The former chairman of TWA is frequently credited as the first golden parachute recipient. When he took the job in 1961, the airline's creditors were trying to wrest control away from eccentric Howard Hughes. TWA's legal status was precarious, so Tillinghast's contract included a clause that would pay him money in the event that he lost his job. The parachute never opened: Tillinghast left TWA in 1976 to become vice chairman of the investment bank White, Weld & Company (later acquired by Merrill Lynch). But not before he took the ailing airline from from a $38.7 million loss in 1961 to a $50 million profit in 1965.
Trans World Airlines
The former CEO of Countrywide Financial Corp. turned an obscure little company into one of the country's biggest mortgage providers. Unfortunately, that put him at the top of the subprime-mortgage bubble that began to burst in 2007. Mozilo testified about the subprime ordeal before the Congressional Committee on Oversight and Government Reform in March 2008, and voluntarily forwent $37.5 million in severance pay, as well as an annual $400,000 "consulting fee." But when Bank of America Corp. bought the struggling Countrywide, Mozilo still took home about $44 million — on top of the $140 million in Countrywide stock he sold off during 2006-7.
Bank of America Home Loans
When Michael Ovitz was hired as Disney's president in 1995, his contract included a $130 million severance package should he be fired without cause after a year. Well, he was — and the $130 million went with him. Seventeen shareholders filed suit, claiming Disney directors had been reckless in agreeing to hire Ovitz and then fire him so soon after, and demanded the money back. In 2006, Delaware Supreme Court found in favor of Disney, and Ovitz got to keep the money.
The Walt Disney Company
With Fiorina as chairman and CEO, Hewlett-Packard's value declined significantly and the technology giant endured massive layoffs. Fiorina led a largely unsuccessful merger with Compaq in 2002, going against the wishes of company founder Walter Hewlett. Asked by the board of directors to step down in 2005, Fiorina left with $21 million in cash, plus stock and pension benefits worth another $19 million. According to HP executive compensation rules, departing executives are entitled to no more than 2.99 times their base salary; anything more requires stockholder approval. Fiorina's parachute was more than that, so the stockholders filed a class action suit (a federal judge dismissed it in April 2008). Fiorina is now a Fox Business Network contributor and a top economic advisor to Republican presidential candidate John McCain.
James Kilts wasn't fired from The Gillette Co., he just lost his job. When Procter & Gamble absorbed Gillette in 2005, the CEO position was made redundant. So Kilts took a $165 million payout, plus another $13 million to cover the transaction's resulting taxes. Suddenly, unemployment didn't seem so bad
A word of advice for future CEOs: don't give yourself an enormous pay raise when your publicly-traded company's share price is falling. That's what Henry McKinnell did as CEO of pharmaceutical giant Pfizer, taking a 72% pay increase in 2005 as its company struggled to reduce costs in light of projected earnings losses. When McKinnell left Pfizer in 2006, the stock's price had declined by 46%; he still managed to take home an $83 million pension anyway. An airplane flew over the company after his departure trailing a banner that read "Give It Back, Hank!"
During his 15-year tenure as CEO and chairman of UnitedHealth Group Inc., McGuire turned the regional health insurer into the second largest managed care company in the U.S. He received his thank yous in the form of stock options—$1.6 billion of them, to be exact—but he took some of them on the days the company's stock price hit yearly lows, profiting when the stocks went up again. McGuire was asked to leave in October 2006 after federal prosecutors and the IRS requested documents concerning his stock options and executive compensation. He later agreed to return $600 million in various payback agreements, including one with the SEC. But McGuire retained about $800 million in options.
In a 2007 emergency board meeting, Citigroup Inc.'s Charles Prince announced his resignation by saying, "Given the size and nature of the recent losses in our mortgage-backed securities business, the only honorable course for me to take as chief executive officer is to step down." He walked away with $99 million in vested stock holdings and a pension, on top of the $53.1 million salary and bonuses he racked up during his four year tenure.
The former CEO and Chairman of the Board of Merrill Lynch & Co. Inc. left the company in 2007 with a whopping $161.5 million. Unfortunately, his departure cooncided with a quarterly loss of $2.3 billion (the largest in the company's 93-year history) and an $8.4 million fine from the government related to the subprime mortgage crisis.
Under Michael Eisner's guidance, Disney added 7 theme parks, a cruise ship line, a successful stage play division and 10 domestic cable channels, and increased its revenue from $1.5 billion (1984) to $30.75 billion (2004). The company's stock price increased 1,646 percent. But a shareholder revolt and a bitter rivalry between Eisner and Roy E. Disney, the nephew of Walt, led to his quasi-voluntary resignation — taking home some $1 billion in bonuses, salary and stock options acquired over his 21 years at the company.
The Walt Disney Company
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