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The oil-services and infrastructure giant Halliburton is a favorite target for critics of former Vice President Dick Cheney, who used to be the company's CEO. During the presidency of George W. Bush, the company's Iraq War-related contracts attracted wide attention. Now, the company's role in the Deepwater Horizon oil spill in the Gulf of Mexico has brought Halliburton back into the headlines.
During a May 20, 2010, appearance with Jay Leno on the Tonight Show, MSNBC host and political commentator Chris Matthews revived the Cheney-Halliburton connection while discussing the spill.
At one point in the interview, Leno said, "All right, a lot going on in politics with this BP thing. This is the one-month anniversary. Where are we? Who’s the lying scum here?"
Matthews responded, "Yeah, it’s the scariest thing I’ve ever seen, and, you know, I don’t know where to start. I mean, Halliburton. Sound familiar? Cheney. Cheney was head of Halliburton. When he got to be vice president, when he was signed for vice president, the oil company gave him a $34 million signing bonus to become vice president of the United States."
We'll grant Matthews some artistic license with his comment. We know he doesn't mean that Cheney literally got a signing bonus for becoming the vice presidential candidate, as a newly signed free agent would in baseball. But we thought it was worth checking whether Cheney did in fact end up with a $34 million payout when he stepped down as CEO to join Bush on the ticket in 2000.
We looked at a personal financial disclosure form that Cheney signed on Sept. 1, 2000. This is the filing made once someone joins a national presidential ticket. It represents the candidate's holdings and income as of August. In the portion addressing Cheney's compensation from Halliburtion, the file lists the following categories and dollar amounts as of that date:
• Salary/bonus (gross): $4,721, 947
• Deferred salary: $1,042, 441
• Senior executive deferred compensation contributions: $654,804
Meanwhile, on May 15, 2001, Cheney also signed a second disclosure form that is supposed to update the August 2000 filing so that it covers the full year. In this filing, Cheney disclosed the following Halliburton income:
• Salary/bonus (gross): $821,896
• Elective deferred salary: $403,166
• Stock equivalent unit bonus: $396,213
• Senior executive deferred compensation contributions: $53,692
• Elective deferred salary lump sum payout: $1,140,160
• Restricted stock imputed income: $7,560,000
• Nonqualified stock option income: $21,964,254
• Senior executive deferred compensation payout: $2,797,128
However, we were unclear about whether the totals from the May 2001 filing, which amount to $35.1 million, should be added to those from the August 2000 filing, which amount to $6.4 million, or whether the amounts in the two filings overlap somewhat. Experts we spoke to expressed uncertainty on this question as well. So we decided to take the most cautious approach and only use the numbers from the second filing, which covers the whole year.
That still leaves a total of $35.1 million earned from Halliburtion reported on the May 2001 filing. Of that total, just over $800,000 represents salary and bonus, which Cheney would have earned regardless of whether he joined the ticket or not. Many of the other categories were subject to some calculation and/or negotiation, as would happen in the case of any CEO who left a position early, so it seems fair to call the rest of the income he received an exit package.
So, if you subtract the salary and bonus from the larger amount, voila -- you get $34 million and change. So Matthews is right.
A footnote: Cheney's timing was impeccable. As the disclosure forms indicate, he held a large number of stock options, which means he had been given the right to purchase shares of the company for an old (and, hopefully for the holder of the options) lower price than the current market value. When the holder chooses to exercise those options, they can buy the shares at the low price and then sell them at the market price, pocketing the difference.
It's not clear when Cheney sold his stock options, but it likely was within weeks of his being named to the ticket -- a period when Halliburtion shares hit their 2000 peak, in the low-to-mid $50 range. By November 30, 2000, the stock had fallen to $33 a share. If he'd waited until then to sell, his payday would have been one-third lower, or roughly $14 million rather than $22 million.
But Cheney does appear to have had timing on his side, so we find Matthews' statement -- that Cheney had a payday of $34 million -- to be accurate. If anything, it may have been a bit low. Either way, we give it a rating of True.
Chris Matthews, interview with Jay Leno on the Tonight Show, May 20, 2010
Dick Cheney, Executive Branch Personnel Public Financial Disclosure Report, signed by Cheney on Sept. 1, 2000
Dick Cheney, Executive Branch Personnel Public Financial Disclosure Report, signed by Cheney on May 15, 2001
Yahoo! Finance, historical stock quotes for Halliburtion (HAL), accessed May 21, 2010
Washington Post, "Giving the Golden Handshake; Cheney Had Role in Farewell Bonuses for Other CEOs," Aug. 30, 2000 (accessed via Lexis-Nexis)
Reuters, "Company Paid Ex-CEO $2.4 Million in 2000," April 3, 2001 (accessed via Lexis-Nexis)
New York Times, "Stocks and Stumps" (column by Gretchen Morgenson), Aug 18, 2000 (accessed via Lexis-Nexis)
New York Times, "In Retirement Deal, Cheney Could Keep Options in Office," Aug. 17, 200o
New York Times, "The 2000 Campaign: The Republican Running Mate; Cheney is Said to Be Receiving $20 Million Retirement Package," Aug. 12, 2000, (accessed via Lexis-Nexis)
Platt's Oilgram News, "Halliburtion Discloses Terms of Cheney Exit," Aug. 17, 2000 (accessed via Lexis-Nexis)
E-mail interview with executive compensation expert Graef Crystal, May 21, 2010
E-mail interview with Dan Auble, Senior Researcher, Center for Responsive Politics, May 24, 2010
E-mail interview with Josh Israel, project coordinator for the Center for Public Integrity, May 24, 2010
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