CEO’s payment package is a Household shame

Jan 6, 2003  •  Post A Comment

CEO voraciousness: There’s no end in sight.

Household International Inc. CEO William F. Aldinger-who this fall engineered the sale of the consumer lender for a bargain-basement $30 a share after settling predatory lending charges-is about to enjoy a double payday, provided his company’s acquisition by London’s HSBC Holdings plc goes through as planned.

Not only will Mr. Aldinger land a promotion and bonus when he steps up to run North American operations for Household’s new parent, he’ll also qualify for severance payments which, based on his 2001 compensation, could run as much as $12 million.

Maybe that kind of package could be justified if Mr. Aldinger were out of a job; that’s what severance payments are for. But he will remain very much employed, with a three-year contract that includes an undisclosed salary, a $4-million annual cash bonus and a $21-million restricted stock bonus.

Such a compensation bonanza might have been deserved if Mr. Aldinger had done a bang-up job for shareholders. But his record falls short here. Mr. Aldinger had opportunities to sell when his company’s stock was in the $70 range. Instead, he struck a deal with HSBC when Household’s stock was at a low point, after access to capital-or the lack thereof-became a major impediment to a recovery.

Household’s agreement to settle charges of predatory lending by refunding $484 million to consumers a month before the HSBC deal only makes Mr. Aldinger’s rich compensation that much more of a head-scratcher.

The double-dipping reflects the kind of corporate arrogance brought to light in the scandals of the past year-arrogance that one would think would be very much out of fashion in the current climate.