Controversies surrounding CEO riches can be traced to mind blowing payments they receive from their companies even long after they have left them. The staggering amounts range from $4.7 million for severance pays, $2 million in part-time consulting after retirement, up to as high as $1.1 billion in retirement packages.
CEO Riches
Jack Welch, the legendary CEO of General Electric, was strongly questioned a while back why he still enjoyed privileges of using the company helicopter, staying in an $80k monthly suite in Manhattan and loads of other benefits even though he has already retired from the company and doesn’t have any work obligations to GE whatsoever? I am biased as I side with GE for giving Jack Welch all these privileges considering what he has done for them. Leading and helping GE maintain the highest spot as the most valuable company in the world is a feat no Manhattan suite can repay.
Mailmen Suffers
Jack Welch is one of a kind; but how about all the other CEOs who doesn’t deserve what they receive and are shouldered by the lowest ranks people in the company including the poor mailmen working their hearts out?
Why all the money for CEOs?
As pointed out by Michael Brush it is because of two reasons:
Reward former executives for their work
Keep them from working for the competition
They don’t deserve the special treatment
Rewarding CEOs for what they have done is right; but doing so even after they have rendered their service is unacceptable. CEOs are already rewarded right after the good things they have done and extending it far after their resignation without rendering any form of consulting service or type of work is unfair to lower ranks of the company. Buying them out to prevent them from working for a competitor extends their greed especially when loyalty and trust should be in their core values given they are role models.
Below is a list of a few out of the multitude of CEOs receiving insane salaries as posted by Money Central:
Dane Miller, Biomet – is about to get a raise of nearly 350%, or nearly $2 million a year. His pay in the first year of the deal will be a tidy $5 million. Miller is stepping down as chief executive and cutting back to a 10-hour-a-week consulting role. To help with that work, he’ll receive $100,000 a year for expenses, including an office and a secretary. Biomet will also provide Miller — who with his wife owns about $230 million worth of Biomet stock — with a cell phone, laptop computer, PDA and company car.
Lee Raymond, ex-CEO ExxonMobil – walked away with a $400 million retirement package.
William McGuire, UnitedHealth Group – will get an estimated $1.1 billion retirement package when he steps down.
Richard Grasso, NYSE – was slated to receive a $180 million retirement package when he stepped down in 2003.
S. Leslie Flegel, Source Interlink Cos. – he’ll get $1 million a year in the three-year consulting gig, which could also reward him with up to $4 million in bonus pay. That’s a nice increase over his 2005 salary and bonus of $710,683.
Conclusion
The compensation of the CEO might look insane but they are the single most important person in the company that could bring the business to the level of greatness or disaster. They are trusted and given lucrative packages to carry them as far as he could. While some of them would fail despite everything given to them, businesses could not compromise having the best leader they possibly can to serve as their CEO, even if it means a sacrifice for the mailman.
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