Emily Thornton Case

In "Fat Merger Payouts for CEOs," Emily Thornton (2005) criticized the top CEOs for taking advantage of Golden Parachutes agreement to seize huge profit from merger. The author quoted a string of the latest news to illustrate an increasing number of famous CEOs benefiting from merger-payout provisions. In addition, Thornton indicated that this trend has negatively influenced the whole financial market. This article was timely because golden parachutes became a hot issue among CEOs when it was published; and it alarmed CEOs and corporations to think twice before taking such actions. However, Thornton failed to thoroughly declare the positive effects caused by such agreements, or fairly compare the benefits those CEOs created for their companies against their compensation.

This article was published after many famous executives gained a huge amount of compensation when their companies changed hands. The most representative example was James M. Kilts, Gillette's CEO, who obtained about $188 million when Gillette was acquired by consumer-products giant Procter & Gamble Co. Compared with Kilts' annual salary of $23million, this compensation went far beyond the norms. Similarly, Willian W. McGuire acquired $162 million by selling UnitedHealth, while Robert L. Nardelli was promised compensation valued at $114 million. According to a study conducted by Equilar Inc., approximately half of America's 100 largest corporations had golden parachutes policies. Because of this popular trend, the author stated that many CEOs dedicated themselves to "dressing up their companies for sale," ignoring their key duty of enhancing the shareholders value.