Elio Leoni Sceti has been bouncing around CEO jobs in recent months, but you probably won’t hear him complaining. After preparing to take the top spot at beauty maker Coty (COTY) in July, the two have decided to part ways.
However, on his way out, Coty is making good on a promise to pay Sceti $1.8 million … just to walk away. The dissolution agreement is comprised of a $1.75 million severance check and $55,000 in preferred stock buybacks.
Not bad for a guy who didn’t record a second on the clock.
According to the SEC filing, it was Sceti who reconsidered and opted not to start, keeping interim CEO Lambertus J.H. Becht in place. The plan seemed to unravel when Coty acquired the beauty business from Procter & Gamble (PG), where Sceti incidentally spent time as a brand manager in the 1990s.
Sceti left the top spot at European frozen foods company Iglo Foods, where he spent almost two years, to take the helm at the beauty company. Iglo Foods has since been acquired by Nomad Holdings.
At least Sceti will have more time on the golf course.
Still, Sceti’s payout is just the latest in a long line of golden parachutes — a significant perk for many top executives in the C-suite, who believe they’re entitled to a generous pay package no matter what. They’re seemingly the opposite of performance-based compensation, and somehow make it through companies’ boards of directors.
Some past golden parachutes are just as egregious as Sceti’s:
Carly Fiorina, Hewlett-Packard (HPQ)
It wasn’t just that Carly Fiorina was sent packing from Hewlett-Packard (HPQ) with a golden parachute comprised of cash, stock and pension benefits that totaled more than $40 million (or $21 million, depending on whether Fiorina’s arguing the point). Nor was it just that the lifeline was triggered by a contentious exchange with the board.
No, what’s most egregious about her payout is shareholders got less than nothing in exchange for her time at the helm. During her tenure, HP’s stock shed roughly half of its value.
But while the golden parachute Fiorina received was shocking, the stock performance sure wasn’t. Not when you consider Fiorina led a controversial, multibillion-dollar acquisition of then PC-maker Compaq, much to the chagrin of Walter Hewlett, and triggered a wave of layoffs that affected thousands of employees.
Shareholders tried to fight Fiorina’s severance with a class-action lawsuit, but unsurprisingly, that fizzled.
What’s Fiorina up to now? She’s running for the top spot in the nation these days, trying to get the nod for GOP presidential candidate. Of course, if she wins, she won’t be making HPQ money — the going salary for commander in chief is merely $400,000.
Henrique De Castro, Yahoo (YHOO)
Henrique De Castro may not have held the top spot at Yahoo (YHOO), but he still received a golden parachute from the COO position.
De Castro was fired in 2013 after a little over a year on the job. Ad revenue failed to impress CEO Marissa Mayer … who incidentally made De Castro her first major hire as Yahoo’s chief.
For his part, De Castro acknowledged that he was fired and that it was OK with him. Surely, the $58 million golden parachute — which he got in addition to more than $50 million in earnings during his tenure at the company — cushioned his fall.
De Castro’s departure was more a PR blow to Mayer than it was to the fired executive himself. Mayer was warned that De Castro wasn’t the right guy for the job despite his success at rival company Google (GOOG, GOOGL) in building that company’s ad display segment.
The success he experienced at Google didn’t translate to Yahoo.
Stanley O’Neal, Merrill Lynch
Stanley O’Neal was at the helm of Merrill Lynch — which has since been acquired by Bank of America (BAC) — for half a decade leading up to 2007. Under his tenure, during which the financial crisis began to surface, the bank experienced by far the single-worst quarterly financial loss in its history, at $2.3 billion.
O’Neal’s golden parachute, however, was one of the most lucrative compensation packages corporate America has ever seen at $161.5 million in financial securities and retirement benefits.
O’Neal’s pay ignited a firestorm over CEO pay and brought policymakers from Capitol Hill looking to cap excessive compensation in on the discussion. These days, executive pay is tied more closely to performance, but stock awards and pension benefits can make up the difference.
In a certain twist of fate, Jeffrey Peek, who O’Neal beat out for the top spot at Merrill Lynch, just took a job as executive vice chairman at global corporate and investment banking at Bank of America.
David Pyott, Allergan (AGN)
David Pyott, the former chief executive at Botox maker Allergan (AGN), activated his golden parachute in the traditional way — by M&A. Pyott certainly didn’t take the easy way out, and had to fight off a hostile takeover from activist investor Bill Ackman and Canada’s Valeant Pharmaceuticals (VRX) for much of 2014.
The activists wanted to shrink Allergan’s R&D division, which was the heart and soul of the company.
This one had the makings of a drama series, with blindsiding, bullying, accusations of insider trading and more, all of which consumed Pyott’s schedule to the point he was forced to hand over daily operations to someone else while he fought the battle.
Allergan was later acquired by Actavis in a $66 billion deal, or $219 per share, which was a higher premium than the hostile bid.
When they signed on the dotted line, Pyott walked away with $100 million — largely in stock options — and never looked back. And why would he? He also was able to cash in some $534 million in stock.
To Pyott’s credit, he’s the one CEO on here who at least deserved a large paycheck. He had led AGN since 1998, helming the company through a sale to Watson Pharmaceuticals (though Watson would adopt Allergan’s name).
Last we heard, he was looking to build a hospital in Africa.
Stephen Rotella and David Schneider, Washington Mutual
Finally, the worst of golden parachutes … well, they haven’t been doled out yet, but time will tell.
A pair of former executives from the defunct Washington Mutual — Stephen Rotella and David Schneider, who held the roles of COO and president of home loans — are battling for $23.1 million in exit payments.
Incidentally, it was WaMu’s tolerance for issuing risky subprime home loans and shoddy risk management procedures — part of the bank’s culture under Rotella and Schneider — that led to its ultimate downfall.
They’ve got to win over a Washington district court to receive their retirement pay. This after the FDIC sued both executives for “gross negligence” and “breach of fiduciary duty” following the bank’s demise, citing a focus on “short term gains to increase their own compensation, with reckless disregard for WaMu’s longer term safety and soundness.”
And how did shareholders come out?
Bruce Ramsey, a former investor in the bank, said, “On WaMu shares that once traded in 2006 and early 2007 around $40, I now get just short of 16 cents.”
Washington Mutual has maintained that golden parachutes were not designed to provide a fortune to individuals who played a part in a bank’s failure.
Let’s hope that continues to be the case.
As of this writing, Gerelyn Terzo did not hold a position in any of the aforementioned securities.
