Now the board will be faced with the question of what to do about the CEO’s severance package when he is terminated without cause.
(Cause does not apply since in this case it requires conviction of a felony-not merely a charge.) Misconduct could qualify as cause, but the contract `requires a warning and then time for correction, which was not possible in Mc Guire’s case.
In addition, there is a pension of million a year and a lump sum of .4 million.
There is also the question of coverage for Mc Guire under the indemnification and directors and officers insurance.
Until the matter is resolved, however, his legal fees and defense charges will have to be covered.
Spears has serious problems due to his actions as chairman of the compensation committee.
The backdating situations under investigation purported to be options that were not discount options but options at fair market value.
Spears was chosen to serve as a paid trustee for the two trusts that benefit Mc Guire’s children, and he was an investment adviser for approximately million of Mc Guire’s billions.
The money at stake is a package estimated in excess of 0 million.
What’s more, all options that have not vested in Mc Guire’s hands will vest immediately and be exercisable for six years rather than 90 days, making them even more valuable.
Approximately 100 companies have come under fire for the backdating of stock option grants.
The resulting investigations, in turn, have led to the resignation of 30 officers- many of them CEOs, CFOs and general counsels.