Former Executive Retirements

[Dea Certe]

If I recall correctly, did not Wolf and Gangwal get some sort of "super seniority" towards their retirements? Does anyone know if those retirements were paid out in a lump sum or in some kind of payment plan?

Was Dave Siegel or Bruce Lakefield given the same sort of deal in their employment contracts? I am under the impression Siegel got the $4.1 million "take a hike" cash and nothing more.

I'm wondering if there's a secret pension deal here for certain upper management ala Don Carty's dirty little scheme.

Are these contracts a matter of public record or private?

If anyone knows, I'm sure we'd all like to hear about it.

Thanks.

Dea

 

[BoeingBoy]

Dea,

For certain, Wolf got a "super seniority" deal - 29 years of credited service the day he came on the property. So he retired with over 30 years "longevity" and got a big lump sum.

Without going back thru old reports, I can't say for sure that G got a similiar deal but assume he did (and hence the similiar lump sum payout).

Siegel is a little more complex since his tenure started before the 1st BK and ended after it. He originally had a DB pension with each year of actual service earning multiple years of "longevity" towards the benefit. However, that DB pension disappeared during BK1 (supposedly) and was replaced with a DC plan. Again, without going back and digging, I can't give you any details.

Jim

 

[FWAAA]

Nearly every Fortune 500 company provides bankruptcy-proof pensions or retirement monies for its executives. That's because typically, executives ask for, and receive them as part of their employment agreement. I have drafted plenty of them.

Before you scream about how unfair that is, remember that the unions could have negotiated the same deal - in fact, management would have been elated if the represented employees would have demanded a defined contribution plan (completely bankruptcy-proof) in lieu of their DB plan (which is nothing more than an unsecured promise to pay annuities well into the future).

Given that the employers were willing to pay a certain amount toward your DB plans, it is safe to assume that your contract could have required the employer to contribute the same $$$ into a DC plan - a 401k plan over which the employees would have had full control of the investments.

To answer your question, executive comp agreements (including retirement) are a matter of public record - but you sometimes have to dig to find them. Sometimes they are in the 10-K, other times hidden in the proxy statement. www.sec.gov is the place to look.

 

[BoeingBoy]

"defined contribution plan (completely bankruptcy-proof)"

Not completely, at least from the motion filed by U and approved by the judge. Payments due postbankruptcy on earnings prebankruptcy are not being paid. In addition, due to IRS limits on 401K contributions, some contributions go into a non-qualified account - meaning there are no real dollars but just an accounting entry. Those "dollars" could disappear as well.

As an aside, this means that the older, more senior (since the two are not necessarily the same) like 3 of the so-called RC4 had a vested interest in keeping the company out of bankruptcy. The two are effectively the same. Bankruptcy could mean that a good chunk of their total DC money disappears. So much for the comments that these MEC reps were willing to risk bankruptcy to protect their retirement.

Jim

 

[700UW]

From my understanding Siegel told us the they bought out Wolf and Gangwal's pensions.

 

[BoeingBoy]

Could be, 700, or it could be semantics. A lump sum is effectively "buying out" the pension liability.

Jim

 

[BoeingBoy]

After some digging in the 2002 annual report....

"During Mr. Wolf’s employment with the Corporation, he was entitled to benefits under a supplemental retirement arrangement upon the termination of his employment that was based upon his actual salary and assumed maximum bonus with respect to his last year of actual employment. Mr. Wolf retired from the Corporation in March, 2002 and his accrued benefit was paid at that time."

"Mr. Wolf’s supplemental retirement arrangement entered into when he joined the Company in 1996 provided that he received 30 years of credited service upon his retirement."

"Mr. Wolf’s agreement also provided that regardless of the reason for the termination of Mr. Wolf’s services to the Company, he was entitled to receive (i) travel benefits for his lifetime; (ii) health benefits for he and his spouse for the remainder of their lives; and (iii) certain other fringe benefits provided to him as Chief Executive Officer to the extent such benefits are provided to other officers of the Company."

That's all (except for stock info on shares that proved worthless after BK1) that I could find in the 2002 annual report. I haven't gone back thru other filings to find more - yet.

Jim