Analysis: Why corporate executives are being paid so much when they leave companies

SUE HERERA, co-anchor: InDepth tonight, we plumb the depths of the pockets of CEOs who have fallen from grace. From Main Street to Wall Street to Washington, people are asking why the leaders of troubled companies are being paid so much just to go away. Our Mike Huckman went in search of some answers.

Unidentified Man: (From TV show) I was mad as hell and I'm not going to take this anymore.

MIKE HUCKMAN reporting:

Everyone has their limits. And over-the-top executive pay is pushing some investors over the edge.

Mr. FRANK GLASSNER (Executive Pay Consultant): Across America, I think that the shareholders are, in fact, going to wake up, say that they are mad as hell and that they will do something about it.

HUCKMAN: And here are a few reasons why: Former Tyco CEO Dennis Kozlowski is still negotiating his severance package, but there are reports it could be worth more than $100 million. WorldCom's Bernie Ebbers is getting $1.5 million a year. Chuck Watson of Dynegy is reportedly going to get somewhere between 18 million and million bucks. And Chuck Conaway from Kmart is walking away with $9 million in cash and forgiven loans.

Unidentified Man: (From TV show) There's only one thing that can stop them: You.

HUCKMAN: But unlike the frustrated anchorman in "Network", shareholders have more productive ways to vent their anger.

Mr. GLASSNER: I think that what this is going to drive is, in fact, further reforms in executive pay and try to make an end to this madness.

HUCKMAN: Glassner is CEO of the Compensation Design Groups which works for boards of directors who want their executive's pay tied to performance.

Mr. GLASSNER: These kinds of packages, you know, that Kozlowski is attempting to get is really pay for ego. This is not pay for performance.

Mr. JOHN HOTZ (Retirement Benefits Advocate): It just smacks of unfairness. And George Bush actually said, `What's good for the top floor should be good for the shop floor.' And that's absolutely not what we're seeing.

HUCKMAN: John Hotz is deputy director of the Pension Rights Center which fights for retirement benefits for rank-and-file employees, workers who he says are left shaking their heads when poor performing executives walk away with big bucks while they try to salvage their 401(k)s and battle to keep their retiree health benefits.

Mr. HOTZ: These executive retirement packages seem to have no limits and are increasing all the time, where the retirement system for the rank-and-file employee seems to be experiencing cutback after cutback.

HUCKMAN: Surveys show that the average CEO makes 450 to 475 times what the average American worker takes home. That is 10 times the gap in pay that existed just 22 years ago. But some boards argue that they have to pay up to attract and to keep the best and the brightest leaders. Those who did not live up to that reputation, though, are now at least counted among the richest. Ron, back to you.

RON INSANA (Co-anchor): All right. Thanks, Michael.