I'll admit that the amount sounds excessive. But, let's consider this another way. Let's assume that you have a very weak financial company (like Wamu) that is seeking a new CEO. We find the perfect candidate, who is currectly leading a top company, and making $4-10 million per year (including incentives). This is the guy we want to be our new CEO, and we offer to increase his salary and incentives by 50% over what he is currently making, with no signing bonus and no golden parachute. This guy has got to figure that his potential new employer may go bankrupt in the next 1-6 months, right? Do we really think he will resign from his current, well paying job, to take a position at our barely solvent firm, risking the chance that we'll go bankrupt in three weeks and he'll be left without a job and nothing but a months worth of pay for his sacrifice? Not a chance. You are asking this guy to leave a solid firm, with good pay and take a major chance to come and attempt to save your firm. To get this guy on-board, you have to offer him certain minimum guaratees, or you won't get your top candidate to take the job. Sounds excessive? Yes. But it would have been equally (or more) unfair to bring a guy into a terrible situation that was not of his making, and then have him lose his job in the first month through no fault of his own. (In fact, it never would have happened, since you would not have been able to lure a decent CEO on those conditions.) Anyway, I agree the amount was excessive, but maybe something more like 1 1/2 years worth of his prior income, as a guarantee, would have been more appropriate to entice a guy to a really risky CEO job.
after an athlete gets his pay-day its usually downhill from there...Sean Alexander, Larry Johnson etc etc are just a few. The only difference is that the owner has the final word, unlike the shareholders who usually have no idea....peace