Golden Goodbye

The price of failure, it seems, has never been so high. Whether it is failure to maintain your company's share price, your marriage vows or your title ambitions, you can expect to walk away discomforted only by the weight of your golden handshake.

The well-worn justification is that such people are exceptionally talented, work extremely hard and take risky decisions that should be rewarded. There is a global market for talent, and businesses and teams must pay the going rate. But while this argument might hold true for success, it collapses in the face of failure. Yet many executives continue to be paid a fortune for presiding over mediocrity at best – at worst, calamity. And usually this generosity continues unabated even when the axe finally falls.

This year's big winner appears to be Stan O'Neal, who walked away with between $160m and $200m (depending on what newspaper you read) after stepping down as chief executive of Merrill Lynch. In October, the New York bank revealed losses of almost $8bn in its mortgage-backed securities business, nearly double the figure it had estimated days earlier. O'Neal had also discussed a possible merger with rival bank Wachovia without board approval.

Another well-paid US failure was Robert Nardelli, who received €150m when he lost his job in January as chief executive at home improvement chain, Home Depot. Despite having earned about €45m during his tenure, Home Depot's stock price was about 9% lower on the day Nardelli was fired than the day he began work in 2000. His confrontational style was on full display last spring, when he single-handedly ran the company's annual meeting, insisting that directors stayed away and dismissing questions from shareholders.

And in Europe, BP chief executive Lord Browne was forced to resign in May, just one month after securing a massive retirement package, after losing a court battle to block tabloid revelations about his personal life. He lost his entitlement of one year's pay and bonus worth €5m, and a long-term performance share package potentially worth a further €17m, but he remained entitled to his BP pension pot worth more than €30m.

Another high-profile departee was Noel Forgeard, who stood down as chief executive of the European Aeronautic Defence and Space Company and its plane-making subsidiary, Airbus, in July in the face of troubles at Airbus and controversy over his decision to exercise share options just months before news of the problems was announced.

Forgeard was awarded €6.1m in pay when he left and was also entitled to a noncompetition indemnity package worth €2.4m. Airbus has since embarked on a restructuring programme with the loss of 10,000 jobs.

Non-governmental bodies are not immune from acts of extreme generosity. Paul Wolfowitz resigned as president of the World Bank in May over his role in arranging generous pay raises for his girlfriend. The poverty-fighting organisation allowed Wolfowitz to stay on as a caretaker until the end of June, enabling him to collect a €280,000 performance bonus.

Marital failure can also be a spectacularly good earner. In May, the UK Court of Appeal upheld the award of €70m in Charman vs Charman, the largest contested divorce settlement in English legal history. Lloyd's underwriter John Charman was told he must hand over more than a third of his assets to his ex-wife Beverley after their 29-year marriage ended.

Ex-Beatle Sir Paul McCartney clocked up only four years of bliss in his second marriage to Heather Mills. Their divorce is expected to return to the courts in February after attempts to reach a settlement failed. Lady McCartney is understood to be in line for a pay-off estimated at between €30m and €100m.

Sporting failure can be equally lucrative. This year British tennis player Tim Henman finally admitted defeat in his annual quest to win Wimbledon. His post-playing career earnings though will top €8.2m. Less genteel is the world of football, where last month José Mourinho, the Portuguese manager is thought to have picked up a €25m pay-off when he left Chelsea football club by 'mutual consent' with under three years left on his €7.5m-a-year contract. Although he picked up two consecutive Premiership titles, but the club's Russian owner Roman Abramovich thought the team was not playing with enough flair.

The Football Association meanwhile has consistently paid over the odds for 40 years of failure. Present manager Steve McClaren, whose tenure looks increasingly tenuous, will walk away with €4m if he is sacked after less than a year in the job.

His predecessor, the Swedish coach Sven Goran Eriksson, pocketed a €5m pay-off following England's inglorious World Cup exit last year, despite being caught trying to jump ship by a tabloid. Now installed as the €3.5m-a-year manager of Manchester City, the FA continued to pay Eriksson €19,000 a day until he started his new job this July.

They would do well to employ him for future negotiations. Tabloid reports said the Swede had offered ex-lover Nancy Dell' Olio only €750,000 from his €35m fortune to get out of his life. Now that would have been a result.