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Insight & Commentary
Corporate Conflicts

Outgoing CEO's Favorite Toy? The Golden Parachute.

Toys R Us shareholders approved a $6.6 billion buyout by an investment group.

Since joining the Toys R Us as CEO in 2000, John H, Eyler has seen the beleaguered company steadily losing market share to discounters such as Wal-Mart. Eyler's annual total compensation is approximately $2 million, split evenly between cash and bonus.

So what happens to a CEO that runs a company into the ground? He gets rewarded with a golden parachute of course.

Eyler is due $65 million from the sale, making him the largest individual beneficiary of the expected payouts to senior executives. The remaining officers and directors of Toys R Us Inc. are expected to receive a total of $187 million.

According to the proxy filing, Toys R Us Vice Chairman Richard L. Markee could collect $1.7 million and Chief Operating Officer Christopher K. Kay and Executive Vice President John Barbour each stand to receive $1.4 million.

With government regulators focused on investigating corporate fraud, why not start with the obvious and curtail golden parachutes? The beneficiaries are the same individuals that propose and approve the amounts. With the specter of monetary fines and extensive jail sentences, senior executives don't need to commit fraud. They can enrich themselves at the expense of shareholders by running the company into the ground before selling it to investment groups that recognize the value of the assets. I would expect the Sarbanes-Oxley Act be amended in the future to limit these golden parachutes.

2005 Nelson Chin.
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Other Commentaries:

Former Computer Associates CEO faces new indictment. Could auditors have detected the fraud ?

Adelphia and ex-CEO Rigas to settle fraud case.

Arthur Andersen Conviction Overturned: Too Little Too Late.

Worldcom's Ebbers faces $30 Million Fine and life in prison.

Russian Oil Tycoon Mikhail Khodorovsky: Guilty of Fraud and Victim of Politics?

Accounting Giant KPMG Probed for Unlawful Conduct.

Former CEO of HealthSouth Scrushy acquitted.

Former Tyco CEO Kozlowski convicted, faces 30 years.

Outgoing TOYS R US CEO's Favorite Toy? The Golden Parachute.

Sayanora Citigroup. Japan shuts down Private Banking Unit.

Heist at the Bellagio or plot twist for the New Ocean's Eleven sequel?

Eisner versus Ovitz. The Showdown in Tinseltown.

Marsh sinks deeper in insurance scandal.

Managers disconnected at Verizon.

What is Martha stuffing in her stocking this holiday season?

Is Apprentice Street Smart Candidate a College Graduate?

Outsourcing Employees - coming soon.

Samples of Written Policies:

Conflicts of Interest v1
Conflicts of Interest v2
Conflicts of Interest v3

Audit Committee v1


Sarbanes-Oxley Act of 2002

Final Arthur Andersen Alumni Letter

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