Executive severance packages running out

The WSJ has a sad story about the woes of executives who, fired and given comfortable severance packages of months or even a year, maintained their old life style and are now facing economic ruin. Judging from the number of fathers I see escorting their kids to school around town, this is a story playing out in Greenwich, too.

By MARY PILON

SILVER SPRING, Md. — Paul Joegriner hasn’t worked since March 2008, when he was laid off from his $200,000-a-year job as chief executive officer of a small bank. But you wouldn’t know it by appearances.

His wife, Marzena, shuttles their two young children to private school every morning. The family recently vacationed in Virginia Beach, Va., and likes to dine on Porterhouse steaks. Since losing his job, 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.

The family’s lifestyle over the past year and a half has been propped up by a $200,000 severance package and another $100,000 in savings — funds the family has burned through rapidly. By Mr. Joegriner’s own calculations, the family will be out of money in six months if he doesn’t find work.

“It will be D-Day,” he says. “But on the outside, no one has any idea that we’re in trouble.”

Mr. Joegriner is a member of what might be called the severance economy — unemployed Americans who use severance pay and savings to maintain their lifestyles. Many lost their jobs in 2007 and 2008, and thought they’d soon find work. Now, they’re getting desperate. Last week, lawmakers passed a bill extending unemployment benefits up to 20 weeks. Unemployment benefits, which typically last about 26 weeks, were expected to run out for 1.3 million people by the end of the year, according to the National Employment Law Project.

All of that is unfortunate, but here’s the truly sad part of this tale:

Originally committed to staying in the Washington, D.C., area, Mr. Joegriner expanded his search. In September, the family flew to tiny Gillette, Wyo., where Mr. Joegriner was in the final interview stages for a CEO position at a credit union. The salary was $60,000 less than what he earned before, and uprooting his family from Maryland would be difficult. But they all seemed excited about a possible move.

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.”

At 56, I’ve had to remake a career several times. Each time, after some rough going, things turned out to be better than before. But you can’t allow yourself to be paralyzed by fear. When, after being passed over for partnership at a law firm I struck out on my own and prospered, I’d get calls from friends who were laid-off corporate attorneys who wanted to know how I’d done it, how I survived. I’d take them to lunch, encourage them, assure them they could do just fine, but when I got to the part about no benefits and no guaranteed paycheck they’d get a sad look in their eyes and say, “I hate what I’m doing, and ‘d love to go out on my own, but I can’t take the risk.”

And there is a risk. When I quit law to try to make a living as a writer I failed. Book sales of 20,000 are gratifying but won’t put three kids through college. So after a couple of years I reluctantly got into real estate, where I discovered that I could make an excellent income from writing – I just had to sell houses to people who came in through my real estate column. It wasn’t how I envisioned making a living from writing, but okay. And when I was fired by Greenwich Post for offending an advertiser I lost that venue and, I feared, my source of clients, so I started this blog, from a combination of pique at the Post and an attempt to continue my visibility among the 1000 real estate agents in town. I ‘ve never made a better decision.

So here’s this poor schnook in Washington D.C. who could start a new life in Wyoming but won’t take the risk. He wants a guarantee of a successful outcome even though his present state of unemployment is telling him that there are no guarantees. I’m no Dr. Pangloss, but if any of you are facing the same situation as  banker Joegriner, I urge you to toss away your fear and move forward. At least it will be different than your current dilemma and the odds are pretty good that the same talent that helped you succeed once will do it again. As the sneaker company says, “just do it”.

So endeth the morning sermon.

13 Comments

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13 responses to “Executive severance packages running out

  1. Well said, Chris. I was pissed when the Greenwich Post fired you. However, now that you have this well established blog, I’m able to observe your opinions all day, nearly every day, rather than just weekly!

  2. XYount

    You’re at the top of your game here, CF. Excellent advice.

    Though I often disagree with your right-wing leanings, to be able to read, in every post, a well-turned phrase–especially in this era of non-writing–is a highlight of my day. You’ve put your talent as a wordsmith (and photo editor) to such good use, you’ve managed to raise the bar (so to speak) on every lawyer and real-estate agent out there.

    It proves that a liberal arts education (I’ve got one, too)–and a philosophy major to boot–has not gone by the wayside. It may be a luxury in this computing age, but it’s a luxury I can only hope doesn’t become obsolete.

  3. Anonymous

    Good advice, CF

    Unfortunately, vast majority of guys who have lifestyles beyond their paychecks/net worth in middle-age never practiced responsible risk/reward decisionmaking in life….and are unlikely to learn in middle-age (more likely to try to blame society, the system, their former employer, evil hedge funds, etc etc for their own mistakes)

    Back in ’70s-’80s perhaps, many of most successful entrepreneurs seemed to be 40-something guys laid off and forced to become creative (recall Bloomberg was fired by Solly at ~40yo)

    Over past 25 yrs, many of most successful risk-takers have been <25yo kids who drop out of college to start a Microsoft or Google or Apple…or start a hedge fund after a couple yrs at Goldman (ala Eddie)….but have the advantage of youth and no dependents to support even if their start-up fails

  4. Anthony Fountain

    I’m able to observe your opinions all day, nearly every day, rather than just weekly!

    Cobra, now you know what growing up with him was like.

  5. Townie

    The plain fact is that jobs have been repriced. Individuals who have been out of work should not hold out for their old comp levels.

  6. Arouet

    CF, you’ve built your gig into a truly enviable position—and I mean that in a positive, healthy way.

  7. KC

    I enjoyed your take on the article which raised so many issues about opportunities taken or lost and what we should or could do versus what we have to do, even if it’s hard. It’s nice to come here and read your stuff even if it isn’t always relevant to me but, hey, I even enjoy the real estate updates. But I really liked this even though it was sort of sobering in a way.

  8. “Cobra, now you know what growing up with him was like.”

    However, Anthony, while you had to endure endless hours of Chris opining, the wonders of technology give me the option to change sites with a click of the mouse.

  9. Peg

    In addition to not waiting for perfection to float along (it never does), amazing that so many of these people are living in la-la land as they wait for it.

    MAYBE they could cut down on some of their champagne tastes? Possibly a little more chicken and pasta and a bit less steak?

    I know, I know; how impudent of me. Still – although real estate has been tough for a while, I’ve learned to cut spending to the bone. I may not be eating steak all the time – but – no danger of me going hungry.

  10. Sandy

    I really enjoy reading your well written blog. Lay offs and downsizing didn’t just start in 2008 – this practice has been going on for decades. Over my 25 plus years career in the group health insurance industry (I was a Philosophy major too!) I went through 4 lay offs / job abolishments – starting in 1987, continuing in 1993, 1999 and the last one in 2005 before retiring in early 2008. Luckily I had a spouse employed each time but it wasn’t fun to go back out and interview. I even went back to the same company after three of the lay offs. However, each time I landed a better position with more pay. I think it may be more difficult to find work now but it is never easy. I have to admit we tighten our belt. During the lay offs I had the time to do things but not the money. We always lived well below our means – socking quite a bit of our income away for retirement. Now we are retired and having fun traveling while we still have our health.

  11. Thanks for writing this. I am starting in a new direction–applying to law school, actually–and hope I can keep this mindset at the forefront as life goes on.

    And on the story itself–geez. Wyoming is a cool place on the face of it, an adventure, and good gads, is $140K ever a LOT of money there. It is just so sad that somebody who was in talks to take over the management of a financial corporation couldn’t manage to figure out how to make the savings from $140K per year in Wyoming last through a possible–not even certain!–lean time.