The preliminary proxy statement filed by Verizon Communications ahead of their AGM on 6 May has revealed that the former President and Chief Operating Officer, Dennis Strigl, who retired from the company effective 31 December 2009, will receive a separation payment of some $18.5m, to be paid in July 2010.
The origin of the payment dates back to the time of the merger of Bell Atlantic and GTE, to form Verizon Communications in 2000. When the merger was completed, the company negotiated and entered into an employment agreement with Mr. Strigl, who was then an executive officer of the company. The Compensation Committee believed that it was important to ensure that Mr. Strigl would continue to provide the expertise and continuity that were critical to the company’s success.
Following his retirement, the Company has determined that Mr. Strigl is eligible to receive separation benefits under the terms of his employment agreement. His employment agreement provided that if his employment was involuntarily terminated without cause or as a result of death or disability or was voluntarily terminated for good reason, he would receive a lump-sum cash payment equal to two times the sum of his base salary, the short-term incentive opportunity at threshold level and the long-term incentive opportunity at the target level specified in his employment agreement. No such payment was due on retirement.
His departure was announced in September 2009 and at the time the Wall Street Journal reported him as stating that said the 63 year old had been “planning his retirement for months”. Shareholders will no doubt question the necessity of the payment given the circumstances.
In addition, Mr. Strigl was eligible to receive, and did receive, his Short-Term Plan award payment for 2009 (which was based on the actual level of achievement under the Company’s Short-Term Plan), and he was eligible to receive an executive life insurance benefit, a tax gross-up benefit, financial planning and outplacement services, in each case as described above. He is also eligible to receive telecommunications services for a period of five years. Mr. Strigl is also eligible to receive payment on his 2008 and 2009 Long-Term Plan awards, to the extent that they vest, at the end of their respective performance cycles.
Wall Street Journal – Verizon President Strigl to Step Down From Post
Verizon Communications – Preliminary Proxy Statement