Even execs worry about health care (sort of) …

November 17, 2010

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The recent weeks brought a flood of quarterly reports as companies on calendar years rushed to file their 10-Qs with the Securities and Exchange Commission. In that welter of documents, one thing stood out: Even executives are worried who’s going to pay for health care.

Now, we’re not suggesting that you shed any tears for them — plenty of these guys (and most of them are guys) get paid enough while working to ensure continuous Cadillac coverage in their golden years, or while they’re between jobs. But even so, we’re seeing agreements that put companies on the hook for post-employment medical coverage more often and for longer periods — this at a time when health-care benefits for ordinary Joes is getting scaled back, and retiree health care is getting slashed.

Two of the most recent examples: Robert Hal Cooper, the retiring chief financial officer of Republic Airways (RJET), signed a transition agreement, filed with this 8-K, that guarantees him 18 months of coverage under the federally mandated COBRA plan, as well as a $2,500 monthly health-care stipend for 33 months after that. That works out to 51 months, or more than four years. By contrast, the non-compete provision that Cooper agreed to in order to get these benefits lasts just 12 months. (Like most such arrangements, Republic is off the hook if Cooper gets coverage from another employer. Cooper also gets a salary of $225,000 until December 31, 2013, or for 30 months after his retirement, whichever comes sooner.)

Meantime, over at electrical-product and tool-maker Cooper Industries (CBE), sitting Chairman and CEO Krik Hachigian inked a new “Benefits Continuation Agreement,” filed with the company’s 10-Q last week, that guarantees him and his wife lifetime health-care benefits after he retires, and coverage for his children until they turn 26 (though Hachigian must continue to pay premiums as if he were an employee). The document appears to supplant the terms of a “Continuity Agreement” signed on Nov. 30, 2009 (a generic version of which is filed here), which provides for a mere 24 months of coverage — plus another 60 after that as long as the retiree isn’t eligible for Medicare or covered under another plan.

Cooper’s proxy shows that Hachigian made $10.8 million last year alone, including $3.75 million in cash, and he raked in a total of $41.7 million over the last three years, so we doubt he’s seriously worried about making the co-payment for his semi-annual dental cleaning.

Still, the amount of attention and effort that companies and senior executives (and their lawyers) are putting into this issue serves to underscore just how big a deal health-care costs remain going forward.

Image source: jasleen_kaur via Flickr

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