Severance pay for the haves and have nots
Boomer Bucks by Barbara
Whelehan • Bankrate.com
 CEOs
have made headlines lately, the boldest ones reserved for those
found guilty of accounting and securities fraud, resulting in losses
of millions, sometimes billions, of dollars for shareholders and
employees.
But they've also made smaller headlines as business
newspapers highlight the more mundane news of the day: How much
severance pay CEOs get when they leave a company or whether they're
retiring, resigning or getting ousted for poor performance. In recent
weeks, the Wall Street Journal ran short clips revealing the severance
terms of several top-level execs, of which this is just a sampling:
The former CEO of an electronics concern will receive
monthly payments of about $35,000 for 12 months, plus a six-month
car allowance, health insurance, disability and group life insurance,
on top of outplacement services.
A manufacturer of electrical components paid its
outgoing CEO $4.6 million in a lump sum earlier this year, plus
stock options.
A technology service company that filed for bankruptcy
for the second time in five years will give its departing CEO $693,000
in severance pay.
The former chairman and CEO of a housewares-products
manufacturer receives $4.95 million to serve as a consultant for
two years, plus $2.88 million in severance, in addition to nearly
$860,000 in bonuses.
The former CEO of a financial services company receives
$6.2 million in severance plus a monthly paycheck of $135,714 through
January 2007.
Let's face it. Top-level executives have tough jobs.
They have to figure out how to cut expenses and increase revenues
while retaining handsome benefits for themselves. Often, they have
to engineer massive layoffs to reach these goals. But if they're
unable to improve profitability to the satisfaction of shareholders,
they're provided with a nice safety net, known as a golden parachute.
Meanwhile, what happens to the average working stiff
who gets the pink slip through no fault of his or her own? What
kind of severance can the rank and file expect to get?
Employers don't have to pay
anything
The sad and sorry truth is that unless you negotiate an exit package
before you're shown the door, you're not entitled to anything. In
most states, private-sector workers are employed "at will,"
meaning that either they or their employer can terminate service
at any time for any reason.
A few laws are in place to protect workers. For example,
you can't be fired because of discrimination on the basis of age,
color, disability, national origin, race, religion or sex. You could
still get canned, though, and the burden would be on you to prove
that the reason for the termination stemmed from discrimination
as opposed to any other reason under the sun.
Boomers are in a particularly vulnerable position.
The youngest turned 40 last year. That's precisely the age at which
you begin to receive protection from the Age Discrimination in Employment
Act, as long as you work for a company with at least 20 employees.
The law forbids mandatory retirement at any age, and prohibits hiring
and firing on the basis of age. However, age discrimination is a
difficult and expensive case to try in a court of law.
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