The buyout phenomenon is not limited to the fieldhouse, as this Game Theory post, reprinted from The Economist, observes.[Kelvin] Sampson, IU's men's basketball coach until Friday night, is only the latest person to stop working for the school but is still collecting money.
Former Athletic Director Michael McNeely received the most: $839,000. Former men's basketball coach Mike Davis got $800,000.
Some others: former football coach Gerry DiNardo ($616,000), former football coach Cam Cameron ($498,000) and former men's basketball coach Bob Knight ($283,000).
So-called “golden parachutes”, large pay-offs even when top executives fail, have become a main focus this year in the debate over executive pay. The Corporate Library, a shareholder watchdog in America, reckons that the average departing CEO in that country receives a severance package worth $16.5m. In May this year, shareholders at the annual general meeting of GlaxoSmithKline (GSK), the world's largest pharmaceuticals company, revolted against the severance pay promised to its boss, Jean-Pierre Garnier, if he were forced to leave the company prematurely. Since one of the more likely reasons for such a departure would be poor performance, shareholders deemed the $35.7m farewell gift to be excessive.There is neither a shareholder nor a merger promoter in a position to call Indiana on its replacement of one underperforming football coach with another. That matters, as this research paper argues. From the abstract:
The incidence of golden parachutes in a sample of S&P 500 firms is consistent with this conjecture: golden parachutes are more likely in firms with concentrated ownership. Interpreted in this light, golden parachutes enhance efficiency by increasing the credibility with which owners can commit against opportunism.Opportunism, here, refers to the manager committing resources to self-aggrandizement rather than to creating market position and shareholder value.
No comments:
Post a Comment