CEO's Don't Deserve Pensions

Franklin Raines leaves Fannie Mae after an accounting scandal which may force the company to restate as much as $9 billion in past earnings.

So he leaves in disgrace right? Surely he must figure out a way to live on the savings from his years of multi-million dollar compensation right? NOT!!

How does $1.3 million per year for life with health and life insurance sound? This figure does not include his deferred salary or stock.

I cannot figure out why someone who has been compensated north of $1 million in yearly compensation needs an annual pension at all.

I've thought about it from the perspective of shareholder value, organizational theory, motivation theory, human capital recruiting... I can't find a single justification.

Many CEOs of publicly traded companies have negotiated similar arrangements in the event that they are forced out or retire.

These arrangements are outlined in the proxy statements you receive before the annual meeting. The agreements are easy to find and a good way to get a sense of the thinking of the Board of Directors.

Monty's Bluff

No comments: