A Bizarre CEO Contract
Jan 18, 2004 7:01 PM
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My jaw dropped when I read this bit from a recent Reuters article on the pay package of Orbitz CEO Jeffrey Katz:
Well, yeah, I understand needing assurances to recruit the guy. And his stock options greatly overshadow the quantity.
But aren't the incentives there a bit perverse? Even if you place a (relatively) little bet against your own company, I still think it's unethical.
Katz, who joined the No. 3 online travel company in 2000, has a built-in cushion in his pay package that gives him the option for a one-time cash payout that increases in value as the value of his stock declines, according to documents filed with regulators.
With shares trading in the $24 range, Katz could have collected about $520 million, according to Orbitz spokeswoman Carol Jouzaitis.
...
Jouzaitis said the package was designed to make up for the $2.5 million of equity in Swissair Katz, the former chief executive, gave up when he joined the dot-com startup in 2000.
(Emphasis mine.)With shares trading in the $24 range, Katz could have collected about $520 million, according to Orbitz spokeswoman Carol Jouzaitis.
...
Jouzaitis said the package was designed to make up for the $2.5 million of equity in Swissair Katz, the former chief executive, gave up when he joined the dot-com startup in 2000.
Well, yeah, I understand needing assurances to recruit the guy. And his stock options greatly overshadow the quantity.
But aren't the incentives there a bit perverse? Even if you place a (relatively) little bet against your own company, I still think it's unethical.
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