Most CEOs get modest severance packages - Executive Briefing - Brief Article

HR Magazine, May, 2003 by Steve Bates

Headlines abound on executives leaving corporations with multi-million-dollar payouts in cash and stock, plus lavish perks. But, according to a report from Right Management Consultants of Philadelphia, most companies send departing CEOs out the door with far less.

Fifty-seven percent of U.S. companies and 55 percent of firms worldwide limit severance to a few weeks of pay for each year of service, and only one-fourth of employers offer such sweeteners as financial planning, retirement planning, secretarial support or use of office space.

Fewer than 22 percent of respondents said they pay a high-level departing executive more than one month's worth of severance per year worked, and more than 24 percent said they offer no more than one week's worth per year worked. "It is kind of lonely at the top," comments Geof Boole, executive vice president of Right's career transition business.

"We weren't surprised" by the caps on severance payouts, he says. "We see it every day" with clients looking to hold the line on costs. Yet "with all the publicity surrounding the hefty severance packages given to certain prominent top executives," adds Boole, "it was surprising how few companies choose, as a rule, to provide some elementary services like financial and retirement planning and office space to their highest-paid people on their way out."

Fifty-eight percent of firms assist with outplacement, and 31 percent extend life insurance coverage.

The study points out that companies in Europe and Latin America often encounter legal mandates that tie their hands regarding severance payments.