Mar. 13, 2003 - 19:09 MST

THE WONDERING JEW

Set Up

An article in the Business Section of today's Rocky Mountain News by Rachel Beck of New York. Headlined, "CEO severance pay is bad for business."

In a box in that article are some interesting figures.

Titled 'Heads I win, tails I win'

$16.5 million dollars: Average golden parachute -- in cash only -- for chief executive officers who left their companies in 2001 and 2002.

55% of 367 exit deals --examined by The Corporate Library -- in which companies agreed to pay thier CEO's salary, bonus and benefits for three years or more following termination "without cause." Only 2 per cent of companies will pay for less than one.

$3,850 to $7,700 Estimate of severance paid to a $50,000-a-year employee -- based on one week of pay for every year of service, capped at four to eight weeks." Source: The Corporate Library

She got some interesting information from Mr. Bill Coleman, senior vice president for compensation at Salary.com. of Wellesly, Massachusetts He says in part, "It is like saying heads I win and tails I win, you can perform or not perform, but it doesn't really matter because you are still going to get the money any way." In reference to, "Generally CEO's work out the terms of their departure before they are hired. They know going in what they'll get if they are forced out." That can provide little incentive to work hard and build strong businesses, since they know they will be rewarded regardless of how the company fares."

"Severance for the average worker is something like a week's pay for every year of service. In this troubled economy that is often capped at four to eight weeks' pay.

But in the world of the CEO's, "Some benefits are lost if the firing is with cause --but what constitutes "cause" is often loosely defined. Just doing a bad job isn't cause, nor is a misdemeanor criminal conviction."Paul Hodgson, author of the study who specializes in CEO compensation a The Corporate Library said, "I can't remember the last time an executive was terminated for cause. CEO's often claim that they have been pushed out and threaten lawsuits, which may eventually cost the company more money to settle than paying severance."

The article says further, "The $82 million severance package that Home Depot CEO Robert Nardelli would get if he is fired includes $20 million in cash and the forgiveness of a $10 million loan. He also would continue to receive stock option awards through 2005 the study said.

The article also cites the loot that some of the other CEO's could get, right now if terminated.

Let me see, the average Joe works under the eagle eye of a boss, is usually tied to an output quota (one way or another), his attendance strictly surveyed with dismissal after three "attendance" "writeups." His lunchbox or attache case has to be opened to show the gate guards that nothing of the company's is being taken. Often his dress is of a mandatory nature. And on his termination his severance is often based on one weeks pay for every year of service which can be capped at four to eight weeks.

So, one of they many guys who do the actual work of production for the company gets the very short end of the stick when severance pay is calcuated. All this time he has worked under the threat of dismissal for most any whimsical reason. He has to do a good job or be let go.

The top dogs, similar in one way to the ball players, the cream of the crap make their deals prior to coming to work. Difference between ball players and CEO's is that the ball player has to play damn good ball to keep from going to the minor leagues. But the holy CEO can do nothing at all, let the company go to rack and ruin and still get his millions, plus perks when he leaves.

Just like the days of the Kings, barons and other lords, they can do no wrong and still the shekels roll in. Seems a bit lopsided it does.

It seems to me that by the CEO's, as a nation we have been Set Up . . . . . . .

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