Labor unions in the United States and Canada on Tuesday expressed concern about the prospect of job losses from any merger between General Motors Corp. and Chrysler LLC, which is controlled by private equity group Cerberus Capital Management. But Chairman and CEO Rick Wagoner could be rewarded handsomely in severance benefits -- offset somewhat by stock losses -- in the event of a change in control and his subsequent separation from the company, according to the company's recent proxy statement:
"There is no general severance plan for executives. At the discretion of the Executive Compensation Committee, Named Executive Officers could receive severance pay up to 2.99 times base salary and annual bonus target. Other salaried employees may receive up to 12 months salary upon involuntary separation."The annual target cash compensation for Wagoner is $5.0 million per annum, which includes a base salary of $2.2 million. So the board could offer Wagoner up to $15 million in severance pay.
Wagoner's stock-based performance incentives, worth approximately $10 million at December 31, 2007 (common stock at $24.89), can now be cashed in for about $2.6 million. In addition, some 2.9 million incentive options awarded to Wagoner in the last decade at exercise prices between $20.90 a share to $75.50 a share are now worthless.
Upon separation from the company, Wagoner, 55, would be eligible to receive an annual annuity payment of $61,200 from his supplemental retirement plan. He will, however, have to wait until the age of 60 to tap his executive retirement plan, worth an estimated $19.7 million at December 31, 2007. In addition, Wagoner had a 2007 year-end non-qualified deferred compensation account worth an estimated $765,000.
This post first appeared in BNET's 10-Q Detective.