Big Business obscenity of the day.
Headline: Dynegy CEO to Get Big Severance
The Associated Press
Thursday, May 30, 2002; 2:46 PM
HOUSTON –– Dynegy Inc. chairman and chief executive Charles L. Watson, who agreed this week to leave the troubled energy company, is set to receive at least $33 million more in severance payments than he would have had he served out his contract.
Dynegy declined to comment on Watson's severance package, which was described in public documents about two years ago.
The contract requires that if Watson were forced out, he be paid three times the amount of his average compensation in his three best years, including the projected value of stock options he would have received over the next three years.
Under the contract that he signed in early 2000, Watson, 52, has been compensated more than $11 million a year, including the projected value of his stock options, according to company filings with the U.S. Securities and Exchange Commission.
Watson would also get compensation he would have earned over the next eight months, before his contract expires Feb. 1, which could be an additional $7 million.
Watson's annual base salary was set in 2000 at $1.5 million, a raise from his previous $1 million salary. He received bonuses of $4.3 million to $5 million in the same three years.
Watson's severance package would also include the projected value of stock options, as much as 3.75 times his base salary, according to a Dynegy filing in March 2000.
The company declined to say whether Watson quit or was fired, but directors said this week that his departure, announced Tuesday, was unrelated to Dynegy's recent problems.
Watson was a co-founder who became chief executive of Dynegy's predecessor in 1989 and built Dynegy into one of the largest 100 U.S. corporations, with $42 billion in revenue last year.
But Dynegy began to unravel about the time that Watson made an aborted bid to buy troubled rival Enron Corp. last fall. Dynegy's stock tumbled further amid questions about possible phony trades designed to puff up the Houston-based company's revenue.
A Dynegy spokesman declined to say whether the board knew about Watson's severance package when it agreed to replace him this week.
"The compensation is a matter between Chuck and the board," said the spokesman, John Sousa. "Both Mr. Watson and the board believe change in leadership was the right thing for the stakeholders, and that a new management focus for Dynegy was needed."
Sousa said SEC rules would require Dynegy to disclose the cost of Watson's severance package, but he said he didn't know when that information would be made known to investors.
In addition to cash and stock awards, Watson's contract says that if he did not quit or get fired for cause, the company would furnish him with a comparable executive office for five years, during which time Watson would not be allowed to discuss confidential information about Dynegy or hire away its employees.
Dynegy has named board member Daniel L. Dienstbier as interim chief executive and Glenn Tilton, vice chairman of ChevronTexaco, as interim chairman. ChevronTexaco owns 26.5 percent of Dynegy.
In midday trading Thursday, Dynegy shares rose 16 cents to $8.58. The shares have lost more than 80 percent of their value in the past year. |
