H.J. Heinz Co. CEO William Johnson could reap a $212.7 million payday if he leaves the company after it is taken private in a $28 billion buyout by Warren Buffett and a Brazilian investment firm.
Johnson's “golden parachute” was disclosed on Monday by the company in a filing with the Securities and Exchange Commission. Johnson, along with other current and former executives of the Pittsburgh food company, could receive a total of $436 million, the filing revealed.
The size of Johnson's payday would be among the top 10 ever awarded an American CEO. Johnson's would rank seventh, according to a list of the largest CEO severance packages, compiled last year by GMI Ratings. Tops on the list is former General Electric CEO Jack Welsh's $417 million severance in 2001 when he retired
“The payments reflect Mr. Johnson's success in creating billions of dollars in shareholder value over his successful 15-year tenure as president and CEO,” spokesman Michael Mullen said in a written statement.
The payout includes $56 million that's tied directly to the company's acquisition. That includes $15.9 million in cash if he is fired and $30.5 million in stock options that haven't vested and $9.6 million in other payments.
Johnson, 63, who was instrumental in securing the deal for the ketchup and pickle maker, will be paid $99.7 million for the Heinz stock he holds and $57 million in deferred compensation.
“This compensation consists of equity that Mr. Johnson accumulated over his 30-year career with Heinz and existing equity awards and contractual rights that were in place well before the announcement of the proposed merger,” Mullen said.
Other Heinz executives are set to receive paydays structured the same as Johnson's, though much smaller by comparison.
For example, Chief Financial Officer Arthur Winkleblack stands to receive $37.6 million in total compensation, and David Moran, chief executive officer of Heinz's European operations, could get $35.3 million. Ten other executives have golden parachutes ranging from $3.5 million to $12.5 million.
Under the proposed buyout deal, which still requires shareholder approval, Buffett's Berkshire Hathaway and Brazilian investment firm 3G Capital would pay Heinz stockholders $72.50 a share, a 20 percent premium to the stock's closing price before the deal was announced.
It's expected to close during the third quarter this year.
Buffett has said that Johnson would keep his post as CEO. However, Johnson and other company officials have said that his tenure with the company hasn't been discussed — an assertion that was reiterated in the company's SEC filing.
Aaron Boyd, research director at executive compensation research firm Equilar Inc. of Redwood City, Calif., said it's difficult to put these kinds of payouts into perspective.
“Obviously, to you and me, the average person, we dare not dream of a $200 million payout upon retirement,” he said.
Boyd said, “$200 million certainly is lot and more than many CEOs walk away with, but he's leaving on successful terms.”
Alex Nixon is a staff writer for Trib Total Media.
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