Rewarding Failure

The disgusting thing is that people like this claim they deserve such huge pay because they are so competent, and are so valuable.

http://www.nytimes.com/2009/10/05/business/economy/05simmons-side.html?_r=1

By JULIE CRESWELL
Published: October 4, 2009

New employees at the headquarters of the Simmons Bedding Company got a little b

Saying No. 1: “In order to create a viable vision you must answer one very fundamental question, ‘What do you really want?’ ”

Mr. Eitel, former colleagues said, really wanted to bring some sizzle to the ho-hum mattress business. He was paid millions of dollars to run Simmons for several private equity investment companies, first Fenway, then Thomas H. Lee Partners. Like those firms, he fared well, even though Simmons plans to file for bankruptcy.

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But while Simmons now faces an uncertain future, Mr. Eitel was a winner in The Great Game of Life. As chief executive, he enjoyed country club memberships, personal use of the corporate jet and thousands of dollars a year in free mattresses. Before stepping down last fall, he earned more than $40 million in compensation, bonuses and perks, according to an analysis by Brian Foley, an independent compensation consultant in White Plains. He earned the bulk of his money when Simmons was sold to Thomas H. Lee Partners.

Mr. Eitel ran Simmons as if it were his fief, several former executives said. His son joined Simmons’s sales force and a son-in-law landed in the company’s marketing department. A daughter often sang at corporate functions and even wrote and recorded a series of songs that were pressed into CDs and distributed at a sales meeting in Las Vegas.

Mr. Eitel declined several requests to speak for this article. But many former Simmons executives said that he ruled from afar — that he rarely appeared at the Atlanta headquarters. Instead, he spent much of his time in Naples, Fla., where he and his wife built an opulent home with a 1,000-bottle wine room and a multitier cascading pool featuring glass mosaic tiles. The home was listed this spring for $16 million.

Mr. Eitel also spent a great deal of time wooing clients from his 80-foot yacht, Eitel Time. With his boat, which had 11 televisions, a hot tub on the flybridge and a sunken granite-topped bar in the salon, Mr. Eitel took customers out for cocktail cruises and junkets to Martha’s Vineyard.

Drinks were always frosty, thanks to the on-board ice machine, which could churn out 600 pounds of ice a day.

The private equity firms that owned Simmons during Mr. Eitel’s tenure appeared to embrace Mr. Eitel’s lifestyle. The first year that Thomas H. Lee Partners owned Simmons, the mattress company even paid the $92,000 salary and benefits for the captain of his yacht.

Executives at Thomas H. Lee, which have agreed to sell the struggling company, defended Mr. Eitel’s pay package.

“The nature of the business includes spending a lot of time with customers. We expected and wanted Charlie to be in the field spending time with customers,” said Scott Schoen, a co-president of the firm who sat on Simmons’s board. He said that in the five years that Mr. Eitel was chief executive, there was not “a single time in the hundreds of times” that he “couldn’t find him very quickly.”

As for Mr. Eitel’s compensation and perquisites, Mr. Schoen said Thomas H. Lee quickly ended the practice of paying for the captain of Eitel Time. Aside from the payment for the captain, Mr. Schoen said, Mr. Eitel’s pay was “in line with industry norms and other companies we’re involved with.”