XL Group exec exits through revolving door…
Last week, David B. Duclos, XL Group plc’s (XL) Chief Executive, Insurance Operations, notified the company that he would retire at the end of 2011. According to this 8-K, filed December 1, Duclos turned in his resignation on November 28 and signed off on an Agreement and Release the next day.
The Agreement covers a variety of issues, but the upshot is that Duclos is definitely not walking away empty handed; and – just as he heads out one door – he’s coming back in through another one by means of a Consulting Agreement.
In exchange for giving XL Group a General Release, Duclos will get a lump sum of payment of more than $2.13 million, plus he remains eligible for a 2011 bonus, assuming the board decides to pay one. If last year’s bonus is any guide, that could add up: In FY 2010, Duclos received a $700,000 bonus dubbed as such, plus a second bonus (called non-equity incentive compensation) of just under $467,000.
The company is also accelerating the vesting for any stock options and restricted stock that Duclos accumulated over the years under the equity incentive plan. Since they won’t officially vest until he retires on December 31, we can’t calculate precisely how much this will be worth; however, the March 7, 2011 proxy discloses that – as of last spring – the payout value for Duclos’s stock rights and options was approximately $826,000.
Duclos currently has 639,908 stock options, almost 42% of which are underwater. They are set to expire between 2014 and 2016, and the agreement states that – following Duclos’s departure – they will expire on the earlier of the expiration date, or five years after December 31, 2011. On top of that, a portion of his performance units will vest in accordance with a fairly wonkish formula, and he will get a payment of $192,467 per the terms of the Company’s 2009 Cash Long-Term Program and his unvested supplemental deferred cash award. Finally, Duclos will get continued medical benefit plan coverage for himself and his dependents for two years, or until he is eligible for insurance benefits from a new employer.
Granted, there are some variables we can’t quantify yet, but it’s plausible that Duclos could leave with as much as $4.3 million for his separation payment, bonus, deferred cash award, and equity interests, a number that would actually slightly eclipse the $4.25 total compensation figure that he received for FY 2010.
And, as mentioned earlier, Duclos agreed to serve as a consultant for XL Group for 2012. In exchange for working no more “than 35 hours per month, which is less than 20% of the average level of services performed by the Consultant over the last three years of his employment with the Company,” XL Group will pay Duclos $500,000, to be paid in four quarterly payments.
When XL Group filed its 10-K last February 25, Duclos’s age was listed as 53, which means he’s either 54 now or will be soon. It remains to be seen whether this is really a retirement, or just an interlude before he takes his next job. But either way, he’ll have a part-time job and a nice chunk of change that will allow him to catch his breath and figure out what to do in 2013.
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