CUTTING TIES WITH THESE EIGHT CEOS COULD COST $1.5B
Most investors accept golden parachutes as just a part of business
Eight current CEOs in the Standard & Poor’s 500 stand to haul in a collective payout of more than $1.5 billion from golden parachutes if activated, according to a USA TODAY analysis of data from S&P Global Market Intelligence.
This tally includes estimated payments triggered either by CEOs losing their positions following a change in control such as mergers and also termination without cause.
Massive golden parachutes, or lucrative payments to executives after being removed from their jobs for various reasons, are regaining attention. Viacom’s ousted CEO Philippe Dauman stands to be paid $84 million after being relieved of his duties, executive pay tracking firm Equilar says. And Marissa Mayer of Yahoo could walk with roughly $50 million if she chooses to step away after the sale of the company’s core assets to Verizon.
“Yes, these are large figures and eye-popping,” says Dan Marcec, director of content at Equilar. “It has much to do with how the company was paying the CEO in the first place.”
The largest that has yet to deploy is a $358.1 million estimated payment to Steve Wynn, who founded his namesake casino empire in 2002. If he were to lose his job due to a change in control at the company, Wynn would be awarded an estimated $358.1 million. Wynn stands to be awarded $240.2 million if he is terminated without cause.
Typically, executives’ golden parachutes are much larger when triggered by changes in control, rather than termination without cause. For instance, David Simon, CEO of Simon Property group, would be awarded a golden parachute of $302 million after a change in control, 163% more than what he would receive if terminated without cause.
Termination without cause can be lucrative, too. CBS CEO Leslie Moonves would be awarded an estimated $225.3 million if terminated without cause, while his golden parachute in case of a change in control is $92.4 million.
Periodically, shareholders bristle. Last week, more than 60% of Johnson Controls’ shareholders voted against the company’s estimated payment to CEO Alex Molinaroli, triggered after the merger with Tyco. Molinaroli’s payment from termination after a change in control was estimated at $39 million as of the last proxy.
While these payments catch attention, most investors typically accept them, Marcec says. A vast majority of large firms have golden parachutes in place, and most win shareholder approval, he says. Equilar found 91% of golden parachute packages it studied in 2015 passed.
Most investors “understand (golden parachutes are) just a part of business,” Marcec says.
“If they (investors) are comfortable with how CEOs are being paid in the first place ... they are OK with golden parachutes as structured in their tenure.”