Severance when CEO gets the boot.
Editor's Note: In an Online Conversation with the Editor, "It Worked for Spitzer," CE asked what should be done--apart from having ambitious attorneys general demogoging business leaders--about generous severance and bonus payments when a CEO gets the boot for poor performance.
When I rejoined MBIA as chairman and CEO in February of this year, the issue of CEO compensation was already well on its way to being the topic of the day. As such, the MBIA board approached the structuring of my compensation reflecting what we believe will be best practices going forward. You can see the details of how I am being paid in our proxy, but a couple of key provisions demonstrate that the only way we can avoid having the government tell us what to do is to lead by example. In my case, there is no contract, there is no severance and there are no golden parachute provisions. In the case of my restricted stock award, it vests on a pro-rata basis depending on stock price and would only go into effect if the shareholders approved it at the next annual meeting. I was obviously pleased that over 90 percent did so last May, which confirmed my belief that owners are not afraid to pay their CEOs well if the performance materializes.
I am not looking for any recognition that we are leading the way on this issue, but thought you would like to know that some firms are doing something about it.
Chairman and CEO
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|Publication:||Chief Executive (U.S.)|
|Article Type:||Letter to the editor|
|Date:||Nov 1, 2008|
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