Pay for Failure: McCann Boss Leaves Agency in Tatters But Takes a $37M Pension

John Dooner, the former CEO of McCann Worldgroup, saw his compensation drop 43 percent last year to $2.8 million, and you might think that reflects performance at McCann Erickson which is in tatters as Verizon, its biggest client, walks out the door.

Think again: As Dooner prepares for retirement he will collect a $37.7 million pension package from Interpublic (IPG), McCann's corporate parent, according to page 52 of this SEC filing.

The retirement package is a shining example of how executive pay is delinked to performance. During the last three of the 15 years Dooner helmed McCann, he was paid between $2.8 and $6 million a year. His basic salary was more than $1 million. Now, for the next 15 years, IPG will be paying him $2.5 million a year not to work.

As you might imagine, the news could not have come at a more undiplomatic time for McCann staff. The situation was bad at McCann before Verizon bolted. Now, that client loss threatens the profitability of IPG's entire year. One observer left this comment on Adweek's bulletin board:

This is very unfair. The hard workers who slave and work long hours get laid off and are left with scraps or even nowhere to turn to while these execs get payed so much money for God knows what. Of course these execs have paid their dues in the business and I will not take that away from them but when you see that so many people are getting fired from left to right in the name of the recession, don't you feel guilty when receiving such a substantial payment?

Dooner's pension is so spectacular that the company doesn't offer it any more. He's the only executive at IPG still participating in the retirement plan that grants him these benefits. IPG described that plan thus:

Mr. Dooner is a party to five ESBAs [Executive Special Benefit Agreements] entered into in between 1986 and 2002, which in the aggregate provide that if he retires, resigns or otherwise terminates employment with Interpublic or his employment terminates due to death or disability, Interpublic will pay to Mr. Dooner $2,514,500 per year for 15 years.

Here's a chart that shows the dramatic difference between Dooner's pension and those of his colleagues:

These numbers are calculated in "present value" (about $24.7 million in total), which is why they don't yet reflect the full future value of payments Dooner will receive.

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