Nice perks plus silly severance at General Dynamics…
In its proxy filed Friday, General Dynamics (GD) assures us its executive perks are reasonable because they “benchmark” them against “generally accepted corporate practices.” But as Footnoted readers know, generally accepted corporate perk practices might be described as “anything goes.” Applying GD’s logic, I may start “benchmarking” my own behavior against whatever Britney Spears is doing so it’ll look like I have everything under control.
GD touts company performance to justify the $18.5 million in total compensation paid last year to Chairman/CEO Nicholas D. Chabraja. (Of course, it doesn’t hurt to be in the defense business; as I was writing this post, a story popped up about a new contract the Army bestowed on GD.) Chabraja’s perks totaled $414K, including tax gross-ups of $32K and personal air travel on company aircraft worth $259K. And GD’s named executives also enjoyed — in unspecified amounts — club memberships, financial planning/tax preparation help, physical exams, home security, relocation expenses, and personal use of a car.
GD also offers its managers an unusual perk, listed as “personal liability” insurance. Could this be some supplement to regular D&O coverage? Or does it mean that if someone slips in the marble entranceway at the Chabraja mansion and sues the CEO, that’s covered by company-paid insurance? Beats me.
But all this is merely a distraction from Chabraja’s severance arrangements. If the man is terminated FOR CAUSE (please excuse the capitals, but I lost control for a moment), he’s entitled to nearly $8.8M. (In last year’s proxy, this number was only $567K.) Of this figure, $8.3M is “in lieu of corporate aircraft usage, reimbursement for office space and administrative support, reimbursement for moving expenses and applicable tax gross up, to which he was entitled under an earlier employment agreement.” Quite bizarre, especially since the amended employment agreement the company filed for Chabraja last August follows accepted corporate practices, i.e., termination “for cause” can happen only if he behaves pretty badly.
While $8.8M is a pittance compared to the $44M Chabraja would get upon retirement, or the $66M he’d get in a termination without cause, it sure makes a nice benchmark for other CEOs out there.