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RB, I agree that it stinks for the top guys to walk away with a lot of bucks in a failure situation. But what do you propose to do about it? Have you ever negotiated an employment contract for someone who really didn't need your high-stress, high-visibilty job and is eagerly sought after by other employers? Typically the would-be employee says something like this: "I'm in demand, I don't need this job because (a) I'm already rich and (b) I have plenty of other companies that want me. But I like your opportunity, so I'm willing to work for you. Pay me a salary of whatever, give me stock options so I can get an upside if/when do well, and you know what else? I want you to protect my downside, too. If you want the right to fire me, or if you want to sell the company and put me out of a job, I want you to have to think long and hard before you do it. It'll cost you." If the board wants to hire this guy badly enough, they'll swallow those conditions. They usually do. The reason is that the talent pool for top executives just isn't that big. It's much smaller than the demand, as the current wave of failures amply demonstrates. So the boards pay up and hope they hired the right person. Does it stink? Sure. Is there anything to do about it? Well, other than have boards negotiate harder, no.
Thain, by the way, was brought in to clean up a mess that his predecessor, Stanley O'Neal, hadn't cleaned up. Thain before that was Pres of the NY Stock Exchange, which he was recrutied for after Richard Grasso was forced out - Thain was "Mr Clean." He was already a very rich man by the time Merrill hired him. And I'll bet his negotiation with Merrill's board looked almost exactly like what I described above.
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