by Leslie Tebbe
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Today’s employment marketplace offers tremendous opportunity for star executives, even when they change jobs – even when they are fired. Regardless of whether they retire, depart for personal reasons, step down after a merger, or get fired, CEO’s are being handsomely compensated for leaving their corporate positions.
How much they get
For example, in anticipation of the merger between USWest and Qwest Communications,
Solomon Trujillo, chief executive of telecom concern US West, is leaving his
job, and receiving $230 million to do so, according to CNBC. Retiring co-chairman
of Citigroup John Reed expects a severance package of approximately $30
million, added to an already established $5 million per year for the rest
of his life and a stock options package worth $250 million. When Michael
Ovitz came to Disney as president in 1995, he had already succeeded as founder
of the Creative Artists Agency in 1975, and as chairman of the talent agency until
1995. Only 14 months later, he left Disney with a $130 million severance
package.
Some compensation consultants aid companies in developing these packages. The standard severance compensation is three times annual base compensation, including salary and incentive pay. And companies often decrease the waiting time before departing executives can cash in on their stock options and restricted shares.
Even when executives are let go, they do not leave empty-handed. When Eckard Pfeiffer was fired from Compaq, he received at least $390 million in severance pay and stock options. Deutsche Bank let Frank Newman walk away from their merger with Bankers Trust with $74 million. David Coulter received $29 million from Bank of America.
These figures are only expected to rise, says CNBC, if the strength of the market holds and today’s M&A activity continues.
They’re going, and they’re taking everybody with them
As is the case for everyone, networking skills are a key to an executive’s
success, including job hunting. According to the Wall Street Journal
an executive at ABC left for an executive position at Healtheon/WebMD as a result
of her relationship with a business affiliate at ABC.
An Atlanta executive who cofounded Pensoft, which was later sold to AT&T, then moved to his executive position at MediaOne Group, Inc (a cable communications giant). A pending merger at MediaOne, says the Wall Street Journal, eventually threw him into more active planning. A new Internet venture came his way, demanding funding and people. Tom Buttermore provided both, contacting people from throughout his extensive contact network. His partner in the current venture, a former BellSouth executive, recruited 12 people from his old company, making a new working team of 36.
Michale Reene, a past leader at Andersen Consulting and International Business Machines Corp. (IBM), is another example cited in the Wall Street Journal. His recent career change to a chief executive at Third Millennium yielded his new company a vice president (a friend of his), as well as other previous associates from both Andersen Consulting and IBM.
Sometimes the mass departure that follows an executive departure is simply independent attraction to the same market opportunities that beckoned to the executives. But more frequently these days the departing executive is bringing his or her people along.
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