In 2006, boards paid CEOs $1 billion while kicking them out the door. That is according to an article in the New York Times (registration required) which totaled up the amount of severance paid to 36 CEOs who departed in less than glorious fashion from their publicly-traded employers last year.

I don't mind CEOs getting paid a lot of money if they make money for shareholders. As I posted last October, I think it makes sense to look for companies led by bargain CEOs -- who get paid the smallest percentage of the shareholder value they create.

But it really gets me riled up when CEOs get big bucks for destroying shareholder value. And the Times article presents a rogues gallery of value destroyers. The 12 failed CEOs mentioned got $654 million as a parting gift after destroying $161 billion in shareholder value -- a 30% decline during their tenure.

Overall, canning these CEOs may have been a bad idea, since the 12 companies lost an additional $4.5 billion in market value, or 1%, since the failed CEOs departed. However, this average decline masks big differences among them -- in retrospect seven of the 12 CEO departures look smart and five look dumb.

Here are the three smartest CEO departures -- as measured by how cheaply the directors rid themselves of the CEOs and the boost in stock value since -- listing the shareholder value they destroyed during their tenure and ranked by the ratio of their exit packages to the increase in market capitalization since they left:

• Peter Dolan, Bristol Myers Squibb Co. (NYSE: BMY) destroyed $55.6 billion in shareholder value over 5.3 years. Since he left in the wake of a federal investigation -- which triggered a $15.5 million exit package -- BMY's market value has risen $8.2 billion, up 15%.
• David Edmonson, RadioShack Corp. (NYSE: RSH) destroyed $1.2 billion in shareholder value over 9 months. Since he left after lying on his resume -- which triggered a $1.2 million exit package -- RSH's market value has added $1.1 billion, up 30%.
• Martin McGuinn, Mellon Financial Corp. (NYSE: MEL) destroyed $2.9 billion in shareholder value over 7.1 years. Since he was forced into early retirement -- which triggered a $63.8 million exit package -- MEL's market value has surged $3.8 billion, up 21%.

Here are the three dumbest CEO departures -- as measured by how much the directors overpaid to rid themselves of the CEOs and the drop in stock value since -- listing the shareholder value they created or destroyed during their tenure and ranked by the ratio of their exit packages to the loss in market capitalization since they left:

• William Kirsch, Conseco, Inc. (NYSE: CNO) added $1 billion in shareholder value over 1.8 years. Since he left due to a sharp decline in quarterly results -- which triggered a $12.3 million exit package -- CNO's market value has lost $900 million, down 33%.
• Hank McKinnell, Pfizer Inc. (NYSE: PFE) destroyed $103.5 billion in shareholder value over 6 years. Since he left after investor outcry over his pension -- which triggered a $199 million exit package -- PFE's market value has lost $6.8 billion, down 4%.
• John Scheussler, Wendy's International (NYSE: WEN) added $2.2 billion in shareholder value over 5.1 years. Since he was dumped due to poor same store sales -- which triggered a $5.8 million exit package --WEN's market value has dropped $251 million, down 8%.

Granted that a change in stock price is not due solely to the departure of a bad CEO, but if that CEO's exit package is a small fraction of the increase in shareholder value post-departure, then it makes the board look good for forcing out the CEO. Conversely, if a board pays a CEO big bucks to go away and the stock keeps going down, shareholders lose twice.

Peter Cohan is President of Peter S. Cohan & Associates, a management consulting and venture capital firm. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned in this post.