Posted by Media Outrage on August 3rd, 2012
GE did not want John Krenicki to move on to one of their competitors, so they gave him a 3 year allowance worth $89,000-a-month not to work….
John Krenicki is giving up his General Electric Co. (GE) paycheck. But he’s going to be collecting an allowance.
As part of a deal to keep the veteran executive from joining a competitor for an usually long three years, the conglomerate has agreed to pay Mr. Krenicki $89,000 a month until 2022.
The payment to Mr. Krenicki, who is 50 years old, was dubbed a retirement allowance by GE and is worth $1 million a year.
It is part of an exit package that will let him immediately cash in equity awards originally set to vest between now and the end of 2014. It will also keep him eligible for a GE supplemental pension plan when he turns 60.
Mark Reilly, head of the executive compensation practice for Verisight Inc., a human-resources consultancy, said the package is worth at least $28.3 million. That includes $14.8 million worth of stock options and restricted stock units, and a projected 2012 bonus equivalent to last year’s of $2.8 million.
Mr. Krenicki’s exit allowance represents “a generous severance package in exchange for his noncompete agreement,” Mr. Reilly said. Considering Mr. Krenicki’s rank of vice chairman and his 29 years at GE, he said the package was fair.
The executive is a vice chairman of GE, but is leaving at the end of 2012 because the conglomerate is splitting his $50 billion energy division into three parts. His exit package includes an agreement not to join a GE competitor anywhere in the world for three years.
Mr. Krenicki has agreed to take a job as senior operating partner at private-equity firm Clayton, Dubilier & Rice LLC beginning in January. He will help oversee the firm’s portfolio of companies and invest in its coming deals.
The $89,000 monthly allowance appears to stem from a GE program called “retirement for the good of the company,” which is geared at allowing middle managers who take early retirement to keep their pensions.
“Mr. Krenicki’s retirement terms reflect his senior position, long service and significant contribution to GE as well as our interest in receiving strong noncompete and nonsolicitation agreement protections,” a GE spokeswoman said.
Multimillion-dollar executive exit packages have long irked shareholder activists and sparked populist outrage. Former GE chief John F. “Jack” Welch relinquished about $2.5 million a year in retirement benefits–from free flowers to use of a New York apartment–after the perks were revealed in his 2002 divorce settlement.
According to corporate governance research firm GMI, Mr. Welch received the biggest departure payout of all time: more than $400 million. He was followed by Exxon Mobil Corp.’s Lee Raymond, with $321 million. The packages were boosted by the value of the executives’ deferred compensation and stock options accumulated over years of service.
Nowadays, big businesses rarely demand three-year noncompete deals from departing executives. “This is unusual,” said Hollis Gonerka Bart, a partner at Withers Bergman LLP.
On the other hand, New York courts tend to uphold bans of that length as long as the former executive “is paid for sitting on the sideline,” Ms. Bart added.
Mediaoutrage- Good money