US heirs get millions in exec death benefits
Corporate death benefits are under scrutiny in the US with the Wall Street Journal reporting that heirs of some company chiefs are set to get hundreds of millions of dollars in so-called golden coffin benefits.
For instance, Nabors Industries would owe the estate of CEO Eugene Isenberg a “severance” payment of at least $263.6 million, which is more than the first-quarter earnings at the Houston oil-service company, the Journal said.
According to the paper, many companies accelerate unvested stock awards after a death and some promise severance payouts, supercharged pensions or a continuation of executives' salaries or bonuses for years after they are dead.
Compensation critics call the practice the ultimate in pay that is not based on performance.
Death benefits are not a new feature of executive contracts, but a federal rule change 18 months ago that forced companies to provide more detail on severance arrangements has exposed just how lavish some of these arrangements are, the Journal said.
It said the CEO of Shaw Group Inc is in line to be paid $17 million for not competing with the engineering and construction company after he dies.
Companies contend they are taking care of an executive's family after an unexpected death, and they note that the benefits often are negotiated as part of a pay package that has many components, the report says.
In many cases, compensation attorneys tell the Journal, death benefits are really a form of deferred compensation, structured partly for estate-planning or tax reasons, and that the packages help to keep executives from leaving.
But “if the executive is dead, you're certainly not retaining them,” Steven Hall, an executive-pay consultant in New York, tells the Journal. (Reuters)
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