The cost of change at AllianceBernstein__»

March 24, 2010

Making changes within the executive ranks is rarely inexpensive. In fact, it’s pretty common for a company to spend several million dollars as it bids farewell to one executive officer and hands the keys to the executive washroom over to his or her successor.

That’s certainly the case in the upcoming CFO change at global investment management firm AllianceBernstein (AB). Earlier this week, the company announced that longtime CFO Robert Joseph will retire at the end of 2010 and that John Howard will succeed him. Between now and the end of the year, Joseph will continue to work in what the company is calling a —senior advisory role.

In the 8-K that the company filed with the SEC yesterday, we get a glimpse into what the change in CFOs will cost the company. Although Joseph will officially retire on December 31, he will continue to draw his $195,000 per year base salary — as well as medical and dental insurance coverage — through June 30, 2011. Provided that he complies with the terms of his Retirement Agreement, he will also get a —2010 year-end compensation award of $805,000, which he will receive partly in cash and partly in deferred compensation. Finally, he will also get restricted units —representing assignments of beneficial ownership of limited partnership interests in AB Holding worth $625,000; so long as Joseph complies with his Retirement Agreement, a percentage of those interests will vest each year on December 1st in years 2011 through 2014.

Howard, who comes to AllianceBernstein after serving as CFO/COO at AQR Capital, started learning the ropes at AllianceBernstein on Monday of this week. His starting salary is $200,000 per year, and his 2010 —total year-end cash bonus and long-term incentive compensation award— shall be no less than $1,800,000, which shall be allocated between cash and deferred compensation. AllianceBernstein is also giving Howard — —for 2010 only — a year-end grant award of $2.5 million —as replacement equity for awards he is forfeiting by leaving AQR Capital.

For a company as large as AllianceBernstein, this transition-related outlay of a little more than $6 million might seem like the proverbial drop in the bucket. But it does show that even at the relatively low salary levels here (at least by Wall Street standards), change in the executive suite is still pretty costly.

Image source: Matt@TPE via Flickr

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