CONGRATULATIONS, David Coulter. Welcome to the pantheon, my friend.
You have succeeded where Disney's Michael Eisner, Tyco International's Dennis Kozlowski, Computer Associates' Charles Wang and numerous other overpaid, under-accomplished executives have failed.
You did such a bad job of running Bank of America and got paid so much money while you were at it that even your corporate kindred have revolted. We all suspected there was a limit to what shareholders would tolerate in the abounding transfer of wealth known as executive compensation, but we didn't know how much was too much.
Now we do. The answer: A severance package worth $50 million to $100 million for a man who occupied the top executive slot only three years and oversaw a $372 million bad-loan loss and a related plunge in profits at the end of his term.
I'll take Blundering Bigwigs for $600, Alex.
Coulter's payout, awarded in 1998, inspired a proposal at last week's Bank of America annual meeting to require shareholder approval on executive golden parachutes over a certain size. These kinds of proposals have been placed on corporate proxy ballots for years, by unions, religious groups and other small shareholders seen by management as fringe nuisances.
The Bank of America measure, which would require a stock-owner referendum on senior executive severance worth more than twice base pay and bonus, was introduced by a Teamsters pension fund in 1999 and thumpingly defeated that year and again last year.
But this time something stuck in the shareholders' craw.
Maybe it was the Enron scandal, which has prompted general brooding on corporate governance. Or perhaps it was Bank of America's stock price, still below its level just before profits cratered on Coulter's watch. A more recent, $75 million gift by Bank of America for Chairman Hugh L. McColl Jr. a year before he retired probably helped shareholders form an opinion.
Whatever the cause, shareholders acted. They narrowly approved the golden parachute restriction, surprising even themselves.
Wall Street financiers joined James P. Hoffa Jr.'s Teamsters to draw a line in the boardroom on mogul pay. To my knowledge, mutual-fund managers did not march on the Bank of America's Charlotte, N.C., headquarters singing the "Internationale" ("Arise ye workers from your slumbers ... "), but you couldn't have blamed reigning bank boss Ken Lewis for checking outside his window now and then.
A presumably sheepish Lewis told a labor official at the annual meeting that "absolutely" the bank would honor shareholder wishes on poo-bah parachutes.
The intriguing mystery is who, exactly, voted for the Teamster measure. We know all the union retirement funds and "socially responsible" mutual funds probably cast "yes" ballots. The California Public Employees' Retirement System, likewise, apparently decided that duty to its pensioners required it to move against the legalized plunder of their assets.
But the parachute proposal would not have passed without the blessing of many financiers who are unaccustomed to voting against management but who are fed up with boardroom recklessness.
The ballots were secret, and my attempt at an exit poll flopped. Vanguard Group, Deutsche Bank AG and Alliance Capital, all top Bank of America shareholders, declined to reveal their votes.
But the overachieving outrageousness of the Coulter and McColl packages seems to have been the main weight tipping the scale.
"It was a pretty easy call" to recommend a "yes" vote for the Teamster proxy proposal, says Ram Kumar, director of U.S. research for Institutional Shareholder Services, whose proxy-voting guidelines are followed by numerous big money managers. "Basically, the company's past practice here made us more friendly to this proposal than we normally would have been."
Don't make too much of this. This is not the beginning of a shareholder Jeffersonian democracy. The Bank of America measure is not binding on the board of directors; that would require a bylaw change. Even if boards get thwarted on one aspect of executive pay, they can shovel the dough in through another door.
Nonetheless, last week's resolution rudely reminded boards and executives of publicly traded companies that they work for somebody else, not themselves. Coulter, who is now an executive at J.P. Morgan Chase and who declined through a spokeswoman to comment for this column, may be marked by history as the man whose pay made even Wall Street gag.