Leucadia Exec Gets Big Pay to Stay…

March 9, 2010

The Change in Control terms for executives at Leucadia National Corp. (LUK) were already generous, but for Vice President Justin R. Wheeler, they just got a lot better.

Late last Friday afternoon, Leucadia filed this 8-K and an attached letter agreement to set out Wheeler’s new deal with the company. According to the document, the new terms were ——intended to induce you to remain in the employ of Leucadia National Corporation.

Frankly, why would he refuse?

Dated March 1, 2010, the agreement states that if within the next five years Wheeler continues to be an executive officer of Leucadia, but neither Ian M. Cumming (Chairman of the Board) nor Joseph S. Steinberg (president) is then serving as Leucadia’s Chief Executive Officer, then Wheeler can make a profitable departure. If he exercises his written option to do so within six months of the stated change in control, he can terminate his employment and receive $2.5 million. That amount can be reduced if it would subject Wheeler to Excise tax liability or if he were to act negligently or breach his duties to the company.

(Of course, if either Cumming or Steinberg leaves the company under certain circumstances between now and 2015, provisions at the bottom of p. 28 of the April, 2009 proxy obligate the company to pay each man $5.1 million. However, that is not a new disclosure.)

But even if Cumming or Steinberg don’t leave, Wheeler may get the money anyway. The second page of the letter states:

7.) At the end of the five year period from the date hereof and if a —Change of Control has not occurred, the Board of Directors of LUK, may upon the recommendation of LUK’s Compensation Committee, choose, in its sole discretion, and based upon its evaluation of your performance during the five year period, to award you all or any portion of the Payment.

So regardless of whether the company changes hands, or whether Wheeler stays or leaves at the end of 2015, he may get $2.5 million – just to continue doing his job.

Image source: Gala Darling

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