As crazy as it sounds, severance packages worth more than $100 million — like the one Yahoo gave fired COO Henrique De Castro this week — occur with some regularity in corporate America, and have since the 1980s.
It’s unusual enough that GMI, the ratings and research firm whose data I cited in declaring De Castro’s golden parachute among the biggest ever, doesn’t even track them. In fact, GMI’s head of research, Gary Hewitt, tells me that packages of this size for non-CEOs are “as scarce as golden hen’s teeth.”
Yet Yahoo CEO Marissa Mayer and her board evidently felt they had to offer De Castro one to poach him from Google. And this even though, according to the New York Times, he was seen as “particularly ill suited for the job,” both by the advertising executives he dealt with and by his colleagues at Yahoo and Google.
Here’s the email Hewitt sent in response to my query.
$100-million plus packages for non-CEOs are as scarce as golden hen’s teeth – there may be more out there (especially on Wall Street, where not every well-paid executive is subject to disclosure), but getting to $100 million is difficult outside of the CEO’s office.
Boards almost never issue a $100 million golden parachute directly – they just happen. These sums are the combination of multiple, overlapping programs that, even following the SEC’s improved disclosure requirements, are difficult to add up. Many boards likely have a “holy cow” moment still, when the value of cash severance, acceleration of equity vesting, pension, and deferred compensation is all totaled up. So it can be even more difficult for investors to track these down – the mandatory disclosure is helpful, but in many cases investors have to piece together the evidence from multiple sources that are sometimes not consistent, or make estimates.
We have not done an exhaustive search for these in the last two years – but two big recent golden parachutes that stand out are William Johnson at Heinz, who earned about $46 million in direct payments upon the take-private last year, plus well over $100 million in pension and equity benefits, and Sanjay Jha at Motorola, with about $67 million when Google acquired Motorola Mobility. There are a lot of $100M plus golden parachutes out there waiting to happen, however – just a couple off the top of my head are Hammergren at McKesson, and Coury at Mylan Pharmaceuticals.