Would you give up your golden parachute?
I don't think I'd have the stomach to turn down $20 million -- especially if I was legally entitled to it.
But that's apparently what Nolan D. Archibald did. The long-time CEO of toolmaker Black & Decker declined the $20 million he is due as a result of a merger between his company and rival Stanley Works. Technically, the sum would have been considered a severance package (otherwise known as a golden parachute) since, as part of the deal, Archibald would relinquish his 24-year reign as head of Black & Decker. Even so, Archibald would become executive chairman of the merged company's board of directors and in that capacity stands to earn $1.5 million a year and would be in line for tens of millions of dollars in bonuses if the company hits financial targets. He is also entitled to keep his $35.5 million pension. And this doesn't include the value of his stock options. This is -- and I'm trying to be refined here -- a boatload of money, and more than enough to keep someone in bright and shiny new handtools for the rest of his or her life.
Still, the $64,000 question remains: What was he thinking turning down millions legally owed to him? Hasn't this guy read Ayn Rand?
I know it's fashionable these days to club CEOs for accepting astronomical salaries and bonuses, and it might seem a bit odd to question one who turns such things down. But unlike General Motors, Chrysler, and a slew of the nation's biggest banks, Black & Decker hasn't taken a dime of government bailout money. To the company's credit, it didn't need to. Black & Decker also doesn't have the optical problems of insurance giant AIG, which took billions in taxpayer dollars and doled out millions in bonuses even as the company gurgled underwater.
Analysts, on the other hand, credit Archibald with turning around Black & Decker by improving the quality of its products, increasing sales and cutting costs, as Dana Hedgpeth reported in today's Post. Forbes notes that Black & Decker has earned a healthy 7 percent return during Archibald's tenure. In short, it appears Archibald actually earned his pay and deserves to have the terms of his contract honored. So what gives?
Archibald is not talking about his reasons, but Black & Decker spokesman Roger Young told the Baltimore Sun: “It’s a recognition that he will continue to get paid as executive chairman. He realized that he wants to be reasonable and he has upside opportunity in this agreement, but it’s tied to the performance and that is the appropriate way to go.”
"Reasonable"? "Tied to performance"? "Appropriate"? And there's more than a hint that Archibald had his eye on long-term perspective rather than short-term gain. Not exactly the kind of approach we've come to associate with the corporate chieftains making headlines these days. But I suspect that there are more Noland Archibalds out there and that they outnumber the kinds of executives who've made a mess of our financial system. These are the smart, innovative, resourceful, responsible men and women who have earned their fortunes by building value and wealth; if they want to give away -- or give back -- some of their millions, that's fine by me. In fact, it's absolutely commendable and completely voluntary, which is a hell of a lot better than having some government czar dictating the terms.
Posted by: noname5 | November 5, 2009 6:13 PM | Report abuse
Posted by: hamkast | November 6, 2009 8:02 AM | Report abuse
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