Many investors believe we've experienced a lost decade for stocks, and for some, financial returns reflect the reality of a turbulent and often difficult to navigate 10-year stretch. Regardless of whether the last 10 years require a Lost and Found sign, though, there's one group of folks that definitely did not experience a financial lost decade: chief executive officers of major public companies.
Unlike most of us, this "special" group benefits from a peculiar twist that sounds like it was exported straight from Bizarro World while so many regular Americans struggled. They make big-time bank when they hit the exits, and sometimes even rake in millions for failure. For them, the so-called lost decade was a lucrative and decadent blast.
A millennium of madness
GMI, the leading independent provider of global corporate governance ratings, recently released its report on the largest severance packages of the millennium. The report outlined 21 chief executive officers who received golden parachutes that totaled more than $100 million.
The report is full of controversial moments that should catalyze shareholders everywhere to rail against poor compensation policies where CEOs always make out like bandits, regardless of performance.
Some of the examples could be called "double dipping." For example, when Lee Raymond left the helm of ExxonMobil
In a stunning example of pay for failure, former Pfizer
GMI also covered a collection of well-compensated outgoing CEOs who were "paid and stayed." This year, Nabors Industries' $100 million parting payout to retiring CEO Eugene Isenberg became even more mind-blowing upon realization that he isn't even leaving the company; he's staying on as chairman.
The report also highlighted Simon Property Group's
Stop the decay
Dictionary.com defines the word "decadence" as follows:
1) the act or process of falling into an inferior condition or state; deterioration; decay; 2) moral degeneration or decay; turpitude; 3) unrestrained or excessive self-indulgence.
Somehow our culture has glorified unrestrained, excessive self-indulgence while forgetting that decay (and an inferior state) is at the root of the word decadence. Talk about missing the point.
When chief executive officers are insanely overpaid or paid handsomely for failure, it deteriorates shareholder value. Such states can also be viewed as solid examples of moral and ethical failings by those who give the green light to such plundering. Financially and ethically, there's really no rational justification for many companies' truly decadent compensation policies.
For those who are invested in less upstanding companies, if you're not prepared to sell, then make a lot of noise about compensation problems. Managements and boards must be forced to understand that there's a huge difference between a financially successful company and a financially successful CEO.
Let's avoid another "lost decade" and find solid, well-run companies that pay their executives for performance, not for failure. Haven't shareholders lost enough in CEOs' decade of decadence?
Exemplary leadership is one of the sure signs of a winning stock. A recent special report from The Motley Fool reveals how truly good leaders have their pay linked to performance. Learn more about the companies that have these strong leaders at the helm; click here and read this report for free today.
Check back at Fool.com every Wednesday and Friday for Alyce Lomax's columns on environmental, social, and governance issues.