CEOs Make Money After They Die With Golden Coffin Benefits

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The WSJ this morning put up an article about corporate death benefits. It turns out that the grossly overcompensated American CEO still lingers in our midst, despite the challenges that have destroyed quite a few of his kin.

The article reports that some executives, when they sign their hiring contracts, acquire fat severance packages, vested shares, a continuation of salaries, bonuses, and even “supercharged pensions”–after they die.

According to Reuters, “Compensation critics call the practice the ultimate in pay that is not based on performance.” No kidding.

Here are a couple of postmortem benefits signed on by C-level executives:

  • Eugene Isenberg, CEO of Nabors Industries, gets a post-croak severance payment of more than $260 million.
  • The CEO of Shaw Group, whom the article didn’t mention by name, will rake in more than $17 million with his cold, dead hands in exchange for not competing with the company after he dies.

But–how can he compete after he’s dead?

Companies defend themselves by saying the pay will be going to the executives’ (very wealthy) families in case of an unexpected death. These additional benefits are just part of a sophisticated pay package intended to cover all possibilities.

In many cases, compensation attorneys tell the Journal, death benefits are really a form of deferred compensation, structured partly for estate-planning or tax reasons, and that the packages help to keep executives from leaving.

Sounds like companies are stuffing money into every imaginable crevasse in order to retain talent. It just so happens that one of those money stashes is located in the afterlife.

“If the executive is dead, you’re certainly not retaining them,” Steven Hall, an executive-pay consultant in New York, tells the Journal.

Nope, but you are buying off their families.

The next time I write a business contract, I’d like to include a pre-mortem clause of $17 million. And a lavish burial in case I do die, with Prada funeral favors for my friends and family.

On the serious side–does anyone know if this is actually ethical?

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Comments

  1. Uncle B's Gravatar Comment by Uncle B on June 10th, 2008 at 11:26 am

    The shareholders hired them to leave us hungry and broke. We are hungry and broke, they get the gold, where’s the mystery, this is predatory Capitalism’s finest, and last hour. Oil is their grim reaper!

  2. Chaos Motor's Gravatar Comment by Chaos Motor on June 10th, 2008 at 1:33 pm

    Here’s what boggles my mind – these geniuses on the Boards of Directors set up these golden parachute & coffin bonuses for CEOS who fucking SUCK. Almost 100% of gains in business revenues in the prior decade were created by

    1) cannabilizing long-term business potential for short-term gains
    2) exploiting consumers & customers
    3) exploiting employees and reducing employee benefits & compensation to increase executive pay

    None of those are intelligent or sustainable business practices, and all of them will eventually lead to the collapse of the core business – kind of like what we’ve seen in the credit and mortgage industries, which relied heavily on point 1, cannabilizing their long-term potential for short term gains.

    How are these supposedly educated and capable Boards so deeply misled and foolish about their executives? They could get Joe Schmoe off the street and get better long-term performance, though perhaps their individual quarterlies wouldn’t look as nice as the quarterlies produced by these short-term greed magnets.

  3. website design's Gravatar Comment by website design on June 10th, 2008 at 2:53 pm

    Why is this absurd? Elvis still makes around $37 million a year. Dr. Seuss makes around $19 million. Tupac makes around $7 million.

  4. Shane Russell's Gravatar Comment by Shane Russell on August 3rd, 2009 at 8:05 pm

    I don’t have a problem with it, it’s the cheapest way to reward someone for managing a company that a majority of consumers depend on, no matter what the outcome is

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