 million in stock last year.

Wachovia - Ken Thompson received package worth $5 million when he was ousted in June (after making a nice salary of $20 million in 2007). Bob Steel, his predecessor brought on in July, was set to receive $1 million salary plus a $12 million bonus, but we’ll see what he really gets after the dust settles in Wachovia’s sale to Citigroup.

Citigroup - Chuck Prince left Citi last year with a $22 million severance package. Mind you that was after Citi announced far greater than expected losses.

JP Morgan Chase – CEO James Dimon earned about $28 million in 2007.

Other Refs and Reading

 It seems to me we have a solid start on a bail out plan right here.  CEO’s, please empty your pockets before leaving the building.