That compensation would arrive in the form of “golden parachute” payments, which are aimed at defraying the potential compensation executives could have earned if AK Steel continued operating.
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AK Steel disclosed the severance packages in a Feb. 4 proxy statement.
The total value of that compensation, as disclosed by AK Steel, includes:
• Roger Newport, CEO: $18.8 million
• Kirk Reich, president and chief operating officer: $12.5 million
• Scott Lauschke, vice president of sales: $7.8 million
• Joseph Alter, general counsel: $4.4 million
• Christopher Ross, interim chief financial officer: $2.7 million
The careers of each man comprise more than 90 years of service to the company, with Newport starting there in 1985, Reich in 1989, Lauschke in 2015, Alter in 2009 and Ross in 1997.
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Compensation, if paid out, would arrive in numerous forms, including cash, pension/nonqualified deferred compensation, perquisites/benefits, equity. Cash would include severance payouts for base salary, annual cash incentive and long-term plan/long-term portion of an Omnibus Management Incentive Plan. Equity would include stock options, performance share awards and restricted shares.
AK Steel did not immediately respond to questions about its golden parachute disclosures.
Golden parachutes are contract provisions that grant severance payments and benefits to top executives, giving them “soft landings” if they lose their jobs at a company in a merger with or acquisition by another firm.
Benefits may include stock options, cash bonuses, and generous severance pay.
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Shareholder activists have increasingly criticized golden parachutes that are too rich or too easily obtained, said Rosanna Landis Weaver, who follows public-company pay practices for the nonprofit shareholder advocacy group As You Sow.
Weaver told our media partner, WCPO-TV, that she believes AK Steel was too generous with its separation package, as was Cincinnati Bell. The stock price of both companies hit five-year lows last year in the months leading up to their takeover announcements. The CEOs of each company would more than double their total compensation from 2018 if they received full payment from their golden parachute packages.
“Severance payments should not reward an executive for overseeing a failure,” Landis Weaver said. “The company has done poorly and that’s why they are open for a change in
control. This seems like a lot of money to get in that kind of situation.”
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AK Steel compensation for executive officers, if they lose their jobs within two years following the company’s expected March 13 acquisition by Cleveland Cliffs:
• Roger Newport, CEO: $18.8 million
• Kirk Reich, president and chief operating officer: $12.5 million
• Scott Lauschke, vice president of sales: $7.8 million
• Joseph Alter, general counsel: $4.4 million
• Christopher Ross, interim chief financial officer: $2.7 million
Source: AK Steel
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