When it comes to executive pay, there is a loud and growing chorus of people who maintain that all CEOs make too much. You don't have to go any further than a local Occupy Wall Street protest to hear those complaints. I believe that any executive who boosts a company's bottom line - share price or sales - should be rewarded. I say more power to him or her. In this country, the reward is financial. As a shareholder, I'm happy to pay for success.
What I don't like is paying for is failure. And, we are seeing too much of that right now.
Take Eugene Isenberg - he's the outgoing 81-year-old CEO of Nabors Industries - an oil drilling company. He's been asked to step down from his post - though he'll remain Chairman.
Because of this "shift in responsibility", Isenberg will be paid a $100 million severance package - all despite the fact he's not even leaving the company.
How does he get so lucky?
It all comes down to the language in his contract - language which triggers automatic payment when he shifts jobs. By the way, he may end up getting another $30 million from that contract when all is said and done.
Now, I might be just jealous and not angry if it weren't for the following facts: Nabors stock is down 19 percent this year. It has underperformed the S&P 500 in one year, five-year and 10-year periods. The "hello, I must be going" bonus of $100 million is more than the company's entire profit for the third quarter.
But this is pretty much the way things have worked for Isenberg for years now. According to the group Corporate Library, Isenberg was the 5th highest-paid worst-performing CEO in the country in 2009!
- Others on the list include Abercrombie & Fitch's Michael Jeffries - who took home more than $72 million in 2009 - after his company's stock sank!
- James Stewart of BJ Services saw his company's stock halved in 2009 - but he took home nearly $35 million.
- Brian Roberts of Comcast - a company lagging behind its competitors - took home almost $41 million in 2009.
- The CEO of International Paper? As the stock fell 63% his company handed him more than $38 million.
Isenberg is not alone with his Golden Parachute either - former CEOs of Disney and Home Depot took home around $200 million each after their tenure was over.
But here's the thing - those guys actually left the companies!
Isenberg is just switching positions.
He's still going to be making millions in salary on top of his severance package.
We mention all the time how things would be better if government was run like a business. I still stand by that statement - as long as they don't use Nabor Industries as their model.