The Biggest Pensions in the World
How the Rich Stay Rich in Retirement Despite Failure in their Jobs
Mar 6, 2009
The credit crunch has left the banking and financial system in turmoil with a number collapsing and many others surviving only because they have been given billions in aid from their respective governments. A number of senior executives have left their posts under a cloud having been seen to have made major mistakes whilst running their respective companies. However, much to the fury of both public and the citizens who are bailing out the banks, these failed senior executives have picked up massive pensions. This practice is not new. So, how big are the pensions given to failed senior executives both in the current crisis and over the years?
Sir Fred Goodwin
Sir Fred Goodwin, former Chief Executive of the Royal Bank of Scotland, whose bank is now propped up only because of £20 billion of public money retired in October 2008 as a consequence of his aggressive policy of acquisition and the ultimate failure of the bank because of one acquisition too many, ABN Amro. On his retirement, his fellow directors agreed that the 50-year-old should have his pension pot topped up to £16m allowing him to take early retirement with an annual pension of over £700,000 a year for the rest of his life.
Larry Fish
Larry Fish was another member of the Royal Bank of Scotland family running the US commercial bank Citizens, which the Royal Bank acquired in 1988. While successful for a number of years, Citizen’s 2008 fourth quarter results revealed a significant volume of delinquent loans on the banks books ($1.1 billion), many of which were made while Larry Fish was at the helm. He retired before the worst of the credit crunch and took with him an annual pension of $2.08 million.
Martin Sullivan
Until 2008, Martin Sullivan was Chief Executive of AIG, the world’s largest insurance company (and sponsor of Manchester United). AIG recently posted the largest corporate quarterly loss in history ($61.7 billion or £43 billion). The insurance company has received about $180 billion in support from the US government. Despite this colossal failure, Martin Sullivan’s pension is more than $3.3 million a year. In addition he received a one-off payout of over $30 million.
Stan O’Neal
Stan O’Neal was Chief Executive and Chairman of Merrill Lynch for four years until 2007 when he resigned after the bank posted a $7.9 billion right-down. After he left, Merrill Lynch fell into even greater difficulty and was eventually rescued by the Bank of America. Stan O’Neal’s retirement package gives him £1.3 million a year.
Chuck Prince
Chief Executive of Citigroup until the latter part of 2007, Chuck Prince’s period at the helm saw the bank become badly exposed to the sub-prime mortgage market and in the last year has lost $20 billion and is currently looking to shed 75,000 jobs. Chuck Prince, who in 2006 had been paid about $25 million, was given a pension of $1.7 million a year for life despite this record.
Pensions for Failure?
Pensions for Directors and Chief Executives are agreed by the other directors. The size of these financial sector pensions has shocked many and is bringing to the fore just how well directors look after each other and just how much of the customers’ bank charges have been going to support and pay off those at the top of private corporations irrespective, it seems, of whether they have been successes or failures in their jobs. For years, the private sector and market liberal conservatives have claimed ‘success must be rewarded’. It now seems that their slogan should have been ‘rewards irrespective of success or failure – especially for the already rich’.
