Executives dying to collect
by Miki SaxonImage credit: Sameen
A post on Yielding Wealth asking readers how they defined ‘wealthy’ reminded me of a post I wrote year ago about executive pay, which included having your taxes paid on various perks, and even on compensation.
But the “golden coffins” being made public due to a rule change 18 months ago really blow me away.
This isn’t about life insurance; it’s about really big bucks if they happen to die while still in office. How big?
“Eugene Isenberg, the 78-year-old chief executive of Nabors Industries Ltd… If Mr. Isenberg died tomorrow, Nabors would owe his estate a “severance” payment of at least $263.6 million, company filings show. That’s more than the first-quarter earnings at the Houston oil-service company.”
At 78 there’s a good chance he’ll collect, too.
And then there’s the death-related non-compete clause.
“The CEO of Shaw Group Inc. is in line to be paid $17 million for not competing with the engineering and construction company after he dies.”
We all know that the pay-for-performance principle often doesn’t hold true, but death benefits have to be the ultimate nose-thumbing on that subject.
Shareholders are in revolt and have forced Comcast to scrap its plan to pay the 88-year-old chairman of its executive committee his $2 million annual salary for five years after his death.
In addition to hard cash, stock options are subject to accelerated (read: immediate) vesting resulting in yet more money upon death.
Certainly sounds like a good motive for a murder mystery—unless you’re a shareholder.
Read the article and you tell me, are death benefits fair?
Your comments-priceless
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June 16th, 2008 at 4:57 am
Wow. This. Is. Insane. These guys make enough alive. Do they really need to make this when they are dead? There are people who can barely scrape by a living, working 60 or 70 hours a week at multiple minimum wage jobs, and these guys severance pay when they DIE?
June 16th, 2008 at 11:00 am
Hi Miranda, Yup, along with accelerated stock vesting and company-paid life insurance. Definitely insane.
Thanks for stopping by and adding your thoughts!
June 16th, 2008 at 11:36 am
Why would anyone agree to a contract where they had to pay you huge sums of money after you were dead? There’s no possible return on investment and it just doesn’t make sense (not counting life-insurance…I pay now for money later – that I understand).
June 16th, 2008 at 5:59 pm
Hi Luke, supposedly that’s what the company must do to compete/retain their talent—whether the talent is performing or not. That’s why they call it ‘golden coffins’, like golden parachutes.