Tuesday, March 22, 2005

Executives cash in, regardless of performance

Hewlett-Packard Co.'s Carly Fiorina, recently muscled out of her job over lackluster performance, walked away with an exit package worth $42 million. Boeing Co.'s Harry C. Stonecipher, pushed out over an affair with a female employee, nonetheless is eligible for retirement benefits of about $600,000 per year. Franklin D. Raines bowed out under heavy pressure in December following accounting problems at Fannie Mae. But the firm says he is now owed $114,393 per month in pension benefits.

At many other corporations untouched by scandal, pay continues to climb whether performance is great, lousy or middling.

"Even though the escalation of pay has often been justified as necessary, when you look at the details, that is not the case, because much of the pay is not all that sensitive to performance," said Harvard Law School professor Lucian A. Bebchuk, author of the new book "Pay Without Performance."

"Our view is that pay is much less connected to performance than investors commonly recognize," he said. Read on".