When Koch Industries completes its purchase of Georgia-Pacific Corp., it will mark a big payday for A.D. “Pete” Correll, the outgoing chairman and chief executive officer of the target company. Correll stands to receive a package of stock-based compensation and other goodies worth a total of about $130 million, according to The Wall Street Journal.
Another case of severance payments gone wild? Yes and no.
It turns out that Correll — now 64, and the chairman and CEO since 1993 — was planning to retire in May anyway and figured to fetch more than $80 million even if he didn’t sell the company, according to the paper.
The Journal pointed out that under the proposed deal, Correll would receive an additional $12.7 million from stock-performance awards, $15.3 million from stock options that immediately vest, and a $15.5 million change-in-control payment. This adds up to an extra $43.5 million or so because of the sale.
Correll is also expected to receive a pension of $1.4 million per year.
Not surprisingly, corporate governance watchdogs did not look at this anticipated payout too kindly. “This calls into question some decisions of the board,” Paul Hodgson of the Corporate Library told the paper.
Georgia-Pacific spokeswoman Sheila Weidman reportedly stated that the compensation is based on a variety of measures and that Correll benefited from accumulating his shares over a long period. “Pete bet the family farm on Georgia-Pacific, and that is now to his benefit,” she added, according to the paper.