Juggling jobs with Corzine at MF Global …

Congratulations, MF Global (MF) shareholders! You have snared a smart, high-profile and accomplished (if pricey) chief executive. Or part of one, anyway.

As has been widely reported, MF Global on Wednesday named as its new chairman and CEO Jon S. Corzine — the onetime Goldman Sachs co-head who went on to represent New Jersey in the U.S. Senate and then governor, losing his bid last year for re-election as chief executive of the Garden State.

At the same time, Corzine will be a visiting professor at Princeton University’s Woodrow Wilson School. And he’ll also be an operating partner at private-equity firm J.C. Flowers & Co. (Flowers owns about 10% of MF Global, but both firms are very clear that Corzine isn’t at MF Global to represent Flowers.)

And that may turn out to be the rub for MF Global’s shareholders. On the one hand, Corzine “is expected to spend substantially all of his business time and attention” on his day job at MF Global, according to his agreement with the company; he can only spend time on Flowers “so long as the activities … do not significantly interfere with your performance of your responsibilities under this Agreement” to serve as CEO. (Emphasis is in the original.)

And yet, when it comes to “corporate opportunities” — read, potential investments for MF Global — Corzine must split his attention: He’s under no obligation to tell MF Global about even the best opportunities if he finds out about them through JC Flowers. His agreement with MF Global even says the company

“renounces any interest or expectancy of the MF Global Group in — business opportunities that are from time to time presented to you by [JC Flowers] — or in which you acquire knowledge through your association with JCF.”

But the company goes further still: It tries to give Corzine the blessing of its shareholders as well:

“(A) you shall have no duty to communicate or present such business opportunity to the MF Global Group and (B) you shall not be liable to the MF Global Group or, to the maximum extent permitted from time to time under the law of the State of Delaware, its stockholders for failing to present such corporate opportunity to the MF Global Group, whether under a breach of any fiduciary duty theory, by reason of the fact that JCF pursues or acquires such corporate opportunity for itself or otherwise.”

With luck, Corzine, the company and their shareholders won’t ever have to put that one to the test in court.

Juggling these three jobs may be part of the reason Corzine and MF Global are signing up for what appears to be a test drive. The contract runs about 53 weeks, until March 31, 2011, but MF Global has to notify Corzine on Dec. 31 whether it intends to keep him on. Cutting him loose before April next year could prove costly: His salary is $1.5 million and he has a guaranteed bonus of at least $2 million for the next fiscal year — but severance would be based on a higher $3 million “target” bonus. All told, his payout for dismissal would be $9 million, cash on the barrelhead, plus more to make up for any federal excise tax on “golden parachute” payments. (His options would also vest immediately, and he would get up to two years of company-paid health-care benefits.)

Curiously, Corzine only has a three-month non-compete period if he does part ways with MF Global, though he couldn’t approach the company’s clients or employees for a year. By contrast, his open-ended agreement with Flowers (there’s no end date specified) spells out a 12-month non-compete.

Other details we found interesting from Corzine’s deals with the two companies:

  • Just for signing on with MF Global, he’s getting not only a $1.5 million signing bonus within the next month, but also an option for 2.5 million shares that vests if he makes it through March 31 next year. The option’s strike price will be set April 7, but at Tuesday’s close it would have been worth $18.3 million.
  • His base salary can’t fall below the initial $1.5 million, but it can be increased — and once it is, it can’t fall again.
  • It takes money to manage all that money, so MF Global will pay up to $200,000 toward Corzine’s tax and financial-planning expenses.
  • JC Flowers isn’t paying Corzine any salary while he works for MF Global, but he won’t be working for nothing: Under his letter agreement with founder J. Christopher Flowers, he gets a 3.5% “carry percentage” — or cut of the firm’s profits beyond whatever he invested — from any of several funds or related vehicles.

As a fellow alumnus of the University of Illinois at Urbana-Champaign, I can’t help but wish Corzine all the best in each of his new gigs. But for the sake of MF Global’s shareholders, I hope he’s better at juggling jobs than he is at winning re-election.

Image source: Tony the Misfit via Flickr