Golden Parachute Essay Example

of some of these “golden parachutes” was enough to make the average person gasp in surprise, and that saying a lot being that most things no longer shock the America public.

Some of these parachutes can be worth more that half a billion dollars after stock options. Most of the American public has found this to be a slap in the face. These large sum parachutes were given out to CEO’s of companies that had just received federal bailout money. However there is still a deep divide. Even in a topic as controversial as this, there is still a majority/ minority issue. Of the top 10 “golden parachute” payouts, only 2 have been given “minorities”. One was paid to Carly Sneed Fiorina, CEO of Hewlett- Packard, in 2005, the other to Angelo Mozilo, CEO of Countrywide Financial in 2007.

While others have been paid to minorities, it is apparent that there is still a deep divide. As of 2007 there were only 26 Fortune 500 Companies with a minority or woman CEO. And of those 26, half are run by women. And if those minorities who run those companies have golden parachutes, the details have not been revealed. While there are some minorities that have had a significant income boost from a parachute. Most are still lacking compared to their white counter parts. In 2002, Stan O’Neal became the first black CEO of Merrill Lynch. His 5 year tenure as CEO netted him a severance package valued at $161. million dollars.

Mr. O’Neal was then replaced with John Thain in December of 2007. O’Neal was forced to resign in 2009 with a severance package valued at $160 million

dollars. This is over $320 million dollars paid out by a company who was bought out. These packages were paid in part by bailout funds received by Bank of America. Bank of America bought out Merrill Lynch in 2009. Bank of America then received $20 billion dollars in taxpayer bailout funds in the same year. While Bank of American claims that these packages and any additional bonuses were not paid out using these funds, it seems quite hard to believe.

Scenarios like this are extremely common place and often happen with little or no fanfare. If not for the economic downturn, this practice would have continued unnoticed. In shedding light on the often misplaced earnings involved in America’s corporate world, Golden Parachutes, inadvertently shed light on the uneven amount of minorities in power positions of Americas corporations. These problems are still continuing. While both areas have shown improvement, the situation is still very skewed and without some form of intervention, the problems will just grow worse. Golden Parachutes do not only apply to corporations.

For example, in 2007, a school district in Wayne Township, Indiana, paid its former superintendent, a 1 million dollar “retirement package. The superintendent received a lump settlement of $817,000, and a $200,000 fee for performing as a superintendent emeritus for 150 days. A superintendent is an honorary title. This superintendent was paid this fee for advising the incoming superintendent on the position. He was also given a $15,000 for retirement planning. The people fitting the bill for this golden parachute are the 43,742 people in this township.

That is an average of an additional 24. 0 for every person in the township, child and

adult, on top of having to pay his normal salary. Most superintendents have some sort of golden parachute written into their contract. This is just another hidden expense that tax payers fit the bill for that they are totally unaware of. Between golden parachutes and bailouts, taxpayers are fitting the bill for others to live richly while they go broke. Government answer to the problem was in enacting a 20% excise tax to the claiming of golden parachutes. However people just increased the amount that was written into the parachutes.

This increase was enough to cover the taxes that would come out of the amount. These parachutes are becoming an increasing burden on the American populace. Whether it be in increased taxes, increased prices, or lower salaries, Americans are truly paying for every one of these golden parachutes. Golden Parachutes are one of the most irresponsible wastes of both corporate and tax- payer funds. This level of irresponsible behavior is a slap in the face at a time where most Americans are struggling to eat their next meal. While corporate America may not flaunt these billion dollar “dirty little secrets”, Americas know they exist.

It is time that the government put a stop to this level of greed and consumerism. These parachutes are often undeserved and are negotiated long before an employee’s work can be evaluated. Corporate executives should be evaluated and held to the same standards as the lowest employee in the company. This would ensure that everyone is treated fairly. A mid- level manager who is laid off after 50 years of service should receive more compensation that a CEO who has held that position

for 6 months. These golden parachutes do nothing to convey a message of loyalty to company employees.

Federal Regulations is needed to stop this level of greed. They need to be enforced to return the jumper to realm of the American people who are carrying them on their backs. There is also the issue of diversity in the workplace. Tolerance is taught from the earliest age in school, however America’s corporate environment, does little to celebrate diversity at its top levels. Even the United States Government is doing to best to show the world that it celebrates diversity at its top levels. We, as Americans, should expect the same from our business counterparts.

References

www.fundmymutualfund.com/2009/01/merrill-lynchs-thain-can-only-work-on.html