By Rob Varnon
The Connecticut Post staff writer
General Electric’s plan to pay its former energy division chief $89,000 a month for a decade is in the running for the worst financial footnote of 2012, according to a popular business blog.
The blog, footnoted.com, selected six disclosures from U.S. Securities and Exchange Commission filings for its eighth annual worst footnote competition. Dell, Sears Holdings, Yahoo, Zynga and Netflix joined GE in the title hunt this year. Previous winners include Hewlett-Packard for a severance package granted to a CEO who spent less than a year on the job and Chesapeake Energy for buying its CEO’s antique map collection for $12.1 million. Voting is open through the end of the month and a winner will be announced Dec. 31.
Footnoted was launched in 2003 when its founder, journalist Michelle Leder, published “Financial Fine Print.” The blog scours SEC filings and reports on the fine print in those filings.
“I basically chose the nominees after looking at some of our top posts over the past year, but readers get to vote on who actually wins,” said Leder. “Keep in mind that this is totally unscientific since I’m not able to police whether someone votes early and often.”
GE landed on the list this year for its deal with John Krenicki, vice chairman of GE Energy.
The conglomerate announced in July that Krenicki would resign at the end of the year after the company decided to reorganize its energy business into three separate divisions. Krenicki agreed to a three-year, no compete contract and GE agreed to grant him his annual bonus, allow existing stock options to vest and to provide a monthly retirement allowance of approximately $89,000 a month until he reaches the age of 60. That compares with a yearly median income for a Connecticut household of $69,243, according to the Census Bureau.
Krenicki was 50 years old at the time of the announcement, and he has agreed to work for private equity firm Clayton Dubilier and Rice beginning in January. GE retirees do not fully vest in the company’s plan until the age of 60, so retiring 10 years early would impact Krenicki’s payments.
GE defended the deal, saying it reflected Krenicki’s abilities, service and the price of keeping the competition from poaching him immediately.
“Mr. Kernicki’s retirement terms reflect his senior position, long service and significant contribution to GE as well as our interest in receiving strong noncompete and nonsolicitation agreement protections, which we received,” said Seth Martin, a GE spokesman.
The Connecticut company does face competition for the footnote award. Illinois-based Sears Holding, whose chairman is former Greenwich resident Edward L. Lampert, was named to the list for providing Louis J. D’Ambrosio, Sears CEO, with regular use of the company jet to commute from his home in Philadelphia to Sears headquarters outside Chicago, despite being on the job for 14 months.
Texas-based Dell landed on the list this year when it revealed Stephen F. Schuckenbrock, president of services, received $1.9 million in relocation benefits to move from Round Rock, Texas, just outside Austin, to Plano, Texas, a suburb of Dallas.
Footnoted said, “Granted, Texas is a big state, but that’s still only about 200 miles, or $9,655.19 a mile.”
Yahoo slipped onto the list for disclosing that founder and former CEO Jerry Yang’s decision to depart the company was not due to any disagreement with the board, despite article after article in the financial press indicating there were significant disagreements at Yahoo.
Netflix was listed for disclosing in its risks statement that the company had done some damage to its brand in 2011 by unveiling a two-tiered pricing structure. And Zynga landed on the list after stating it gave a $2 million signing bonus to a top Electronics Arts executive that joined the firm.
In GE’s case, Krenicki spent 29 years with the company and nearly doubled the size of its energy business since being named its head in 2005, the company said.