|Thu Dec 18 2014 20:49:09|
eBay Gives Top Execs a Golden Handshake
By: Ina Steiner
While sellers, employees, and shareholders anxiously await word of how the eBay-PayPal breakup will play out and how it will affect them, first things first. eBay's Board of Directors made sure the company's top-tier executives including CEO John Donahoe will be well compensated after the split.
On December 15, 2014, the Compensation Committee of the Board of Directors of eBay Inc. adopting the "Transaction Success and Retention Program," which includes the following provision:
"The benefits for the CEO and CFO would include a cash payment equal to two times annual base salary and two times the annual cash incentive paid at the target amount, as well as the acceleration of all restricted stock unit and stock option awards that were outstanding and unvested as of the date of termination of employment."
Such retention provisions are usually written into an executive's contract when newly hired - called a golden handshake - to offset the risk of taking a new job. Since that's not the case, why is the board offering it, and why call it a retention program? After all, Donahoe said he would leave after the split.
"Under the terms of the arrangement, called the Transaction Success and Retention Program, each Departing Executive Officer would be entitled to certain benefits in the event the officer remains employed through the separation of the Company's ecommerce and payments businesses and his or her employment is terminated at the time of separation."
The executives made the decision to break up the company and already committed to staying on and seeing it through to completion. Yet the eBay board feels obligated to promise them a fortune to stay on. Does anyone else think this is over the top?
As far as I know, the CEO and CFO are not obligated to accept this golden handshake - but what are the chances they'll decline to accept it?