Forget Google Zeitgeist — if you want to know the real preoccupations of the age, take a look at executive employment contracts. They show clearly what’s on the mind of American captains of industry. That’s how we know, for example, that iPads occupy a special place in many an executive’s heart. But we’re also seeing evidence that health-care remains a big deal.
Just on Thursday, tiny polymer-maker Landec Corp. (LNDC) disclosed a new three-year employment agreement for Chief Executive Gary T. Steele — replacing his January 2009 agreement — that promises to pay his (and his spouse’s) health-insurance premiums until he turns 65. After that, the company will
“pay or reimburse Executive for the monthly premiums for Medicare Part B, Medicare Part D and a Medicare supplemental plan or, at Executive’s election, a Medicare Advantage plan … for the remainder of the lives of each of Executive and Executive’s spouse…”
If Steele gets health coverage elsewhere, say from a new employer after leaving Landec, the benefit ends. But it’s still pretty sweet, and it underscores how even people earning $900,000 or more in cash each year — that’s Steele’s salary and target bonus — fret about the subject.
Most of us, of course, don’t get a chance to work lifetime healthcare into our compensation — ask your boss and let us know how it goes — but it’s striking how many executives do.
Earlier this month, Delta Airlines extended a lifetime Medicare benefit to Chief Executive Richard H. Anderson and his spouse, as a replacement for benefits he was entitled to at Northwest Airlines before the companies merged, according to a copy of the agreement, filed with Delta’s 10-K on February 10. They get a Medicare supplemental policy and drug plan, or a Medicare managed-care plan with drug benefits, and Delta will pick up the premiums. Moreover, although Delta “will select the Policy and Policy provider,” Anderson in fact “may direct the Company to use a different insurer and specific policy” if he so desires. On top of that, the company will pick up 90% of anything not covered by Medicare after a modest annual deductible (at most $4,500 for a family), or a little less outside the company’s provider network. Delta offered a similar arrangement to General Counsel Richard B. Hirst.
These are recent examples, but there are more in the SEC’s archives. Amusement-park manager Cedar Fair (FUN), says in its June proxy that then-Chief Executive Dick Kinzel and his spouse were entitled to “lifetime health coverage” that, together with Medicare, are supposed to be the equivalent of remaining enrolled in the company’s health-care plan. A table in the proxy estimates that the benefit was worth some $180,448, minus whatever Medicare kicks in. Presumably, now that he’s been supplanted by a former Disney executive, he still gets the benefit.
As we’ve footnoted before, United Continental Holdings (UAL) offers some attractive post-employment healthcare coverage, at least for top executives. Two, including Chief Executive Jeffery A. Smisek, get company health coverage until they’re eligible for Medicare, which is expected to be August 17, 2019, for Smisek, according to UAL’s proxy. And, of course, we’ve previously footnoted generous healthcare coverage at Gannett (GCI), as well as at Republic Airways (RJET) and Cooper Industries (CBE).
As we head into proxy season, we’ll be keeping an eye out for more examples. We have a feeling we’ll find some.
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What else preoccupies executives these days? In some cases it’s M&A, and we’re watching for those signs in the filings over at footnotedPro. Our 2012 M&A report, published last month, names out 10 companies we see as likely acquisition targets. Last year, three of our top 10 announced deals within a few months. For more information about the report, or to inquire about a trial subscription to footnotedPro, contact us.