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Verizon Chief's Reign Ends, but Gravy Train Thunders On

Forget about the golden handshake. The time has come for the diamond-encrusted farewell.

With all the comings and goings lately in telecom, it's easy to be distracted by the gaudy paychecks being doled out to new executives. This past year, three of the industry's leading outfits -- Lucent (LU), Sprint (FON) and MCI -- each handed incoming CEOs at least twice as much scratch as their handsomely compensated predecessors.

But as good as the new bosses have it, the old bosses haven't quite been forced out onto the street to raise spare change. No, quite the contrary. It seems the royal perks like those heaped on GE's (GE) retired CEO, Jack Welch, aren't so much the exception as they are the rule.

You may recall last year's revelation that Welch's retirement benefits included unfettered access to a corporate jet, a company-owned New York apartment, paid memberships to various country clubs and a few other things.

Now consider Charles "Chuck" Lee, Verizon's (VZ) former co-CEO. Thanks to a sweet severance deal he signed in 1999, coming up on the market's closest point to the sun, Lee almost makes Welch look second-rate.

Not only does Lee get all the nice stuff listed above, but he collects $3 million a year for his work as a consultant to Verizon. Lee quit his co-CEO job a year ago, giving Ivan Seidenberg sole control of the office. In addition to his consulting, Lee serves as non-executive chairman.

Lee also happens to have been the highest-paid telco executive last year, raking in $15.6 million in total compensation, according to federal filings and Multex. That dwarfs the paltry $9.5 million Seidenberg pulled down.

Verizon's Chuck Lee

"There's no justification to retain him as a consultant with this enormous fee," says critic Paul Hodgson of the Corporate Library. "From a corporate governance point of view, this is one of the worst contracts I've ever seen. It draws a picture of a board bending over backward to give a CEO anything they want."

What exactly does Lee do now for Verizon that's worth $3 million annually?

"In general, the answer is that this agreement accelerated Chuck's retirement, while giving Verizon and its shareholders the very important side benefit of his valuable expertise and counsel until June 30, 2004," Verizon spokesman Peter Thonis wrote in an emailed response. Lee didn't immediately reply to a request for comment.

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