Paying chief executives
Fortune favours the boss
Big, controversial golden goodbyes to bosses are probably here to stay
IS THE new boss of Time Warner Cable about to become one of the luckiest-ever winners of the great chief-executive pay lottery?
Robert Marcus is set to take over as boss on January 1st.
If rumours are to be believed, that will be just in time for the cable firm to be bought by one of a host of rivals that are now circling it.
A change-of-control clause in his contract means he could go straight back out of the door with a golden goodbye of over $56m.
The biggest loser, in contrast, may be Philippe Varin, who will step down as boss of PSA Peugeot Citron, a struggling French carmaker.
On November 27th, he issued a statement saying he would give up a pension provision valued at 21m.
The board will decide his future pension arrangements before he retires, probably with an eye on public opinion.
He follows in the footsteps of Fred Goodwin, who presided over the collapse of Royal Bank of Scotland.
In 2009, again after a public outcry, the man known as Fred the Shred, because of his fondness for firing people, agreed to reduce his pension by 212,500 a year to a paltry 342,500.
It is rare for public disapproval of generous golden goodbyes to have so much impact.
Even the introduction of say on pay votes in countries such as America and Britain seems only to have curbed the most egregious excesses.
Ira Kay of Pay Governance, a consultant, says that in America, most company boards facing such votes have managed to win them by dropping overgenerous perks like the automatic vesting of the boss's share options even when he has kept his job following a takeover.
The once-widespread practice of paying a boss's taxes on his post-takeover payout, a nice little earner known as the excise tax gross-up, has also ended, costing some chief executives millions of dollars, says Mr Kay.
Bosses can no longer trigger big severance payouts by self-termination—quitting or retiring—adds Doug Friske of Towers Watson, another pay consultant.
Topping up the pension fund for a boss who leaves earlier than expected is now frowned on too.
Say on pay has also forced boards to get better at costing perks that once were wrongly regarded as practically free.
Yet the golden parachute is a chronic problem that I don't see changing anytime soon, says Donald Hambrick, a management professor at Pennsylvania State University.
The procession of bosses exiting with fabulous pay-offs continues.
Pay consultants brought in by firms seeking a new boss often get blamed for regarding the most generous existing package in the market as the baseline for negotiations.
But there is also a small cottage industry of elite lawyers who are used by any candidate to be boss, and who have mastered every trick in the book, Mr Hambrick says.
By the time the public is frothing at the mouth about some fired corporate failure walking off with a fortune, it is usually too late to do anything about it.
Everything is negotiated up front; that is the time to be outraged, he advises.
Once a boss has failed and pulled the cord on his golden parachute, boards typically conclude that it is best just to pay up quietly.
Even though recent legal changes have made it easier, even in America, to claw back some of the money paid to failed bosses, in practice firms will only try to do that if there is cast-iron evidence of fault, such as a financial misstatement.
None of this should come as a surprise to anyone familiar with the myopic ways boards tend to work in practice.
The moment when a company is paying off a failure is also the moment it is trying to attract the best possible candidate to sort out the mess.
Contesting the last boss's deal could easily scare off the ideal new one.
The CEO wheel of fortune keeps on turning.
1.take over 接管
The Belgians took over Rwanda under a League of Nations mandate.
The parliament in Madrid was taken over by civil guards.
2.step down 下台
The governor has rejected all calls to step down.
The constitution says she must step down next year.
3.give up 放弃；投降
But some mountaineers do not give up.
It seemed that there was a message for him not to give up.
4.agree to 同意， 赞成
He could agree to cut nuclear arms with russia.
She convinced a reluctant union to agree to a pay-for-performance system.