“”¦Another Pay For (CEO) Failure Package”

Kudos to Peter Viles for his “L.A. Land“ blog in the “latimes.com” website.

Many of the CEOs from my previous post on real estate related stocks that have radically declined in value in 2007 were not only paid huge sums of annual salary last year, but most made their lion’s share of compensation in the form of stock grants, exercised stock options and perks.

By now you’ve heard that IndyMac is cutting another 2,403 jobs, or another 10% of its workforce.

I was at a luncheon a few years back with Mike Perry, the CEO of IndyMac. The previous year Mr. Perry made over $30 million in total compensation.

When asked if he felt he was deserving of making 1,000 times the average pay of an IndyMac employee he responded with, “Damn straight. The stock price and earnings under my leadership has averaged a 20% annual growth for the past five years.”

My mother taught me that turnabout is fair play. If a CEO (and his ego) takes credit for the company doing well in the good times, then the CEO must also take the blame for the company sucking during bad times.

Inquiring minds want to know if Mr. Perry will be paying back 90% of his compensation earned over the past five years as the market has wiped out 90% of his shareholders value in just this past twelve months. Maybe a rather large donation to Habitat For Humanity?

Mr. Perry was the CEO of IndyMac this past twelve months, right? So this devastation of stockholder’s value occurred under his watch, correct?

If you or I were to helm a company that lost 90% of its value in a single year — we would be fired, thrown out on the street with a boot print on our ass, and told never to come back again.

But with a publicly traded company, the Board of Directors lowers the strike price on all our underwater stock options, grants a golden parachute consisting of at least a $100 million severance package, offers continued use of the corporate jet, pays our country club membership, pays for my personal assistant, offers full benefits package for life.

Not bad for screwing up and decimating the shareholders stock value.

Charles Prince, the former CEO of Citigroup (who was just canned December 2007) still retains 1,612,732 shares of Citigroup (C) now trading around $26.94 for a market value of $43,447,000.

So for taking on too much risk without proper management controls that your shareholders have lost $20 billion (so far), Mr. Prince walks away with more money than you or I could spend in a lifetime (well, maybe my ex-wife could spend that).

It’s times like these that make me wish I was a corporate CEO of a publicly traded firm. You can fire my ass and pay me $100 million to go away any time you like.

It must be hard to pay the bills and “send the kids to college” on $140 million annual compensation in 2006 (actual quote from Angelo Mozilo of Countrywide on why he was accelerating his CFC stock sales in 2007 via his 10b5-1 plan).

Could be it is time for Angelo Mozilo to fade away into the sunset, but from the looks of it one could say he’s already spent a tad too much time in the sun (tanning booth). But at least he walks away with $650 million in compensation over the past 10 years.

Instead of the disgraced CEO receiving a $100 million severance package for failing, I propose the CEO be required to pay back all their stock options earned over their management reign.

Next I recommend we bring back public pillory and dangling a large placard around the humiliated CEO’s neck that reads, “I Lost 90% of My Shareholders Value”.

After all the only way to inflict any hardship on a rich man is to take away his money.

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