By George Anderson
As David Livingston of DJL Research points out: "It's pretty standard for a new CEO to clean house."
That would seem to explain why Nash Finch's compensation committee signed deals with 16 top executives at the company to pay them for up to two years in salary and benefits should they find themselves out of job when a new chief comes in to replace Ron Marshall, who is stepping down next March.
According to a report in the Star Tribune of Minneapolis, the compensation committee was concerned that senior managers might look for employment elsewhere during the interim period and decided the agreements would ensure "continuity of leadership."
Mr. Livingston said the agreements are less about maintaining continuity and more about severance. "If you have senior vice presidents and they get fired because of a change in management, they usually get one to two years' salary as severance. These people make some pretty high dollars, and they're usually 50 to 55 years old. It's not easy to get a new job paying that kind of money."
Moderator's Comment: Are retention agreements such as those at Nash Finch common when new CEOs are joining a company? Did Nash Finch's compensation committee make the right decision for the company's various stakeholders in signing the retention agreements described in the Star Tribune report? - George Anderson - Moderator