This year's flurry of corporate mergers may not pay off for shareholders in the long run, but one thing is for sure: The bosses who are selling their companies will do just fine.
The CEOs who've decided to sell in the 10 biggest US deals this year are set to rake in an estimated USD 430 million in "golden parachute" payments, according to a study done by pay-tracking firm Equilar at the request of The Associated Press.
Translation: It would take the typical American household 830 years of work to get what the average CEO will receive in one fell swoop. The payoffs are often negotiated when CEOs are hired.
They're designed to compensate chief executives for losing their jobs and years of big pay so they won't stand in the way of a sale that is good for shareholders.
But some critics say the packages are so lavish, they can be an incentive to strike iffy deals.
Among the grab-bag of goodies in some packages are selling bonuses, cash for agreeing not to join a rival, severance, cash to help pay taxes, and lump-sum compensation for giving up corporate cars and other corner-office perquisites.
The biggest haul is in the form of stock that the CEOs arguably could have gotten if they didn't sell. But they would have had to run their companies for several more years and, in many cases, hit certain performance goals.
Numerous studies have shown that many M&A deals are bad for shareholders of the combined companies in the long run.
Since the financial crisis six years ago, big companies have mostly resisted the urge to merge. But not recently. On Monday alone two deals worth a combined USD 100 billion were announced: Halliburton's bid for rival oilfield services company Baker Hughes and Actavis' offer to Botox-maker Allergan.
So far this year, about USD 3.2 trillion worth of deals have been announced globally, the most since 2007, according to data provider Dealogic.
Some of the payouts in the 10 big deals this year kick in only if the CEOs both sell their companies and lose their jobs after the deals are complete, a higher hurdle than in years past. Some of the deals are still in negotiation, and most haven't closed yet.
