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... just one article of an endless stream - mentioning the biggest cases to date ... Copyright © 2002 The International Herald Tribune | www.iht.com
Last week, the board of Adelphia Communications Corp. disclosed that it would not pay John Rigas, the company's founder and former chief executive, a $4.2 million severance package that his contract calls for, citing the fraud charges that have been brought against him. On Tuesday, directors at WorldCom Inc. discussed whether they could take a similar step against Bernard Ebbers, their former leader and a company founder, who is under investigation. On Thursday, Tyco International Ltd. filed a civil suit against L. Dennis Kozlowski, who stepped down as chief executive in June, to recover his income from the past five years and his severance pay. The same day, the Manhattan District Attorney's office indicted Kozlowski on fraud and other charges. At healthier companies, meanwhile, directors are scouring more closely than ever the pay contracts they have extended to top executives. Some are promising to redouble their efforts to connect pay to performance. The lifetime perquisites granted to General Electric Co.'s former chairman, John Welch Jr. - described in a recent divorce filing by his wife, Jane - have increased the scrutiny given to the pay packages of retired executives as well. For the first time in years, some boards appear to be responding to criticism of executive pay with actions, checking the perks, if not the power, of once-lionized chief executives. Over the past decade, those executives have come to expect not only millions of dollars of pay each year but also lavish pension plans, low-interest company loans (often forgiven) and deeply discounted use of a corporate jet for personal travel. How far directors go will not be known until early next year, when most companies publish their annual proxy statements. A significant decline in executive pay is very unlikely. At the least, corporate directors have turned an eye on the more egregious perks that became so common during the boom years and appear to be stiffening their resolve when negotiating with executives who are on their way out. "Boards are getting a little tighter-fisted," said Robert Stucker, a lawyer who represents executives during contract talks. "They're just being more careful about what they're agreeing to." The biggest changes so far have been at companies where the possibility of criminal charges hangs over top executives. But at even a broader spectrum of corporations, boards have decided to fight former executives over the size of their good-bye packages. Independent directors at ABB Group, a European energy and technology company, shamed Percy Barnevik, a former chief executive who was sometimes called the Jack Welch of Europe, into returning most of an $87 million severance package early this year. In New York, Warnaco Group, a clothing company that filed for bankruptcy protection last year, and Linda Wachner, its former leader, are locked in a legal battle over $25 million in severance the company has declined to pay her. Kozlowski and Rigas have both said they are innocent of the criminal charges filed against them, and Rigas has said he may file suit against his former company. Some boards have decided not to change their pay plans until the current scandals recede from the headlines, said Blair Jones, a consultant who advises companies on pay, but some change is likely. Public scrutiny of corporate America is intense because so many people have invested in, and lost so much money in, the stock market. Copyright © 2002 The International Herald Tribune |