A Cushy Position at EDS…
In the past, Michelle has noted how nice it is to be a Vice Chairman. Another pleasant position is Chairman Emeritus –“emeritus” being the Latin term for ‘coasting on one’s past performance.” So former Electronic Data Systems (EDS) Chairman and CEO Michael Jordan is a lucky fellow. Per this letter agreement filed Wednesday with the 10-K, Jordan ratcheted down at the start of the year to Chairman Emeritus status, although his $1.4M salary won’t be ratcheting down at this point. (Jordan relinquished the CEO title last September, when President and COO Ronald Rittenmeyer succeeded him, but he remained as Chairman until year-end.)
In addition to the salary, Jordan keeps all employee benefits, and can avail himself of the same perks he had as a real Chairman, including “reasonable personal use of aircraft.” As disclosed in the preliminary proxy filed last week, Jordan’s personal travel on the company jet last year was worth about $400K, proving that “reasonable” is a pretty squishy word. EDS will also continue to provide financial counseling/tax preparation (which totaled $45K for Jordan in 2007) and a car and driver ($19K for 2007). While Jordan will no longer participate in the company’s regular equity incentive plans, in December the board awarded him over 250,000 stock options that he can start exercising at the end of 2008. ( FYI, at yesterday’s close, the grant was out of the money.)
Jordan also got a new change of control agreement that will be effective for two years. To the company’s credit, he won’t get any severance pay except in a change of control situation, and it seems he’s actually expected to keep normal work hours. It’s not entirely clear, though, why shareholders who already compensate a CEO so generously (Rittenmeyer’s total comp last year was $10.7M) also need to pay a Chairman Emeritus well over a million bucks, plus fat perks, to hang around and lend a hand.