Reply #33: Pay Packages Allow Executives to Jump Ship With Less Risk

[54anickel]

http://www.nytimes.com/2006/12/29/business/29whole.html?_r=1&ref=business&oref=slogin

It’s called the “golden hello.”

For a chief executive of a large corporation, it is the one thing — more than the corporate jet or any other perk — that must be guaranteed before the executive will move to run another company.

W. James McNerney Jr., a former superstar manager at General Electric, received not one, but two such deals in recent years, worth tens of millions of dollars. In each deal, he was given any bonuses, stock options, restricted stock and pension benefits that he would have abandoned by leaving his previous employer.

Such golden hello payments are intended to make the executive “whole” — in essence to treat the executive as if his career were one smooth ascent with no costly interruptions. And these multimillion-dollar payments and perks are used to draw in not only chief executives, but virtually every member of the executive suite. If “golden parachutes” — rich exit packages of extra cash, stock or retirement benefits — are needed at times to kick out chief executives, golden hellos are increasingly needed to get them in the door.

The career path of Mr. McNerney illustrates the phenomenon. In late 2000, after losing out in the race to become chief executive at G.E., Mr. McNerney jumped to 3M, where he received a pay package worth more than $34 million in guaranteed salary, bonus, option grants and restricted stock to make up for what he left behind at G.E., according to an analysis by Equilar, a compensation research company in San Mateo, Calif.

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Whatever happened to that "pull yourself up by the bootstraps" idea? Oh yeah, that only applies to the working folks that get laid off. :eyes: