Keeping the CFO at Weatherford International …

PenWhat’s it worth to Weatherford International (WFT) to keep its chief financial officer happy? About $7.25 million, from the looks of the 8-K it filed late yesterday.

Weatherford’s compensation consultants and attorneys have been having a busy couple years of it. Worried about unspecified tax concerns, the company froze its executive pension as of late 2008, then created a lush retirement program intended to last for just one year, in 2009. A third plan was set up early this year — then frozen and closed to new participants this spring.

Along the way, it seems, Weatherford triggered the “good reason” clause in the terms of employment for a number of executives, including CFO Andrew Becnel — something the company warned investors about back in May. (We mentioned it when discussing the $24.5-million departure of two other executives.)

Now, Weatherford has amended Becnel’s employment agreement, filing the new one with that 8-K, in large part to guarantee him benefits he gave up amid the executive-pension switcheroo. That’s where the $7.25 million comes in: It’s money the company owes him no matter why he leaves, or when. Or, in Weatherford’s words:

“if the Company or Mr. Becnel terminates his employment for any reason … or without reason, Mr. Becnel will be entitled to receive (i) any accrued base salary and vacation as of the date of termination plus (ii) a lump sum amount of $7,251,348, which is substantially equivalent to the amount that the Company would have been obligated to pay to Mr. Becnel had he terminated his employment for Good Reason under the Prior Agreement.”

The risk of losing $7.25 is nothing to sneeze at, but it’s not like Becnel was hurting for retirement and severance benefits. Those successive retirement plans may be frozen, for example, but they’re still pretty sweet: According to the company’s most recent proxy filing, Becnel’s pension benefit was worth $6.2 million as of Dec. 31, but would have paid him $9 million had he been terminated under most circumstances (part of a total estimated termination package of $17.5 million).

And in a nice addition amid today’s turbulent health-care market, that one-year plan that was in place last year entitles Becnel to lifetime health-care benefits not only for himself, but of his wife and any dependent children under age 25 — for a maximum cost of $2,000 a year. This, of course, is on top of the $1.35 million in salary and bonus, and $3.3 million in stock awards that Becnel received last year, according to Weatherford’s most recent proxy.

All in all, we can see why he might want to stick around. We’re not sure it was such a tough sell on Weatherford’s part, though: Earlier this year, under a provision in the company’s latest executive retirement plan, Becnel elected to link $4.5 million of his benefits — which otherwise would have earned interest at the 5-year LIBOR rate — to the company’s share price.

Update: As Mark notes out in the comments, we neglected to say that Weatherford is an oil and natural-gas services and equipment company that’s now based in Geneva; its market-cap is about $12 billion. Sorry about that!

Image source: MShades via Flickr


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