Business

CEO's payout hurt by stock fall

In his ouster from Wachovia Corp., former chief executive Ken Thompson is feeling a bit of the pain of the company's suffering shareholders.

According to a securities filing this week, all of Thompson's 5.97 million outstanding options to buy company stock are “under water,” meaning the exercise price is above the current trading value of Wachovia stock.

Of course, Thompson, who retired Sunday under fire for the Charlotte bank's mounting losses and plunging stock price, leaves the nation's No. 4 bank by assets with other stock holdings, deferred compensation and other benefits accumulated over a three-decade career.

The total comes to about $28 million, but the take would have been bigger if the stock was faring better. The company's shares fell Tuesday by $1.48, or more than 6 percent, to $21.92, around a 13-year low.

Stock options give the holder the right to buy company shares at a future date at a predetermined price. The idea is that they reward executives only if the stock appreciates.

Thompson's options have strike prices that range from $27.56 per share to $58.36 per share. The expiration dates, which remain in effect, range from 2009 to 2018, meaning he could benefit in the future if the stock recovers.

Executives walking away with millions peeve investors who have suffered losses because of their missteps. But most of Thompson's payout wasn't directly tied to his departure and paled next to the exit packages of some other ousted leaders. For example, Stan O'Neal, who left Merrill Lynch & Co. last year under fire, reportedly reaped a $161 million retirement package.

Here's the breakdown of Thompson's $28 million:

Over his 32 years at the bank, Thompson received outright stock grants for his performance and bought shares on his own. According to a filing in April, he and family members held a total of 950,118 shares, including 304,469 restricted shares that vested with his retirement. At Tuesday's closing price, those holdings were worth $20.8 million.

Thompson, CEO since 2000, accumulated a pension benefit worth $801,202 as of Sept 30.

During his career, he set aside money in deferred compensation accounts – sort of like a 401(k) plan. Those accounts contained $4.78 million at the end of 2007.

As part of his departure, Thompson received severance worth $1.45 million, the equivalent of 16 months' base salary.

He also gets office space in a building other than the company's headquarters and the service of an executive assistant for up to three years.

In return, Thompson can't compete with Wachovia for two years or recruit the bank's employees for three.

Thompson declined to comment by e-mail. The company declined to comment beyond its securities filings.

According to Thompson's retirement agreement, New York attorney Joseph Bachelder negotiated his exit.

The Wall Street Journal has labeled him one of the best lawyers at wrangling deals for departing executives, including O'Neal.

The last piece of the $28 million is $50,000 to pay for legal expenses for negotiating the agreement.

In his ouster from Wachovia Corp., former chief executive Ken Thompson is feeling a bit of the pain of the company's suffering shareholders.

According to a securities filing this week, all of Thompson's 5.97 million outstanding options to buy company stock are “under water,” meaning the exercise price is above the current trading value of Wachovia stock.

Of course, Thompson, who retired Sunday under fire for the Charlotte bank's mounting losses and plunging stock price, leaves the nation's No. 4 bank by assets with other stock holdings, deferred compensation and other benefits accumulated over a three-decade career.

The total comes to about $28 million, but the take would have been bigger if the stock was faring better. The company's shares fell Tuesday by $1.48, or more than 6 percent, to $21.92, around a 13-year low.

Stock options give the holder the right to buy company shares at a future date at a predetermined price. The idea is that they reward executives only if the stock appreciates.

Thompson's options have strike prices that range from $27.56 per share to $58.36 per share. The expiration dates, which remain in effect, range from 2009 to 2018, meaning he could benefit in the future if the stock recovers.

Executives walking away with millions peeve investors who have suffered losses because of their missteps. But most of Thompson's payout wasn't directly tied to his departure and paled next to the exit packages of some other ousted leaders. For example, Stan O'Neal, who left Merrill Lynch & Co. last year under fire, reportedly reaped a $161 million retirement package.

Here's the breakdown of Thompson's $28 million:

Over his 32 years at the bank, Thompson received outright stock grants for his performance and bought shares on his own. According to a filing in April, he and family members held a total of 950,118 shares, including 304,469 restricted shares that vested with his retirement. At Tuesday's closing price, those holdings were worth $20.8 million.

Thompson, CEO since 2000, accumulated a pension benefit worth $801,202 as of Sept 30.

During his career, he set aside money in deferred compensation accounts – sort of like a 401(k) plan. Those accounts contained $4.78 million at the end of 2007.

As part of his departure, Thompson received severance worth $1.45 million, the equivalent of 16 months' base salary.

He also gets office space in a building other than the company's headquarters and the service of an executive assistant for up to three years.

In return, Thompson can't compete with Wachovia for two years or recruit the bank's employees for three.

Thompson declined to comment by e-mail. The company declined to comment beyond its securities filings.

According to Thompson's retirement agreement, New York attorney Joseph Bachelder negotiated his exit.

The Wall Street Journal has labeled him one of the best lawyers at wrangling deals for departing executives, including O'Neal.

The last piece of the $28 million is $50,000 to pay for legal expenses for negotiating the agreement.

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