Severance pay comprises the pay and benefit’s awarded to an employee on his/her exit from an employer. The exits may be some untimely exit brought around by a firing or because of some M&A, or it could be retirement. We have listed some interesting stories related to severance pay-out’s.
Severance Packages:
- Microsoft CEO Steve Ballmer won’t be heading out with a fancy retirement package or any such consideration. He does not need to. He is already worth $ 12 billion plus in Microsoft stocks.
- Nokia CEO Stephen Elop would get $25M for Microsoft buyout and it seems he will still retain a job at Microsoft. Some say that he is in line for the Microsoft top job considering Steve Balmer’s exit.
- Andrew Mason the former Groupon Inc. CEO walked away with $378.36 retirement package during his recent exit, note that there are no millions attached. Any way – he holds about $ 200 million worth of Groupon’s stocks.
- Scott Thompson’s , the former Yahoo CEO was not considered for any severance post his four-month stint as the company’s CEO. In fact he was required to surrender unvested stock awards valued at $16 million. He could however retain his joining bonus and restricted stocks valued at about $ 5.5 million at the time of his joining.
- The ex-CEO of Duke Energy Corp., Bill Johnson, got $44.4 million for his one day as the CEO. He had previously been heading another energy company that merged with Duke. As a part of the contract he was to be Duke’s chief officer post the merger took effect. That was July 2 – and he took charge. Subsequently on on July 3, he resigned with $7.4 million in severance, and a $1.4 million bonus and some hefty stock awards.
- Viacom gave about $100 million to departing CEO Tom Freston in 2006 after nine months on the job
Top 10 Severance Pay’s :
- Jack Welch the Ex General Electric chief received a severance pay of $417 Million on his retirement in 2001.
- Lee Raymond , ex CEO for Exxon Mobil had a severance pay of $ 321 on his exit from the company in 2005
- William McGuire of UnitedHealth got $286 Million on his retirement in 2006.
- Edward Whitacre, AT&T’s former CEO, collected $230 Million when he stepped down in 2007.
- Bob Nardelli from Home Depot stepped down as CEO in 2007, after facing a shareholder and subsequently board backlash on his pay. On his exit he got a severance of $223 Million.
- John Kanas at North Fork Bank stepped down as CEO in 2006. His severance and retirement package totalled $214 Million.
- Fred Hassan left Merck, with $189 million and a pension package worth $98 million.
- Louis Gerstner the ex chief at IBM exited in 2002 with $189 Million as severance.
- Hank McKinnell the ex Chief from Pfizer received $188 Million on his exit in 2006.
- Thomas Ryan stepped down as CVS’s CEO in 2011 to collect $185 million in severance pay.
While these sums are HUGE, a good percentage of these pay-outs does not comprise cash. A good chunk of severance comes from accelerated payment of unvested stock options. The total amount is built of severance, retirements, bonuses, accelerates vesting of stocks etc.
