On the books, Wachovia considered the recent firing of CEO G. Kennedy Thompson an "early retirement" -- resulting in a $1,453,333 severance award and an accelerated vesting of $7,246,362 in restricted stock. But it actually could have been a far bigger payout for the departing CEO if Thompson hadn't terminated his employment agreement with the bank three years prior.
All other Wachovia execs have an employment agreement entitling them to a pro-rated retirement bonus of either their current annual incentive or the highest incentive payout from the previous three years. If Thompson had such an agreement, his $6 million current annual incentive pro-rated for five months of service would come to $2.5 million, and that's on top of any stock awards that would immediately vest.
But if Thompson had such an employment agreement and the bank considered his firing an actual firing (absurd!), he would've been entitled to severance pay of three times his current salary ($1,090,000) plus his biggest incentive payout from the past three years ($5,150,000 in 2006). On top of the $7,246,362 in stock awards, the total would come to $25,966,362.
So the bank may have saved $17 million in severance pay, but it's probably not worth it, seeing as they have no succession plan in place with which to move forward. The bank now has its chairman, Lanty Smith, as interim CEO, and vice chairman and president Ben Jenkins as interim COO.
Hopefully the bank's executive troubles won't have an adverse effect on its customer service, as Wachovia recently took the top spot in the J.D. Power banking survey measuring customer satisfaction. For more on Wachovia, BNET's own Corner Office blogger Peter Galuszka details the bank's financial woes leading up to the CEO's departure.