THE FREE MARKET DOES NOT APPLY TO AMERICAN CEOS

(h/t Gary Rivlin)

Back in 2007, I noted two flagrant example of CEOs escaping the consequences of their actions.  GMI provides a list of 21 CEOs who left with severance packages worth at least $100 million and here are a couple of the worst:

William D. McGuire

Mr. McGuire’s tenure at UnitedHealth ended when he became embroiled in a stock options backdating scandal. He was asked to leave the company in October 2006, after the IRS and federal prosecutors requested documents detailing his option grants. In December 2007, UnitedHealth released the findings of a Special Litigation Committee which listed repayments required by Mr. McGuire, including:

Dr. McGuire will surrender to the Company (1) all of his right, title and interest in stock options to acquire 9,223,360 shares of Company common stock, including all options unvested as of November 30, 2006; (2) all rights he has under the Company’s Supplemental Executive Retirement Plan, amounting to approximately $91 million;and (3) his rights to approximately $8 million in his Executive Savings Plan Account. Dr. McGuire will relinquish claims to (1) Company-paid health care for himself and his family; (2) participation in any Company life, dental, short-term or long-term disability insurance plans; and (3) a Company-paid office, secretarial and administrative support,and the use of Company aircraft for personal business.

He still walked away with $180.5 million in equity profits and a pension worth almost $103 million.

Thomas E. Freston

Mr. Freston was terminated as CEO of Viacom by media mogul Sumner Redstone in September 2006, just nine months after having assumed the role. Mr. Redstone’s decision was seen as a direct result of News Corp. having won a bidding war to acquire MySpace, an acquisition Mr. Redstone deeply wanted. Mr. Freston exited Viacom with salary, bonus, and deferred compensation totaling just shy of $59 million and with total severance and perquisites of more than $71 million. In addition, he received more than $17 million in pension and deferred compensation earnings as well as nearly $8 million in equity profits.