Samuel Palmisano retired in December as the chairman of IBM, but that's not stopping the company from paying more than $1 million to set him up with a new office and company cars.
In an IBM proxy statement dated March 11, the company said it spent $1,033,138 for "personal use of Company autos, retirement items, office payments and administrative support, including space renovation" for the former CEO.
Office space renovation? Yep.
Turns out, IBM treats former executives extremely well. Company spokesman Edward Barbini said the funds were spent to "establish an office for a former CEO off of the IBM campus." He would not say where the office is located or why it cost about a million dollars to staff and renovate. "I have nothing further to say on it," Barbini said.
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Critics of lavish executive compensation say that's money wasted—even on a widely-praised former CEO who drove earnings growth and stock market value.
"Does it make any sense at all? Are you kidding me? It's an outrage. Its horrifying," said Nell Minow, a long time CEO compensation expert and board member at the analysis firm GMI Ratings. "If anybody can pay for his own office space, it's the former CEO of IBM." Minow pointed out that shareholders will see very little result from that expenditure. "What is the return on investment for that? It's nothing."
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An IBM spokesman also confirmed another perk for Palmisano: A $20,000 per day consulting gig with the company. Here's how the deal is described in the company's proxy statement:
"After Mr. Palmisano's retirement, he may be asked, from time to time, to provide services to the Company as an independent contractor. The fee for such services would be $20,000 per day for each day he provides four or more hours of services and $10,000 per day for each day that he provides less than four hours. As of December 31, 2012, no consulting fees have been paid to Mr. Palmisano."
The office and consulting perks were disclosed in a March 15 item on the website Footnoted.com.
How long will Palmisano, who began work for the company in the early 1970s, continue to have an IBM-financed office? Apparently, as long as he wants it. The proxy statement said, "IBM has agreed to provide furnished office space with administrative support for Mr. Palmisano's use after retirement, until such time that he notifies the Company that he no longer wishes to maintain the office."
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During his tenure at the top of Big Blue, Palmisano transformed the company, increased profitability and saw the stock price grow. Palmisano ran IBM from 2002 until 2012. The stock doubled in that time period and the market cap jumped some 30 percent. He reoriented IBM toward a focus on profitable services and software and away from traditional business lines like personal computers and technology hardware.
All told, the website Footnoted.com has estimated that the value of the former executive's total retirement package could be nearly $271 million.
An IBM spokesman said that figure will not necessarily prove correct over time.
"It appears that the calculation (in this blog) is based in substantial part on a number of assumptions and speculations on IBM 's stock value and performance well into the future," Barbini said. "The IBM proxy statement contains a full explanation as to how our executive compensation programs are linked to the company's performance over time."
—By CNBC's Eamon Javers; Follow him on Twitter: @eamonjavers