I HATE THESE PEOPLE
Merrill Lynch, after an $8.4 billion writedown on subprime mortgages, let CEO Stanley O'Neal retire rather than resign, so he could walk away from the job with $161.5 million. And that left Merrill flat broke when it came to paying a new CEO, right? Er, no:
It is too soon to know whether John A. Thain, who now has the top spot, can restore Merrill's former glory. But thanks in large part to a hefty sign-on bonus, he was the highest-paid executive in [a recent executive compensation] survey, with a compensation package that totaled almost $83.8 million.
Whew! For a minute there I thought Merrill might respond to a multi-billion-dollar loss by forcing its new CEO to settle for a measly $20 or $30 million. But I guess that would be un-American! So, not to worry.
Oh, but I'm being too negative, as usual. This comes from an article in today's New York Times that says CEO pay packages are actually becoming more realistic, with real penalties if goals aren't met. Here's an example, at a formerly high-flying home-building company:
Robert Toll, the chief at Toll Brothers, received no bonus in 2007
Good for Toll Brothers! A round of applause!
-- but the company has rewritten the compensation plan so that he will probably get one this year even if home building does not recover.
OK, let's try another example -- David Steiner of Waste Management, Inc.:
... Last year, 75 percent of Mr. Steiner's long-term incentive plan was tied to specific targets for earnings growth and return on invested capital....
Mr. Steiner's pay is now linked entirely to achieving those targets. And some perks he used to get -- about $35,000 worth of items like car allowances and country club dues — are gone...
...though their value will be added to his base salary or bonus.
Read the article. There actually do seem to be a few signs of hope. (For instance, last year, "only 73 percent of the chiefs got performance bonuses, down from 78.6 percent in 2006." Feel better now? I know I do!)