Former AIG CEO Robert Willumstad decided to forego a $22 million severance pay package. He will avoid the intense scrutiny that has befallen other CEOs who walked away from disastrous results with hefty pay packages. It is not indicative of a trend from other CEOs of failing large companies, according to FinancialWeek.
Due to the government saving AIG from bankruptcy, Willumstad was notably under more pressure to forgo a severance package, according to some observers. He also only served as CEO of AIG for three months. While his decision may not ignite a trend, the topic of excessive CEO compensation remains a heated debate.
“There is definitely a trend of some companies cutting back on some of these severance packages, especially for newer executives,” said Equilar research manager Alexander Cwirko-Godycki to FW.
Merrill Lynch eliminated all severance payments for change-in-control scenarios shortly after former CEO Stanley O’Neal left with $161 billion when he was ousted last year. John Thain, who succeeded O’Neal, will receive $11 million accelerated stock awards and salary if he leaves the company after the $50 billion sale of Merrill closes early next year. However he will not receive any additional severance payments due to change-in-control.
In most instances, unless there is a high profile bailout, as is the case with AIG and the U.S. government, executives who are asked to leave without cause, will receive what they are contractually owed.