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Babcock & Wilcox exec gets his own Independence Day…

There are many great ways to observe July 4th, but regardless of how any of us marked the holiday, we bet that Michael S. Taff’s party had more pizzazz. In addition to celebrating the nation’s independence, he was very likely celebrating his own.

Taff, 49, the departing Senior Vice President and CFO at The Babcock & Wilcox Company (BWC), told his employer last week that he plans to leave his post on July 30. It’s a move that will add several million dollars to his bottom-line.

That’s because Taff is exercising his rights under a “Restructuring Transaction Retention Agreement” that the parties signed when B&W’s former parent company, McDermott, spun off subsidiary B&W, which generates nuclear and other types of power and does a lot of work with the U. S. Energy and Defense departments. We found the terms of Taff’s departure in an 8-K and related Consulting Agreement that B&W filed at 5:06 p.m. on July 1 – part of the “Friday night dump” that companies often make right before a long holiday weekend.

The filing states that Taff will get:

(1) a cash payment equal to two times the sum of his annual base salary and target annual incentive compensation, (2) a cash payment equal to his target annual incentive compensation prorated as of his termination, (3) a cash payment equal to two years of medical benefits; (4) continued medical coverage for 48 months (Mr. Taff to be responsible for payment of COBRA premiums) and (5) full vesting of any equity awards then outstanding for at least one year from the applicable date of grant.

Based on B&W’s April 1 proxy, it appears that Taff could get close to $5 million in cash, plus four years’ worth of insurance coverage and money to cover two years’ of medical benefits (which made us wonder: If Taff is getting the insurance, why does he also need the extra cash?), and more than $1.6 million in value for his soon-to-be-vested equity awards.

That’s all great, but the Consulting Agreement is pretty sweet, too. Taff is going to continue to pitch in while B&W looks for his successor, except he’s going to make a lot more money as a consultant than he did as the SVP/CFO. Whereas his annual base salary for FY 2010 was $516,363, he’s now going to make $112,629.00 per month. And because that’s not enough, while he’s a consultant, B&W is also going to provide him with a furnished apartment “(not to exceed a cost of $3,200 per month, inclusive of utilities and housekeeping); and (2) a car (not to exceed a cost of $900 per month).” The company will also pick up the tab for two roundtrip tickets each month for Taff to fly back and forth to Houston, where his family apparently still resides.

Unless Taff and B&W agree otherwise, the consulting gig is intended to last through next July.

Is it really any wonder that this was filed late on a Friday before a holiday weekend?

Image source: bayasaa via flickr

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Want to know which companies visited the “Friday night dump”? Our FootnotedPro subscribers do, thanks to the report we sent out this morning. For more information or to inquire about a trial subscription, qualified institutional investors can contact todd.serpico@morningstar.com.