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US CORPORATE EXCESS-BARONS OF BANKRUPTCY

August 1st 2002-They are what the Financial Times have called the Barons of Bankruptcy-a privileged group of top business people who made extraordinary personal fortunes even as their companies were heading for disaster. They were able to walk away with gross earnings of $3.3 bn, a stunning payoff for corporate failure.

The FT survey covers the 25 largest US public companies to go bankrupt since 2001. The earnings figures comprise salary, bonuses, other cash payments and share sales between January 1999 and December 2001. Gains prior to 1999 and after 2001-often quite large, have not been included. Nine executives as detailed below sold shares to the value of $450 m. Gary Winnock of the failed Global Crossing scooped top rank with a whopping $512 m.

America's biggest bankruptcies    
Rank Bankrupt Company Assets $bn Value lost since 1999 $bn Jobs lost Individuals' gross earnings $m
1 WorldCom 103.9 126.8 24,000 157
2 Enron 63.4 18.8 5,500 778*
3 Global Crossing 25.5 9.2

5,020

 933
4 Adelphia Communications 24.4 1.9 n.a 7
5 Kmart 17.0 7.2 22,210 39
6 NTL 16.8 3.4 7,000 71
7 Finova 14.1 3.0 1,100 15
8 Reliance 12.6 1.5 5000 17
9 Federal Mogul 10.2 4.9 1,100 23
10 Comdisco 8.8 2.6 1,400 52
11 ANC Rental 7.1 0.2 2,060 5
12 Metromedia Fiber Network 7.0 3.2 n.a. 290
13 Williams Communications 6.0 13.4 1,300 13
14 Exodus Communications 6.0 1.4 1,290 350
15 XO Communications 5.7 1.6 600 128
16 McLeod USA 4.8 2.0 2,165 299
17 Bethlehem Steel 4.3 1.1 2,740 9
18 Kaiser Aluminum 3.4 0.4 150 14
19 FLAG Telecom 3.3 0.8 160 11
20 Covanta Energy 3.3 1.2 80 9
21 USG 3.2 2.2 500 8
22 Sunbeam 3.1 0.6 399 6
23 Winstar Communications 3.1 1.4 3,450 30
24 Hayes Lemmerz 2.8 0.9 1,730 9
25 Warnaco 2.8 1.3 5,228 24
           
Total     210.7 94,182 3,296
           

*Share sales of $365 m by 5 executives not included

       

Source: Financial Times
What they made
Rank Name Company Salary, bonus other cash Gross Share Sales $m Identifiable options profits $m Total $m
1 Gary Winnick Global Crossing 2.8 509.6 0 512.4
2 Lou Pai Enron

n.a.

 270.3 178.0 270.3
3 Kenneth Lay Enron 25.3 221.3 81.6 246.7
4 K.B. Chandrasekhar Exodus Communications n.a. 130.7 87.1 130.7
5 David Lee Global Crossing n.a. 118.0 0 118.0
6 Richard Lumpkin McLeodUSA n.a. 116.3 0 116.3
7 Craig McCaw XO Communications n.a. 115.4 0 115.4
8 Barry Porter Global Crossing n.a. 113.8 28.9 113.8
9 Howard Finkelstein Metromedia Fiber Network 0.7 104.5 0 105.1
10 Clark McLeod McLeodUSA 1.4 97.6 15.8 98.0
11 Jeffrey Skilling Enron 17.8 70.7 9.0 88.5
12 Kenneth Rice Enron 7.6 73.4 31.6 81.1
13 Rebecca Mark Enron 0.1 79.5 28.3 79.6
14 Kenny Harrison Enron 0.2 75.2 53.6 75.4
15 Joseph Sutton Enron 4.3 59.7 35.5 63.9
16 Mark Frevert Enron 4.3 50.3 30.0 54.6
17 Stephen Garofalo Metromedia Fiber Network 1.0 50.3 0 51.3
18 Wayne Perry
XO Communications
n.a. 50.6 48.9 50.6
19 Scott Sullivan WorldCom 14.8 34.6 23.3 49.4
20 Stanley Horton Enron 3.5 45.3 30.0 48.8
21 Nicholas Tanzi Metromedia Fiber Network 0.7 45.8 6.9 46.5
22 Richard Stolz Exodus Communications 0.3 43.3 0 43.5
23 John Baxter Enron n.a. 39.2 16.5 39.2
24 John Sidgmore WorldCom 2.9 35.4 25.0 38.3
25 Lodwick Cook Global Crossing 1.5 35.8 0 37.3
         

Source: Financial Times

Click for US Scandals and the Laws of Unintended Consequences

Fortune Magazine's September 2002 Issue:

THE GREEDY BUNCH
You Bought. They Sold.
Meet the 25 companies with the greediest executives. Of the big companies whose stocks dropped 75% or more from their boom-time peak, these are the ones where officers and directors took out the most money via stock sales from January 1999 through May 2002. An exclusive study by FORTUNE, Thomson Financial, and the University of Chicago’s Center for Research in Securities Pricing.

Click for Fortune Magazine's Rankings
 
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