英文阅读：Golden Parachute
The financial crisis in America has put the golden parachute under renewedscrutiny.
Massive bailout plans by the United States to rescue troubled investment
banks provides a golden opportunity to, among other more urgent things, examine
the golden parachute, the thing that allows bank executives to jump from an
airplane about to crash and land safely on the ground – and into a pool of
cash.
Parachute, the umbrella-shaped apparatus that sky divers fall out of the
sky with – otherwise, sky diving would not be fun, I assure you. Golden, because
there's a lot of money involved.
OK, firm definitions first.
"Golden parachute" refers to clauses in a contract that allows corporate
executives to cash out in a crisis, such as the financial crisis that currently
grips America and Europe.
That's just how their contracts are negotiated and structured. There are
specific clauses (golden parachutes) that stipulate that when "shit happens" – a
euphemism for something inconvenient occurring – the company will pay its top
executives a bonus package, including cash, stock options or both. This bonus
package is otherwise known as a severance pay, similar to a divorce package.
Under normal circumstances, say, when a bank is bought out by another, the
golden parachute clauses are understandable, seen as a reward for the CEO's
previous contribution, such as it is.
I am a Chinese and I can understand these things. As a young employee, I
once asked a superior why civil servants all seem to want to move up the ladder
in a government office. "There's money and benefits", my superior replied
perfunctorily, "houses and cars." And he asked me back: "Otherwise who wants to
'Serve the People'?"
You see, the golden parachutes are in place to make sure that nobody takes
the fun away.
Only that this time in America, taxpayer's money is at stake. People
rightfully demand why banks rescued the taxpayer should continue to reward
managers whose poor management had led them to the brink of ruin in the first
place.
Oh, well, I don't want to get involved in all the economics and politics as
to why there is a democracy for the few. I just want to help you understand the
concept of a golden parachute.
I've done that, I think. Let's move on to examples from recent media:
1. It's no secret that CEOs have been raking in millions of dollars in
salaries, stock options, retirement benefits, and perks like country club
memberships and private jet use at a rate that far outpaces the growth of
rank-and-file workers' wages. What's more, even when their companies don't
perform well or when the top dog gets the boot, the CEO still gets out with a
golden parachute worth millions in severance pay, retirement benefits, stock
options, and other benefits.
- The Golden Parachute: CEO Severance and the Housing Crisis by the
Numbers, AmericanProgress.org, February 27, 2008.
2. Fannie Mae and Freddie Mac's regulator is blocking as much as $24
million in "golden parachute" severance payments to the companies' ousted chief
executives.
The Federal Housing Finance Agency notified former Fannie CEO Daniel Mudd
and former Freddie CEO Richard Syron that they will not receive the exit pay
called for in their employment contracts now that the companies are under
federal control, the regulator said in a statement on its website.
FHFA director James Lockhart on Friday proposed limiting payments for
departing executives, board members, contractors, outside lobbyists, and
business partners. US senators including Charles Schumer of New York, Jack Reed
of Rhode Island, and Richard Durbin of Illinois had urged FHFA to trim or
eliminate bonuses for Mudd and Syron, citing their "failed leadership."
"We find it way out of line that these two executives will be rewarded with
millions of dollars in bonus compensation at a time when taxpayer dollars may
have to be deployed to cover any financial losses caused by errors in
management," Schumer and Reed, both Democrats, wrote in a Sept. 9 letter to
Lockhart.
- Regulator blocks $24m 'golden parachute' pay to ousted Fannie, Freddie
CEOs, Bloomberg News, September 16, 2008.
3. Banks' boards of directors, encouraged by their shareholders, must look
hard at reforming the pay of top bankers. The core problem is this: Bankers get
stellar rewards in the good times and don't have to give money back when their
strategy sinks the bank a few years down the road. They might miss a bonus, or
even get fired - and float down to earth on the "golden parachute" negotiated in
the flush years.
One way to change this would be for banks to hold a big chunk of bankers'
pay in escrow, to be doled out over several years. A bigger share of a bankers'
pay could be made in restricted stock that can only be sold over a fairly long
period of time. Golden parachutes could depend on good performance through the
executive's tenure.
- Crashing banks and golden parachutes, International Herald Tribune,
September 19, 2008.
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