Another way rich people are different

So yesterday I was looking through Honeywell’s 2007 proxy statement — these things are always an interesting read in a twisted sort of way — and I came up the section about severance pay for executives.

Damn but these people get some sweet deals.

Anywhere between $5 and $7 million for leaving. Free and clear if the company changes hands, under a few negligible conditions if it doesn’t. For example, if they’re fired for anything other than committing a crime or intentional misconduct that damages the company, they get the money. (Wouldn’t you like that: “I’m sorry, we’ve discovered that you’re just not competent to do your job, here’s $5 million to go away.”)

Better yet, they get the same severance pay if they just up and quit, just as long as it’s for a “good reason”. What’s a good reason for walking away with $5-7 million?

  • A “material change” in their duties or responsibilities. Well, OK, maybe.
  • A pay cut of more than 10%. Because, y’know, that kind of insult is worth 5 mil easy, even if the company could really use the money to pay the rest of its workers or its suppliers.
  • A “significant” reduction in company-paid insurance benefits or increase in premiums. Hands up, everybody whose employer hasn’t cut insurance coverage or increased the price you pay anytime recently. If you were an executive at Honeywell, you could walk away with $5 mil for your trouble.
  • An office relocation of more than 50 miles. Because having to move to a different exclusive estate to keep your morning commute down just isn’t worth it. Better take the millions and split.

And the footnotes. The footnotes are the best part. After giving all these numbers, lots of them nicely rounded to the nearest hundred thousand, the text continues, to explain just how the megabucks are allocated. In footnote 4, for example, we learn that executive officers fired for mere incompetence are entitled to receive their bonuses for the next three years, even though they might not have earned them had they remained employed. In footnote 9 we see that two executives even get to accrue vacation pay for the three years after they leave (details like this are important, I guess, because handing them a duffel full of Jacksons and saying “Dig in!” doesn’t pass SEC muster). Oh, and should any of these sweet perks result in extra tax liability, Honeywell has promised to reimburse its executives for the full amount of tax paid, including the tax on the money Honeywell gives them to reimburse the taxes on the base-level payout.

I don’t even think Honeywell is being significantly more disgusting than other big stupid companies its size. Their executives just have access to a huge pot of other people’s money and are doing what anyone who’s been trained to maximize personal utility would do. If I could get someone to pay me salary, bonuses and vacation pay for not wanting to do my job any more, I’d probably do it too.


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