The golden parachute is much maligned by the masses, perhaps for good reason. When most people fail to properly lead their companies or they commit huge errors at work, they’re either chastised at best or fired in the worst case. The world’s top CEOs, however, often get something entirely different: the golden parachute.
Technically, golden parachutes are given to high profile executives after they’re let go from a company, whether it’s because the board wants them ousted or a major merger has happened. It allows them to depart from their positions with millions of dollars and perks, even if they caused harm to their former employers or the public.
Marissa Meyer, the latest executive asked to leave Yahoo, was expected to receive a compensation package that totaled $123 million. That figure dropped to $54.9 million after Yahoo’s stock dropped and she failed to turn things around for the company. Nearly $55 million sounds impressive, but it doesn’t come close to the biggest severance packages in history.
Here are 10 of the largest golden parachutes given to CEOs.
10. Tom Freston – $100,839,772
When Tom Freston couldn’t manage to acquire MySpace in 2006 for his company Sumner Redstone, they fired him in an embarrassingly public display. Still, Freston went laughing to the bank with his huge severance package of over $100 million. After leaving Sumner Redstone, he went on to head investment group and media consulting firm Firefly3 LLC.
9. Tom Ryan – $185,415,435
Tom Ryan was with CVS, the major pharmacy chain, for 13 years before overseeing the company’s merger with Caremark in 2006. All kinds of drama followed once the Federal Trade Commission got involved and started an investigation into whether CVS has employed anti-competitive business practices. CVS was found to have used deceptive pricing practices, and Tom Ryan stepped down with a lump sum pension of $58 million. The rest of his golden parachute is comprised of deferred compensation.
8. Hank McKinnel – $188,329,553
One of the more baffling golden parachutes given was to Hank McKinnell, who served as CEO of Pfizer for five years. While McKinnell was at the helm, the mega drug corporation lost $140 billion. The question after he finally left: why reward him with over $188 million in severance, including an $83 million pension? People inside and outside of the company were so outraged that at his final shareholder meeting, a plane was flown over the building with a trailing banner that read “Give It Back, Hank!”. Anger aside, McKinnell left the company with a lot more money in his pockets.
7. Lou Gerstner – $189,005,929
One of the largest golden parachutes given out in the tech industry was to IBM’s Lou Gerstner. He not only left the company after nine years with tons of money, his contract also stipulated that he be granted access to IBM’s company cars, home security aid, financial planning help, and company planes for 20 years after his departure.
6. John Kanas – $214.3 million
John Kanas was with New York’s North Fork Bank for 29 years, so it’s understandable that he’d be given a large sum after the bank was merged with Capital One in 2006. However, the interesting thing is that Kanas’ pension was worth just $1 million, and the rest of the more than $214 million that he received was comprised of prerequisites and equity profits.
5. Bob Nardelli – $223,290,123
In one of the more brutal oustings that resulted in a huge golden parachute, Home Depot’s Bob Nardelli was forced out of his executive position by shareholders after being with the company for just six years. The whole situation began when he disagreed with shareholders about his annual pay, so they showed him the door. Still, Nardelli took home a pretty penny after the ordeal.
4. Ed Whitacre – $230,048,463
Communications giant AT&T has given out some big golden parachutes in its day, but the largest went to Ed Whitacre. He had been with the company for 17 years when he walked away with a package totaling over $230 million, which included a $160 million pension. At the time that Whitacre left, the pension he received was the largest in history. Aside from the money, he left AT&T with $24,000 per year in auto benefits, use of the company jet, home security fees, and all fees for his country club usage taken care of.
3. Bill McGuire – $285,996,009
UnitedHealth as gone through a whirlwind of changes in the last decade, including the ousting of 15-year veteran executive Bill McGuire in 2006. Once the company found that he’d improperly handled UnitedHealth’s stock options, he was not only let go from the company but fined by the Securities Exchange Commission. Get this, though: even after relinquishing $620 million in pay and giving the SEC $7 million for the fine, McGuire still ended up with over $285 million. His pension alone was nearly $103 million.
2. Lee Raymond – $320,599,861
Exxon is well known around the world, for a slew of different reasons. One of the key people behind Exxon’s multi-billion dollar success and sprawl around the globe was Lee Raymond, who left the company after 12 years. With Raymond in charge, the company went from making $5 billion per year to well over $25 billion a year. To reward his efforts, the executive received a whopping severance package in excess of $320 million.
10. Jack Welch – $417,361,902
One of the most tremendous golden parachutes of all time was given to Jack Welch. He was with General Electric for two decades, and when he retired the scandal and drama surrounding him didn’t end. Before Welch stepped down, he’d spent years being dishonest about how much he’d used company perks, including a lavish New York City apartment, luxurious company jet, and Red Sox home game box seats.
Because of these revelations, General Electric was forced to start disclosing more details about executive perks in its public filings. After everything was said and done, Jack Welch made off with over $417 million, including a payment of $9 million per year for life.