Golden Parachute Or Gilded Noose?

WSJ takes a look at the “severance class” – unemployed formerly high-ranking folks burning through their chunky termination pay package to maintain the outward apperance of their pre-pink slip lifestlye.

Intended as a safety net, the hefty cya later pay packages can however seduce ex-employees into thinking that they can continue to spend like everything is hunky-dory—until the reckoning comes.

Commenter Coles_Law put it best:

“Mr. Joegriner, 44 years old, has had several offers. He’s turned each down in hopes of landing a position comparable to what he held before.”

+

“.By Mr. Joegriner’s own calculations, the family will be out of money in six months if he doesn’t find work.”

= *head explodes*

Life on Severance: Comfort, Then Crisis [WSJ] (Photo: JoshuaDavisPhotography.COM)

Comments

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  1. davebg5 says:

    If you put your ear REALLY close to your speakers maybe you can hear the world’s smallest violin playing in the background.

    • TouchMyMonkey says:

      @davebg5: Unfortunately, the background noise generated by most computer speaker systems costing less than $500 will drown out the violin sound.

      Stories about those poor, poor rich people piss me off like nothing else in the world.

      • PølάrβǽЯ says:

        @HurtsSoGood: “Poor, poor rich people.” I love it! HA!

      • pecan 3.14159265 says:

        @HurtsSoGood: I don’t know. I have a lot of sympathy for people of all income levels who find themselves faced with immense hardship.

        But if you lose your job and still make the decision to keep up with the joneses rather than save it, I have a little less sympathy. It doesn’t matter how much money you had before – I have little sympathy for stupidity.

        • thesadtomato says:

          @pecan 3.14159265: I agree. Relative poverty is physically and psychologically more taxing than absolute poverty, but you have to know how to handle yourself.

          • richcreamerybutter says:

            @thesadtomato: I’ve experienced both, and can say for a fact that in my case absolute poverty is worse. The phrase, “suck it up” as meant for exactly this kind of situation.

    • Eyebrows McGee (now with double the baby!) says:

      @davebg5: Beat me to it, I was going looking for my world’s tiniest violin ….

      I suppose now I’ll have to say that “My nose bleeds for them.”

    • Burning pakalolo not even noticing the weather says:

      @davebg5: I’m glad I am not the only one that feels this way. When I read the article this morning on the bus I was thinking “really? are they trying to garner sympathy from me or is the joke on the people they interviewed for this piece?” Sorry you, your wife and kids are accustomed to a certain lifestyle but shit happens in life and we must all adjust. Cry me a fucking river….

    • gStein_*|bringing starpipe back|* says:

      @davebg5: all i can hear is some guy singing “never gonna give you up, never gonna let you down…”

  2. Ouze says:

    They can’t even afford to hyperlink articles anymore!

  3. bloggerX says:

    Hey Ben, where is the link?

  4. endless says:

    So once you run a giant company into the ground, you can run your personal finances into the ground?

    brilliant!

    • bohemian says:

      @endless: The same mentality that has ruined so many companies. What? I can’t have my $300 pedicure or a $50,000 rug for my office?

      I have no faith left in the executive classes.

      • Blueskylaw says:

        @bohemian:

        My friend is a retired Bear Sterns executive (he’s still young) who has his priorities straight and isn’t trying to keep up with the Joneses. All his properties are paid for including the Manhattan penthouse, his child’s education is already funded to whatever school he/she wants to go to, his child already has money set aside for a house anywhere in America that they decide to live and he’s planning on downsizing soon to get away from all the material things he doesn’t need.

        Granted he may be one of the rare executives with his head squarely on his shoulders but they do exist.

  5. mongoloid says:

    is this meant to be informative or should i feel sorry for someone who makes monthly what i make yearly

    • MostlyHarmless says:

      @mongoloid: I dont think consumerist is quite in the business of making you feel sympathy for someone who runs the whole company and economy to the ground.

      WSJ on the other hand…

  6. Jerry Vandesic says:

    The only message behind the WSJ article is that people who keep spending wildly after they are laid off, even though they get signficant severance, are going to have a hard time when the severance ends. If you look at the people mentioned in the article, they had limited savings and didn’t change their spending behaviours after getting laid off. That’s a bad plan, regardless of how much money or severance you have.

  7. hypnotik_jello says:

    These poor babies. It’s called Schadenfreude! Seriously, zero sympathy. How vain can you get?

  8. microcars says:

    I got this link to work just before it was disabled in the summary above.

  9. craptastico says:

    maybe we can start some kind of fund to help these guys out. it’s unfair to expect them to be responsible for their own finances.

  10. Coles_Law says:

    “Mr. Joegriner, 44 years old, has had several offers. He’s turned each down in hopes of landing a position comparable to what he held before”

    +

    “By Mr. Joegriner’s own calculations, the family will be out of money in six months if he doesn’t find work.”

    =

    *Head explodes*

    • sammy_b says:

      @Coles_Law: I know – how is it more productive to earn zero income than to work part time in retail, or at mcdonalds, or anything? If he was laid of in March 2008 he isn’t earning unemployment any more – time to suck it up and figure out a way to feed your family over the next few years.

    • Rectilinear Propagation says:

      A few days later, Mr. Joegriner received an offer and a contract. Despite the earlier enthusiasm, doubts began to surface. “What if we went all the way out there and they laid me off?” After fruitless negotiations, he turned down the job. The reason: The position didn’t include a guarantee of severance pay. Says Mr. Joegriner: “I just couldn’t take the risk.”

      @Coles_Law: WTF?!?!

      I just…I can’t…

      *Head explodes*

    • theblackdog says:

      @Coles_Law: *sigh* What this says to me is this man is likely someone who basically grew up having everything handed to him and never stopped to consider that things can and do change in the future.

      He needs to learn that it is okay to cut back on spending and take a job for less money, fast.

      *head explodes*

  11. Sockatume says:

    I find it amusing that the group providing some of the severance stats is “Challenger, Gray & Christmas”. Yeah, there will be a few challenging, gray Christmases this year I think.

  12. diasdiem says:

    Do they still have enough to afford this tiny, tiny violin?

  13. ChrisC1234 says:

    Am I supposed to feel sorry?

    Nope, sorry. I just can’t have sympathy on people who spend more money in a month than I survive on all year long.

  14. halcyondays says:

    It’s ridiculous for people who make $200,000 a year to have debt. With that kind of income, they should be saving their money and paying cash for their cars and homes.

    • Cant_stop_the_rock says:

      @halcyondays:

      As your income goes up, your expenses usually go up. Most people say they wouldn’t raise their standard of living if they made twice as much, but you don’t see many people making $200k living like hermits. Taxes alone eat up a huge chunk of that $200k. Even if you’re able to bank $50k per year, it costs $400k+ to buy a small house in some areas of the country. Why spend 10 years renting when you can get a mortgage at a ridiculously low interest rate?

      I do agree about the cars, though they sometimes have crazy low interest rates as well so it doesn’t always make sense to pay cash.

    • stevejust says:

      @halcyondays:

      This is not to say we should feel sorry for people or whatever, it’s just to say that very few people are immune from debt:

      Take a hypothetical lawyer in NYC at a top firm: They might have a $165,000 a year salary. But chances are high, they’ve got about $165,000 in educational debt from law school ($120,000) and undergrad ($45,000).

      So, with renting an apartment in NYC and having to buy clothes for work, how long do you think that person will remain in debt?

      Same thing with a doctor. Or any highly skilled profession where you make a lot of money. Except for those whose rich parents paid their way, most people who earn a lot of money have a lot of debt as well.

      Even if they had rich parents paying for school or went on full rides, they’re SUPPOSED to have a nice house or nice car or whatever, which perpetuates the debt cycle.

      Debt is not something earning money automatically makes you immune from.

  15. LuvJones says:

    ROTFLMFBAO!!!!!! BWAAAAAAAH!

  16. ZekeSulastin says:

    I wonder if the responses would be the same for a not-rich person pulling the same sort of bullshit with whatever savings/severance/whatever they had after being laid off.

    • imsnowbear says:

      @ZekeSulastin:
      “I wonder if the responses would be the same for a not-rich person pulling the same sort of bullshit with whatever savings/severance/whatever they had after being laid off.”

      Why not? Stupidity knows no economic or class differences.

    • MikeToole says:

      @ZekeSulastin: I doubt that the story would be the same. I don’t know about you, but I got laid off in both Bush recessions, and didn’t get large severances for either. One of them was two weeks, the other four. I only ever hear about these lavish severance packages when wealthy executives are involved; regular Joes just get the boot and a few weeks so they can try to keep heads above water.

  17. girl_scientist says:

    This story breaks my heart. No, seriously! All those poor ex-rich people out there, having to live like the rest of us schmucks!

  18. Rylar says:

    Gee 80 million dollars severance and nothing not enough money to keep up my appearance spending…. Meanwhile the rest of humanity have about 1-3 months to find another job before they end up starving and on the street.

    Yes the CEO who steered Merill Lynch into the ground got 80 million + in severance for his trouble.

    • SkuldChan says:

      @Rylar: Yeah they talk about ceo’s getting more pay because its a riskier job, but if I had 80 million in my hands I’d be set for life. I’d never have to work another day as long as I lived.

  19. dumpstergirl says:

    “two months after that, the out-of-work couple moved to Greenville, S.C., to be closer to family and get a fresh start. Together, they had received about $60,000 in severance. “Now we have $600 to our name,” says Mr. Hipsher.


    Although their rent was cheaper, Mr. Hipsher says the family continued to spend like before. They moved with three cars — two BMWs and a Chevy Silverado. They continued to buy cases of $36-a-bottle wine. They spent $250 a month on a cleaning lady, and Mr. Hipsher dropped $50 a week on flowers for his wife. The couple still dined out regularly.”

    They are both out of work and they have a CLEANING LADY!? What is wrong with them? The unemployed can’t deign to sweep their own floors? It aint like their unemployed butts are too busy.

  20. whysthsncnsmrst says:

    This is similar to how lottery winners (the poors) blow all of their money and have nothing to show for it in a short amount of time. Some people just don’t have enough sense to handle personal finances and balk at the proposition of paying someone to do it for them.

  21. soldstatic says:

    having been laid off myself with a respectable severance (for my not rich salary mind you), I have been in that situation. Granted, I am poor poor poor and had very little savings, so I changed my behavior drastically.

    But for someone with some savings, and a hefty severance, and a hefty salary (when he was working), life is obviously a little different.

    For one, if he is confident that he will be back on top in 6 months, let him spend away. Who cares? In 6 months, when the severance pay is gone, he will file for unemployment and make more per week than many of us make per month. But he’s been paying into unemployment “insurance” more than we have. So quit whining.

    I bet you that by “out of money in 6 months” he means their immediate checking accounts, and not the kids’ college funds, his own retirement funds, etc.

    And those of you saying he’s being too picky about a job, i think you should reconsider your POV. Benefits are worth a lot of money, and in the case of severance in a turbulent economy, a lot of mental security. My salary is typical for an entry level engineer, and my benefits are worth more, meaning I feel good about what I make. If I had no benefits, and made the same salary, my net worth per month would be less and I’d be pissy about it. severance is a benefit that this guys values greatly. he can be picky about it if he wants.

    • Sudonum says:

      @soldstatic:
      It’s been a while since I’ve had to collect unemployment, but if I recall correctly, it doesn’t matter how much you made while you were employed, there’s a cap on the amount you can collect.

  22. ArcanaJ says:

    Ok, so this guy had the equivalent of a year and a half’s pay to get by on. In the grand scheme of things, that’s a really good (though not giant) buffer. It certainly isn’t millions, and I can understand wanting to keep his kids in the same school, But vacations? Turning down several job offers because they aren’t exactly, precisely what he wants?

    There my limited sympathy just vanished.

    Honestly, suck it up, take what you can get and stop being such a spoiled baby about it. That’s certainly what the rest of us have to do.

  23. tungstencoil says:

    Wow… shame on everyone who is reveling in this. While there are lessons to be learned here, remember:

    There are tons of people in this world who would look at the people griping on this site that they’re “poor” and gladly switch places with them. “Rich” and “poor” are relative. All kinds of people at all levels make mistakes with their money.

    While there is a certain amount of amusement in it, it’s kind of like laughing at someone who trips. You laugh, then feel a little embarrassed, and then maybe try to help them up.

    • JollyJumjuck says:

      @tungstencoil: But what happens if the person you helped up arrogantly pushes you away and then continues to act like a douche afterward, and didn’t learn a damned thing when they tripped? I’d be sorry I tried to help them up.

  24. Freedomforall says:

    Not to be mean but [Ben this could be a new topic] there are folks in the under $20,000 income range in this country in the south and in small forgotten towns who have next to nothing in their lives and never will. This idea that “TV” type people are the “population” is bull. Go research the mine towns and burnt out rust belt areas a little bit and a shiver will go up your spine. Kids who never see a doctor much less a dentist, never get eye care, roll along from one crisis to the next always feeding some trashy truck or car to keep a way to even get to an overpriced grocery store. They are to put it hard and cold a lot of people in America that, in another time, could have passed for folks in a film about the former Soviet Union as far as poverty.

    • pecan 3.14159265 says:

      @Freedomforall: Yes, but there’s also a thing called free will, and there’s also a thing called a moving truck. You come from a crappy no-name dying town in which you’re the poorest of the poor? Take what you can and get the hell out of there. Make a better life for yourself in any way you can.

      • Mecharine says:

        @pecan 3.14159265: Who’s gonna pay for that, you?

        • Freedomforall says:

          @Mecharine: Exactly my point, the cost of even just moving is beyond the ability of lower income folks to find. Getting a spare $1000.00, not a lot of moving to a new town money at all, is impossible. Why else would folks stay at by the week motels paying those rates if not because geting a lump sum to go on to a better location just ain’t gonna happen.

  25. Oranges w/ Cheese says:

    @sammy_b: Seriously! I took a job at a call center making HALF of what I made at my previous job so that I could pay my rent. Fuck, it was more than unemployment and that was good enough!

  26. SadSam says:

    Guy #1 – it probably is hard to pull kids out of private school but public schools in Silver Spring, Md. are generally very good. But no vacations, accept whatever reasonable job offer comes your way and the wife should go to work.

    Gal #2 – it makes sense to spend on networking events within reason. It also makes sense to spend on personal care, again within reason, so that you present well at an interview. Otherwise, eating out and Starbucks should be out.

    Couple #3 – you don’t find out you are pregnant 4 months after being laid off, either you were trying to get pregnant (since you don’t have a job it might be the right time to have a baby) and you got pregnant or you are careless or stupid. You don’t keep three cars when you are both laid off, if anything you downsize to one car since it sounds like one of you is staying home with the new baby. Cases of wine, cleaning lady, who are these people, Mr. Sam and I are both employed as professionals and we’ve never employed a house cleaner – clean the house yourself, you should have pleanty of time to do so since neither of you don’t have a job.

  27. Whiskey Tango Foxtrot says:

    Its not just high ranking folks doing this. My friend’s ex-wife got laid off from her claims adjuster job 6 months ago, and has turned down five different jobs a head-hunter has found for her, ranging from 55-65 a year because she believes that she “deserves at least 75″ and won’t take a penny less, regardless the state of the economy. She’s almost completely blown through her $40,000 severance pay already. Boggles the mind.

  28. Snarkysnake says:

    The real problem here is simple : These people that refuse to take honest work to make an honest dollar are shallow pricks that believe that any work that doesn’t stroke their ego is beneath them. I hope that they do suffer the indignity that is coming with mathematical certainty if they don’t get busy and earn something. It’s bad enogh that they refuse to work “beneath their station ” , but to drag their family down to ruin because of their conceit is just criminal. These people mentioned in the article in most cases have kids. Kids that need to see a improvise/overcome/adapt spirit instead of an entitled mentality that seems to be the one common thread between these people.

    Look, I make pretty good money, but I would scrub toilets cheerfully (and thoroughly and efficiently) if thats what it takes to make a go of it. I would do that because I know that with my get up and go ,I won’t be there for long. These people seem to have lost that desire to succeed.

    The desire to work is what empowers us. Not what we make on the job.

  29. H3ion says:

    I can understand the lack of sympathy when the media are full of stories about $80 million severance packages and solid gold toilet seats, but the fact is that a lot of the people who used to make six figures and are out of work are people who started with humble beginnings and worked their way up. That is, they are people very much a lot of the posters on this blog who were able, maybe through obtaining a particular degree or having a particular skill set, to generate a six figure income.

    The guy mentioned in the WSJ article is, IMHO, an idiot but I do feel sympathy for some young person who spent three years in law school, incurred a $100,000 debt, and now can’t find a job. Not every one of these people were born with a silver spoon. Some of them earned it and it’s hard when it’s taken away and you still have a family to support and mortgage to pay. Yeah, it’s all right to look a bit strangely at the guy who’s spending his severance on steaks and private schools, but not everyone is in that position.

  30. OneMHz says:

    “At that point, the only life preserver is unemployment or getting another job….It’s an awful situation.”

    Sorry, is this somehow different from people who weren’t making a quarter million a year and got a large severance? Somehow it’s better for the guy making near minimum wage with no savings? I guess I miss the point of all these rich-guy-sob-story articles.

  31. varro says:

    What I find galling is that every one of these articles mentions Starbucks as a horrible, horrible waste of money – much more so than sending your kids to private school, multiple cars, or living in an upscale suburb or owning unproductive rental properties.

    A $4 a day coffee habit is a bit expensive, but nothing compared to other extravagances. Consider it a reward for going on the Wi-Fi network and job searching or communicating with your leads…

  32. lovemypets00 - You'll need to forgive me, my social filter has cracked. says:

    I would be able to live for over 12 years on Mr. Joegriner’s combined $200,000 severance pay and $100,000 savings – since my take home pay is just under $2,000 per month.

    I read the article. Boo dee freakin’ hoo.

  33. soloudinhere says:

    @pecan 3.14159265: I can only imagine what I’d do with $16,000 a month to live on. Hello moving out of my dad’s basement!!

  34. Eyebrows McGee (now with double the baby!) says:

    @pecan 3.14159265: Yeah, the “no deviation” thing is sort-of (or part-of) what I was after.

  35. tailstoo says:

    @pecan 3.14159265: And that would be part of the problem – someone who has no skills to adapt to a changing environment have no business making all that money. Probably why they got laid off in the first place.

  36. lmarconi says:

    @pecan 3.14159265: Maybe it’s my skewed viewpoint from growing up in a less than wealthy area, but I’m surprised that you think $200,000 income is upper middle class. I think it’s fair to call him wealthy, even if he’s no millionaire. He’s probably not driving around in a Camry like my folks and most other Americans, that’s for sure. I think that’s the point commenters are trying to make.

  37. mazzic1083 says:

    @pecan 3.14159265: Unromantic but so highly practical that I would still get joy out of it.

  38. nbs2 says:

    @pecan 3.14159265: Why Morton’s? Why not Ray’s?

    Although, would Morton’s be too ostentatious for a Consumerist-DC-Lunch meetup?

  39. failurate says:

    @bohemian: Breast milk for everyone!

  40. Coles_Law says:

    @Eyebrows McGee (now with more baby!): A very good point. I was really blown by him turning down the 140k job due to no severance.

    Lots of exploding heads in this thread…

  41. Burning pakalolo not even noticing the weather says:

    @pecan 3.14159265: I read the article this morning, I work in the financial world and live in NYC and even I was like “really? you expect me to feel sorry for you?” 200K is not alot for DC, NYC or Boston but for other places in this country you are living pretty good. What is nauseating about these people is that they are so out of touch with reality. Sorry but the average joe that sends their kid to public schools, drives a beat up car, is shopping at wal-mart because Whole Foods is way too expensive and has learned to cut back due to the economy is not going to shed a tear for an entitled family that is living off severance pay and still living in the lap of luxury (relatively speaking) while refusing decent jobs or not even working at all.

    While a $100k/per year job for you may seem like small potatoes, their aren’t alot of people out there that will ever see that much being made in a year. To pass it up because it doesn’t give you the benefits you are seeking is just plain old fucking stupid. I don’t wish ill will upon anyone in life but these people, especially the Family of four, is in for a huge wake up call and all I can say is it sucks to be you but I don’t really care. Your stupidity put you in that place and you can only blame yourself.

  42. trujunglist says:

    @nbs2:

    well, he’s looking to make your entire combined salary plus about $70k more. if his wife works (didn’t read article, she may be working or dead or whatever), then that’s just bonus money. if you had $70k extra, would you consider yourself wealthy or just middle class still i guess is the question. i consider you wealthy based upon what i make, and I live in one of the most if not the most expensive areas in the country. however, i suppose i would consider myself lower middle class.

  43. ktetch says:

    @nbs2: “we drive a more than 10 year old Civic (we need a second car since it won’t fit two carseats)”

    You’re not doing it right then. I have a 20yo civic, and I could fit two car seats in just fine – a pumpkin seat, and a more standard full booster. Better, I could still get my third kid in the back seat and belted in as well!

    Middle class these days seems to be anyone who has a job, and doesn’t earn a million a year or more. I’m proud to be working class!

  44. nbs2 says:

    @trujunglist: With the extra $70k, I’d call myself upper-middle class. Right now, I’d say we’re somewhere in the middle-middle class. Raw numbers would leave us ok, but forward planning means we stay tight on money.