Fat cat chief executives are almost always used as Exhibit A in the national debate about the rich getting richer.
Bolstering that case is a growing body of evidence showing that a burgeoning cohort of chief execs are getting lush compensation deals that last long after they've driven out of the corporate parking lot.
Take Edward Whitacre Jr., who retires this month as chairman and chief executive of AT&T. On his watch, the company grew from a regional telephone provider to the country's leading provider of wireless, broadband and regular phone service. AT&T now has more than 100 million customers and $63 billion in operating revenue.
Though its stock price rose 57% in the last year alone, "over the five fiscal years through 2005, Whitacre received $85.2 million in compensation, while total shareholder return was negative 40.3%," according to The Corporate Library, a corporate governance research firm. The Library, in turn, gave AT&T's board a "D" for overall effectiveness.
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But Whitacre's golden parachute has quite the platinum lining. His pension package includes $4.5 million in annual payments for life, plus an $18.8 million lump sum. He'll also get $25,000 in country club fees, $6,500 in annual home security costs and access to the corporate jet for 10 hours a month.
AT&T will also cover up to $19,000 in taxes for these benefits, except for use of the aircraft. Whitacre and his family will also receive free health insurance for life. Plus, he'll get just over $1 million a year for three years to work as a consultant to AT&T during his retirement.
Whitacre is not alone among chief execs who get very rich retirement deals that last for the rest of their lives. With the help of Paul Hodgson, a top analyst at the Corporate Library, we dug up more examples of fat cat lifetime excesses:
ExxonMobil: Former chief exec Lee Raymond got a $400 million payout, including pension, stock options and other perks, such as a $1 million consulting deal, two years of home security, personal security, a car and driver, and use of a corporate jet for professional purposes. He also gets office space and secretaries worth $200,000 for life.
IBM: Lou Gerstner got a 10-year consultancy contract worth up to $2 million annually, plus expenses and full use of IBM facilities and services, such as office, cars, aircraft and financial planning. He only has to work one month out of the year. His successor, Samuel J. Palmisano, stands to receive more than $3 million in pension annually for the rest of his life after he retires.
Pfizer: Henry A. McKinnell Jr., chairman and chief executive, who is to retire in 2008, will get $6.5 million a year for life. His total pension payout is pegged at more than $71 million. Contrast that with McKinnell's 2005 salary of $2.3 million. Also, Pfizer board member William Steere got a $50,000 annual consulting agreement where he only has to work one month out of the year.
That's on top of the $169,000 he gets annually as chairman emeritus. He also has lifetime access to Pfizer facilities, including use of an office, secretary, access to financial planning services, and the use of a car and driver and of company aircraft.
The company says Steere has chosen to personally pay for his financial planning services and voluntarily reimburses Pfizer for all personal use of company-provided transportation.
Walt Disney Co: Michael Eisner got a post-termination bonus of $7.5 million a year for two more years, or one year if he takes a role at another major entertainment company other than as an independent producer. In addition, Eisner got an annual annuity of $297,779 for life. Before he stepped down in October 2005, he got $9.1 million in 2005 salary and bonuses.
Citigroup: Former chairman and chief executive Sandy Weill got a supplemental pension benefit equal to a $350,000 annual lifetime annuity and access to Citigroup facilities and servicesfor the rest of his life, including the use of Citi's corporate aircraft, car and driver, office, secretary and security arrangements.
And,far from having to contribute to his medical benefits, as other employees now have to do, a filing states that "Citigroup will continue to pay, for Mr. Weill's lifetime and his spouse's lifetime should she survive him, the premiums and out-of-pocket expenses associated with receipt of health and dental care benefits by Mr. and Mrs. Weill, and life and accidental death and dismemberment as well as disability insurance for Mr. Weill. Mr. Weill will also continue to receive a tax gross-up with respect to the imputed income arising from these benefits."
Qwest Communications: Former chief executive Richard Notebaert gets, for life, financial planning, a private office, an executive assistant, telephone services and "appropriate office computer and other equipment (including tax gross-up)."
Gannett:Former chief exec Douglas McCorkindale got, for life, life insurance, travel accident insurance, executive health insurance, legal and financial counseling services, a home security system allowance, an automobile purchase or monthly allowance, and an allowance for club membership fees.
"Inaddition, the company will provide Mr. McCorkindale substantially similar post-retirement benefits for the remainder of his life as well as ownership of the computer and other home office equipment used at the time of retirement, use of company aircraft, and reasonable access to Gannett offices and facilities."
McKesson: Former chief executive John Hammergren got lifetime coverage under the company's executive medical plan and financial counseling program and office space and "secretarial support services as may be suitable and adequate for [the]executive's needs."
Tyco International:The contract of L. Dennis Kozlowski at Tyco called for an immediate payout of about $135 million if he was dismissed, and a retainer of $3.4 million annually for the rest of his life.
Hisvoluntary resignation released Tyco from the terms of the agreement, but directors clearly are cognizant of how expensive fulfilling the contract terms could have been. Tyco's new severance policy limits compensation to twice the executive's base salary and bonuses at the time of termination.
Honeywell:Former chief exec Lawrence A. Bossidy was slated to receive an annual retirement benefit of nearly $4 million and will have use of company aircraft, car and driver, security services, financial and tax-planning services, and office space, services and administrative support for the rest of his life.
H.J. Heinz:If William R. Johnson, its chairman and chief executive, stays at Heinz for nine more years and earns as much in any four of them as he did last year, the company will pay him up to $3.5 million a year for the rest of his life after he retires.
General Electric: Jack Welch got approximately $2.5 million in benefits, including access to GE aircraft for unlimited personal use and for business travel; exclusive use of a furnished New York City apartment that, according to GE, in 2003 had a rental value of approximately $50,000 a month and a resale value in excess of $11 million; unrestricted access to a chauffeured limousine driven by professionals trained in security measures; a leased Mercedes Benz; office space in New York City and Connecticut; the services of professional estate and tax advisers; the services of a personal assistant; communications systems and networks at Welch's homes, including television, fax, phone and computer systems, with technical support; bodyguard security for various speaking engagements, including a book tour to promote his autobiography Jack: Straight from the Gut;and installation of a security system in one of Welch's homes and continued maintenance of security systems GE previously installed in three of Welch's other homes.
Emerson Electric: Charles Knight got a 15-yearconsultancy deal where he has to work just one month out of the year. It's worth $900,000 a year. He also gets retirement benefits and health benefits, access to Emerson facilities and services, including company aircraft, car, driver, financial planning and club memberships.
RadioShack: Leonard Roberts, retired chief executive, gets annual salary worth $492,000 for life and an annual bonus for life of $500,000, plus $750,000 in restricted stock, deferred compensation and benefits such as medical, disability, life insurance coverage, the use of RadioShack's aircraft (to be used only for RadioShack business purposes), $100,000worth of office space, a secretary, computer and a wireless handheld communications device. RadioShack also covers his monthly fees at the City Club and the Fort Worth Club.