|  | | 2007 News and Press Releases | | |
HEADLINE NEWS:
Soft Landings for CEOs, Some shareholders may object, but heads of most major financial services firms will have very secure futures even if they're forced out
Lauren Young
BusinessWeek. November 15, 2007
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EXCERPT: It's anybody's guess which chief executive of a major financial services firm will be the next to fall victim to the subprime mortgage mess—or when. But should the fallout spread, one thing is certain: Many of the executives currently running financial services companies will leave with significantly less compensation than they thought. Most, that is, but not Richard Fuld Jr. The CEO of Lehman Brothers has nothing to worry about—his exit package is valued at $299 million, putting him close to the record for any such package. By parsing proxy statements and crunching numbers, analysts can figure out roughly how much the CEOs of major financial services firms might take on their way out. Paul Hodgson, a senior research associate at The Corporate Library, did just that for the heads of 10 financial services firms, at BusinessWeek.com's request. Some of the numbers uncovered by The Corporate Library are staggering, but a scratch below the surface shows that what drives severance packages can vary widely from company to company. At companies like Bank of America (BAC) or Countrywide Financial (CFC), the bulk of a CEO's exit package is tied up in retirement benefits. … Most executives at companies ensnared in the subprime mess have seen the value of their packages tank. A plummeting stock price has sliced about a third off the potential exit package of Bear Stearns CEO James E. Cayne, now valued at roughly $31.2 million. At Wachovia (WB), G. Kenneth Thompson has seen more than $17 million, or 38%, of his estimated payout disappear. Some Shareholders Are Fuming Not so if you're Angelo R. Mozilo, chairman of Countrywide Financial (CFC). Although Countrywide is at the epicenter of the subprime meltdown, Mozila has seen just minimal damage to his estimated payout. Should Mozilo be forced out, his benefits are worth more than $73.5 million, including a cash severance payment of $29 million and pension benefits of almost $23.8 million, down from $81 million last year. With Countrywide's stock down more than 68% this year, shareholders are fuming. |
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