Give Me a Break: Big Bucks for Execs as Companies Flounder

April 19 -- It's fine that some corporate executives make big bucks. If their companies are doing well, they're worth it. But what if their companies flounder?

It's fine to pay entrepreneurs lots because they create something. T.J. Rogers, for example, built a computer chip company in California from nothing.

"Our company was worth zero in 1982. It had one employee, me, and it was in debt," he said.

Four thousand people have jobs because of him. If he failed, he would have lost big. And that's why he deserves the millions he's paid.

"I built it. I own it. I deserve it," he said. "There's nothing wrong with that."

But does Jill Barad deserve the millions she got from Mattel's shareholders? Under her reign as CEO, Mattel's stock dropped by half. When Barad resigned two years ago, she walked away with a severance package worth more than $40 million.

A Golden Parachute

It's not unusual for companies to write big checks to executives who don't work out. Many executives like Barad have a golden parachute locked right into their contract. My company has been criticized for paying executives lots of money even when the stock was dropping. But at least last year, when the stock dropped, my boss's boss took no bonus.

Not Joe Nacchio. The CEO of Qwest told new employees: "We believe in pay for performance." But last year, when the stock took a nosedive, his bonus went down by a third to just $1.5 million, and they increased his salary.

At Worldcom, Bernie Ebbers made millions when his company was growing. But over the past few years, they've fired thousands of people as the company's stock lost 90 percent of its value. What happened to Bernie? He got a $10 million bonus to stay with the company, and the company loaned him $341 million.

And Kmart paid millions to hire CEO Charles Conaway. Under his watch, the company went bankrupt. It will close 284 of its stores, and 22,000 jobs will be cut. Yet one day before they declared bankruptcy, Kmart signed Conaway to a new contract, paying him $1.5 million a year.