Tom Kirvan
Legal News, Editor-in-Chief
Several years ago, in an article appearing in the Harvard Business Review, author Peer Fiss offered “A Short History of Golden Parachutes.”
It was interesting reading, tracing the origin of the corporate practice and how far off the rails it has gone since its launch nearly 40 years ago. The lesson that Fiss, a business professor at the University of Southern California, spelled out is that bad behavior and/or poor performance pays off to the proverbial nth degree in the corporate, academic, and sports worlds.
“While executives have come to see parachutes as an expected part of many current pay packages, investors and the public still tend to largely see them as unwarranted and disproportionate payoffs to executives who walk away and leave their firms to pick up the pieces,” wrote Fiss.
The decision-makers on the banks of the Red Cedar at Nassar-stained Michigan State University are among those providing some of the most recent examples of modern excess.
Former MSU President Lou Anna Simon, who stepped down earlier this year in the wake of revelations connected to her mishandling of the Nassar scandal, was given a sweet sendoff under terms of her contract.
Even after resigning in disgrace, Simon was offered a number of lifetime perks as well as the opportunity to return to MSU in a teaching capacity, earning for the first year the same $750,000 salary she received as prez and the option of a 12-month research leave at the same rate of pay. After those two years, her pay for the next two will drop to the paltry sum of $562,500, or 75 percent of her presidential wage. But that’s not all, of course. The gravy train has only begun to pull out of the MSU station for the ex-president.
She also will be entitled to the title of “president emeritus” along with “suitable” office space and secretarial support during her time on the faculty. In addition, she will receive passes for on-campus parking, including all home sporting and cultural events; two free tickets in the Spartan Club suites to home football games; two free tickets to women’s basketball games; the option to buy up to four men’s basketball tickets in a prime location; and on and on.
Simon’s package is small potatoes to that doled out by Baylor University to a pair of bad boys, former football coach Art Briles and former president Ken Starr.
The two were caught in the crosshairs of the school’s sexual assault scandal that engulfed the football program, turning a blind eye to a series of rapes and other assaults allegedly committed by various members of the nationally ranked team during the 2012-16 time frame.
Despite their failures to adequately respond to the crisis, Briles and Starr reportedly were given especially nice “going away” presents, according to forms the university filed with the IRS. Briles, who was dismissed with 8 years left on his contract, received a $15.1 million payout, while Starr was given the boot with $4.52 million in his pocket.
In other words, nice work if you can get it.
Then there is Dave Brandon, the former University of Michigan athletics director who resigned under pressure from his U-M post in 2014 with a hefty payout in search of another at embattled Toys R Us.
In three short years at the helm of the toy seller, Brandon has taken the company into bankruptcy and now liquidation while reaping the benefits of an $11.25 million compensation package in 2017. The total includes a reported $2.8 million “retention bonus” that was paid to Brandon just days before the retailer’s September bankruptcy filing.
Of course, before the liquidation is final – and some 735 stores in the U.S. are shuttered and 33,000 employees are cast to the wind – expect Brandon and other company execs to be back at the bankruptcy court trough again, gobbling up whatever dough remains from the sale of the retailer’s assets.
