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Gold-plated retirements

The Independent 

Generous packages – and even perks such as tickets for top games or use of corporate jets – ensure that top executives from Wall Street and the City rarely face financial hardship when they are pensioned off

Saturday, 28 February 2009 

Martin Sullivan, AIG

Martin Sullivan is the former president and chief executive of AIG, the world’s largest insurer. Born and bred in Britain, he began working for AIG in London in 1971, climbing to become chief executive of the whole group 24 years later. He was ousted last year, after it was revealed that AIG had run into severe financial difficulties and needed to be bailed out by the US government. Nevertheless, he walked away with an annual pension of more than $3.2m (£2.2m), and a payout of more than $30m. The New York State Attorney’s office criticised his enormous salary and benefits package. 

Jack Welch, GE

Jack Welch was chief executive and chairman of General Electric, the world’s largest company, for 20 years – between 1981 and 2001. Although he is widely regarded as one of the most successful executives in US corporate history – taking the company from a market value of $14bn to more than $400bn during his time at the helm – his company is now, by its own admission, in dire straits. Mr Welch, however, retired from the company eight years ago, and is now enjoying an astronomical annual pension of $9m. Even more incredible is the package of additional long-term benefits that he negotiated on his way out the door. These include unlimited use of the company’s private jet, as well as courtside seats at New York Knicks basketball games, and a box at the Yankees baseball stadium.

Stan O’Neal, Merrill Lynch

Stan O’Neal was chief executive and chairman of Merrill Lynch from 2003 to 2007, and was ousted from his job shortly after announcing a $7.9bn writedown in the early stages of the credit crunch. He was constantly under pressure during the last few months at Merrill, and was heavily criticised for opening secret takeover talks with Wachovia, without consulting the rest of the board. Months after his departure, Merrill ran into even greater difficulties and was eventually rescued by Bank of America in September last year. Many investors and employees at Merrill blame Mr O’Neal for the bank’s collapse. Nevertheless, he walked away from the bank with over $150m in stock and pay, as well as an annual pension worth $1.3m.

Chuck Prince, Citigroup

Charles “Chuck” Prince was ousted as chief executive of Citigroup towards the end of 2007, after his firm reported multi-billion dollar losses due to its subprime mortgage exposure. At the time, he was one of the highest-paid bankers on Wall Street, earning around $25m in 2006. He walked away from Citigroup with a payoff of almost $100m in cash and stock, as well as an annual pension of $1.7m (£1.19m). Even after his departure from Citigroup he continued to work as a consultant for the bank, and towards the end of last year took up a position as the vice-chairman of Stonebridge Inter- national, a US consultancy.

Sir Philip Watts, Shell

Sir Philip Watts was the chairman of Royal Dutch Shell at the time of the company’s embarrassing oil reserves scandal in 2004. Sir Philip was ousted from the company after admitting that it had overstated its reserves by some 25 per cent and would have to cut its estimate for proven oil and gas reserves by 3.9 billion barrels.

In spite of losing his job, Sir Philip managed to hang on to a not insubstantial annual pension of almost £600,000.

Although he was investigated by both the Financial Services Authority in the UK and Wall Street’s Securities and Exchange Commission in the US, over allegations that he had misled the stock market, no charges were ever brought against him.

Larry Fish, RBS

Larry Fish was a director of Royal Bank of Scotland until he retired in May last year, taking with him an annual pension of $2.08m. Mr Fish ran the US commercial bank Citizens, which RBS acquired back in 1988, and used as a stepping stone to develop a presence in the US. Although Citizens had long been seen as one of the most successful parts of the RBS group, RBS’s results published this week revealed that the number of delinquent loans on Citizens’ books multiplied last year – hitting $1.1bn in the fourth quarter. Mr Fish was in charge of the company when many of these loans were being granted, but he managed to make his escape from the company before the worst of banking crisis hit.

Lord Browne, BP

Lord Browne’s final months at BP were mired in scandal – ending with his resignation in May 2007 after it was revealed he had lied to a court about how he had met a gay lover. Only months before, an inquiry into an explosion at BP’s Texas City refinery – which killed 15 people – concluded that the incident was the result of systematic failings in the plant’s safety procedures. Nevertheless, the former chief executive – who worked at BP for 41 years – still managed to leave the company with a payout of about £10m, and an annual pension of just over £1m. Two large pension funds challenged the legality of Lord Browne’s sizeable pension, but were ultimately unsuccessful.

Ernest Saunders, Guinness

Ernest Saunders spent time in jail for his part in the Guinness share trading fraud – one of Britain’s most infamous corporate scandals. He famously managed to have his sentence reduced from five to two and a half years after it was claimed that he was suffering from pre-senile dementia, and eventually spent just 10 months inside. After his release, however, he made a miraculous recovery from what is an incurable disease, and was soon recruited as a consultant to Carphone Warehouse. He still draws a healthy pension of £75,000 a year from Guinness – which is now owned by Diageo – and is believed to have houses in London, Sussex and Switzerland.

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