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Out Of a Job, But Still In the Money

Mary Thompson, CNBC Reporter
Monday, 31 Dec 2007 | 10:45 AM ET

It's been a tough year for CEOs.

The credit crunch and housing crisis led to some high-profile firings, most notably Merrill Lynch's Stan O'Neal and Citigroup's Chuck Prince. Still, while they lost their jobs, these executives didn't lose their shirts.

Bob Nardelli, president and CEO of Home Depot speaks at the National Retail Federation Convention, Tuesday, Jan. 17, 2006, in New York. Nardelli and John Chambers, president and CEO of Cisco Systems discussed the role that new technology is playing to enhance the customers experience and the profitability of retailers. ( AP Photo/ Louis Lanzano)
Louis Lanzano
Bob Nardelli, president and CEO of Home Depot speaks at the National Retail Federation Convention, Tuesday, Jan. 17, 2006, in New York. Nardelli and John Chambers, president and CEO of Cisco Systems discussed the role that new technology is playing to enhance the customers experience and the profitability of retailers. ( AP Photo/ Louis Lanzano)

A review of Securities and Exchange Commission filings of 14 companies where CEOs stepped down found only one — Starwood — sent its CEO packing without any kind of payout. Steven Heyer was dismissed with cause from the hotel operator, and left with only $13 million dollars in stock he already owned.

Other CEOs walked away much richer men (yes they were all men). Unofficially, they may have been fired, but the official word from many of their former employers was they "retired."

For these CEOs, "retirement" means they get a lot more than a gold watch, they get to keep the money they've socked away in retirement and executive savings plans, and in many cases, the stock options the boards gave them for performances in years past.

As a result, according to an analysis of SEC filings by the compensation consultant James F. Reda & Associates, the remaining 13 former CEOs received final payouts in salary, pension plans and other benefits (left with golden parachutes) ranging from the $858,000 given to Jet Blue's former CEO and co-founder David Neeleman, to the $165,000,000 Bob Nardelli walked away with when he left Home Depot . The numbers jump signficantly when you add in the stock these men already owned in the companies they used to run, with Neeleman leaving with $118,000,000, and Nardelli $209,000,000.

What many of them did not get, were severance payments — cash payouts that might be required by a contract, or given at a board's discretion. Sensitive to shareholder outrage over excessive CEO pay, boards appear to be more reluctant to give cash severance payouts to former CEOs.

When Stan O'Neal stepped down at Merrill Lynch, the company's board was quick to point out he didn't receive any severance, just $159,085,201 which included stock he already owned, over $39 million in stock options, $24 million in a pension plan and $4.8 million in a deferred compensation plan.

James Reda, president of the compensation firm that bears his name describes this year as an "extraordinary" one for CEO exit payouts, thanks in part to the appreciation of the very generous stock grants the executives were given in years past. He says you can expect to see other big payouts if other CEOs from the financial and housing industries lose their jobs in the new year.

Top Chief Executive Exit Payouts for 2007

Executive Company *Total Payout Stock Owned Total
Bob Nardelli Home Depot $165 million $44 million $209 million
Stanley O'Neal Merrill Lynch $68.9 million $90.1 million $159.1 million
Ezra Dabah Children's Place $7.5million $124.6 million $132.1 million
David Neeleman Jet Blue $858,000 $117.3 million $118.2 million
Charles Prince Citicorp $17.2 million $60.73 million $77.9 million
Gary Forsee Sprint $66.7 million $10 million $76.7 million
Ed Zander Motorola $29.4 million $37.1 million $66.6 million
Kevin Rollins Dell $53.4 million $1.2 million $54.7 million
Richard Lenny Hershey's $42.8 million $0 $42.8 million
Peter Boneparth Jones Apparel $19.3 million $11.2 million $30.5 million
Mitch Caplan ETrade $13.3 million $5.2 million $18.6 million
Paul Pressler The Gap $15.5 million $0 $15.5 million
Steven Heyer Starwood $0 $13.2 million $13.2 million
Mark Jackson Noble Corporation $3.9 million $0 $3.9 million
Krish Prabhu Tellabs $1.9 million $1.3 million $3.2 million
*Includes severance payouts, pensions, savings plans, options and other benefits.Source: James F. Reda & Associates
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