According to Law Encyclopedia: A Golden Parachute is defined as: An agreement that provides key executives with generous severance pay and other benefits in the event that their employment is terminated as a result of a change of ownership at their employer corporation; known more formally as a change-of-control agreement.
Golden parachutes are provided by a firm's board of directors and, depending on the laws of the state in which the company is incorporated, may require shareholder approval. These agreements compensate executives in the event that they lose their job or quit because they have suffered a reduction in power or status following a change of ownership of their employer corporation. Some golden parachutes are triggered even if the control of the corporation does not change completely; such parachutes open after a certain percentage of the corporation's stock is acquired.
Golden parachutes have been justified on three grounds.
First, they may enable corporations that are prime takeover targets to hire and retain high-quality executives who would otherwise be reluctant to work for them.
Second, since the parachutes add to the cost of acquiring a corporation, they may discourage takeover bids.
Third, if a takeover bid does occur, executives with a golden parachute are more likely to respond in a manner that will benefit the shareholders. Without a golden parachute, executives might resist a takeover that would be in the interests of the shareholders, in order to save their own job.
I can't quite see how these 12 Credit Crunch guys were looking out for their shareholders . . . it appears they were looking out for themselves. If you are outraged at paying the price for these guys being rewarded for MASSIVE FAILURES, then why not send a loud signal to your State Representative to say that you want to see legal charges imposed against these guys?
Alan Fishman . . . left on Sept. 25, 2008
Golden Parachute Total: $19 million
Company: Washington Mutual
Fishman was paid $19 million for three weeks of work! He joined WaMu on Sept. 8 and left on Sept. 25, 2008. The bank was seized by the FDIC -- the largest bank failure in US history! Then WAMU was bought out for under $2/share by Chase.
Golden Parachute Total: $44 million
Company: Washington Mutual
Killinger was removed as CEO on Sept. 8, 2008. He was replaced by Alan Fisherman (above), who led the company for only three weeks until the bank was seized by the FDIC and sold to JPMorgan Chase.
That is $63 Million going to 2 men before WAMU was sold for under $2.00/share
Golden Parachute Total: $13 million
Company: Bear Stearns
Several months after two hedge funds collapsed, Cayne stepped down from the CEO position on Jan. 8. Bear Stearns was bought by JPMorgan Chase in a Fed-engineered deal in March for about $2.00/share.
Golden Parachute Total: $24 million
Company: Lehman Brothers
Fuld's four-decade career with Lehman took a hit on Sept. 15, 2008 when the investment bank filed for Chapter 11 bankruptcy protection, the largest such case in US history
Golden Parachute Total: $16 million
Company: Freddie Mac
Freddie Mac, led by Syron until Sept. 8, 2008, was taken over by the federal government along with Fannie Mae.
Golden Parachute Total: $8 million
Company: Fannie Mae
Fannie Mae, led by Mudd until Sept. 8, 2008, was taken over by the federal government along with Freddie Mac.
Golden Parachute Total: $22 million (his was declined)
Willumstad reportedly rejected a $22 million severance package from troubled insurance giant AIG. He was replaced as CEO on Sept. 17, 2008 after the company received an $85-billion loan from the federal government in exchange for a 79.9 percent stake in the company.
Golden Parachute Total: $161 million
Company: Merrill Lynch
Merrill Lynch ousted O'Neal from his position on Oct. 28, 2007 shortly after the company reported $8 billion in write-downs. What a great way for Stanley to collect $161 Million
John Thain replaced him as CEO. See him Next!
Golden Parachute Total: $9 million
Company: Merrill Lynch
Thain served as CEO of Merrill Lynch for less than a year, before Bank of America bought the investment bank for $50 billion on Sept. 14, 2008.
Golden Parachute Total: $56 million
Mozilo stepped down from the CEO spot on July 1, 2008 after leading Countrywide for 39 years. Bank of America bought the troubled mortgage lender in Jan. 2008
Golden Parachute Total: $105 million
Prince resigned from his position on Nov. 4, 2007 after the company announced $11 billion in write-downs. Remember they were in line to buy Wachovia this week, but Wells Fargo won the Bid.
Golden Parachute Total: $42 million
Thompson was removed from his position on June 1, 2008 (replaced by Bob Steel) following questions about a major acquisition as well as heavy losses. Once the fourth largest bank in the US. Read the latest on the battle to purchase Wachovia between Citibank (who seems to be having trouble keeping their word and Wells Fargo (the only AAA rated bank in the USA) (Royal Bank of Scotland is the only AAA rated bank in Europe) http://www.nytimes.com/2008/10/06/business/06bank.html?bl&ex=1223438400&en=f895f0fd514c47fb&ei=5087%0A
Be sure to see, be sure to read what CNBC Mad Money's Jim Cramer has to say on Wachovia and more importantly Bob Steel!
Hey don't you think this is worth a letter to your Senators or your Congressmen to consider this $500 Million a crime?? You do remember that Martha Stewart went to PRISON for 6 months and then another 6 months of house arrest for only saying to her stock broker: SELL @ $60 on her Imclone Stock. She was charged with Insider Information.
WHO had more insider information than these guys?
Why should they get to bail out when they are the ones who should be standing behind this mess and fixing things.
Don't you think doing nothing means you are sort of supporting their GREEDY actions!
Please feel free to forward this BlogPost onto your State Senators or Congressmen to let them know you would like to see legal action taken against those taking these big parachutes, against those who were party to the demise of your business model as you have always known it.
It can't HURT you to speak up to your State Representatives. It might even make you feel better!!