Marissa Mayer gets an impressive $157.9 million even if Yahoo (YHOO) is sold off. So she wins no matter what happens to the Internet company. But a few CEOs get even more.
Mayer is one of five CEOs in the Standard & Poor's 500, including
Stephen Wynn of casino operator Wynn Resorts (WYNN), David Simon of real-estate investment trust Simon Property Group (SPG), David Zaslav of media company Discovery Communications (DISC.A) and Terry Lundgren of department store operator Macy's (M), that get the largest potential payouts if their companies are taken over, according to a USA TODAY analysis of data from S&P Capital IQ.
Altogether these five CEOs stand to get paid $1.3 billion as part of their so-called "change in control" severance payments based on the most recent data available from their regulatory filings from their most recent fiscal years. Each of these CEOs get $150 million or more from these plans - often nicknamed "golden parachutes" - since they're not a bad way for a CEO to go. The data are based on estimates the companies provide to investors on what the CEOs would earn as part of a change of control event as of the end of their most recent fiscal years.
Investors typically focus much more on what CEOs are paid - than on golden parachutes. These arrangements - paid paid to most CEOs to disappear after their companies are bought out and new management brought in - are very common. Last fiscal year, 444 CEOs of S and P 500 companies had change-of-control severance payments in place, says S and P Capital IQ. On average, the arrangements were worth $33.4 million for the CEOs.
These payments could become much more important to investors as merger and acquisition activity heats up and more companies could find themselves being bought in 2016.
So far this year, there have been $4.3 trillion in merger and acquisition deals announced, up 19% from all of 2014, according to S and P Captital IQ. It's shaping up to be another huge year for dealmaking in 2016, according to many market observers including panelists at the 2015 USA TODAY Investment Roundtable, due to companies' record mounts of cash and highly valued shares which can be used for currency to buy rivals.
The biggest potential windfall from a change of control goes to Wynn. The 73-year-old casino maverick stands to be paid $431.8 million if the company were to go through a change of control, S and P Capital IQ data says. Not only is the potential payout the largest among all CEOs of S and P 500 companies, it's up 74% from the end of 2013. Unfortunately for investors, there's no easy way out for them. Shares of the company are down nearly 60% over the past year as the company's profits in Asia have fallen apart.
Simon, 54, CEO of the real-estate investment trust for 20 years, now has a lucrative golden parachute in place that would pay him $293.4 million on a change-of-control event, says S and P Capital IQ. That, too, is up dramatically - 46% - from 2013's estimated payout. The REIT industry has been busy with merger activity - but most of the deals have been smaller buys of parts of companies' portfolios. Shares of Simon are up roughly 2% over the past year - but the industry may need to prepare for a different world with higher interest rates.
Mayer's potential payout of $157.9 billion, based on the 2014 estimate, could be one of the first golden parachutes investors have to deal with. The board is in talks to determine the future of the struggling Internet company, with selling off parts of the whole core Internet business being on the table, according to USA TODAY. Such an event could remind investors just how golden things are for CEOs when they say goodbye.
S and P 500 CEOS WITH THE LARGEST ESTIMATED "CHANGE IN CONTROL" SEVERAL PAYOUTS
CEO, Company, Symbol, Estimated payout ($ mils.) *
Stephen Wynn, Wynn Resorts, WYNN, $431.9
David Simon, Simon Property, SPG, $293.4
David Zaslav, Discovery Comm., DISC.A, $266.8
Marissa Mayer, Yahoo, YHOO, $157.9
Terry Lundgren, Macy's, M, $154.2
* estimated payout from change in control, based on regulatory filings from most recent fiscal year
Source: S and P Capital IQ, USA TODAY