More than 12 million reasons…

Earlier this month, Calpine (CPNLQ.PK) announced that it had hired Bob May to be its new CEO, after Peter Cartwright was removed by the company’s directors at the end of November. May, 56, a turnaround expert who most recently served as interim CEO at Healthsouth (HLSH.PK). Last week, Calpine filed for bankruptcy protection. But before they did that, they inked this employment agreement with May that was filed with the SEC yesterday.

The most striking thing about the agreement is that May will collect a $12 million “success fee” if the company’s bankruptcy plan is approved either during May’s tenure or within a year following his departure from the company. That’s certainly a hefty incentive to get the job done. Equally interesting is the $2 million signing bonus May was set to collect yesterday and a guaranteed minimum bonus of $2.25 million at the end of next year and a $1.5 million guaranteed bonus at the end of 2007 of $1.5 million. That’s on top of the $1.5 million in annual salary. Needless to say, none of those details were included in May’s hiring announcement.

Now I’ve interviewed May two months ago for an article I worked on for Worth magazine and he certainly seems like a bright, talented guy. But that’s still a whole heap of money, given that it’s only a two year contract. Is he worth that kind of cash? Calpine’s board apparently believes so. And, since the contract was entered into a week before the company filed its Chapter 11 petition, I’m pretty sure (thought correct me if I’m wrong) the bankruptcy court has no say on this one.