That’s some contract!

July 15, 2005

At a time when many corporate boards are reducing the number of years in employment contracts with top execs, Leucadia’s (LUK) board has decided to go in the opposite direction. In an 8-K filed yesterday, Leucadia’s top two executives, Ian Cumming and Joseph Steinberg, were given 10-year employment contracts, which is pretty unusual these days. What makes the contracts particularly interesting is that if Leucadia is acquired, Mssrs. Cumming and Steinberg will “receive a severance allowance equal to the remainder of the aggregate annual salary” which makes for a pretty nice windfall.

Equally interesting was the item about personal use of the corporate jet. In the past, I’ve written about Steinberg’s high-flying ways. But in the current employment contract, Leucadia’s board says the pair can spend up to $1.5 million on personal use of the corporate jet, which is more than the two men made in salary last year.

So let’s recap: a 10 year-contract with a generous change-in-control clause and the keys to the corporate jet. Could there possibly be something else the pair wanted that the board didn’t give them? With that kind of track record, they should have asked for something really good, like their own private islands, or at least lifetime consulting contracts.

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