No need to worry about Steelcase executives if they are fired by HNI without “cause” or if they resign for “good reason” within two years following the acquisition. If they are fired without cause or resign for good reason, each will receive millions through a “golden parachute” provision.
Under the company’s executive severance plan, Steelcase President and Chief Executive Officer Sara Armbruster would receive $50.6 million in total compensation; Chief Financial Officer David Sylvester would receive $18.1 million in total compensation; Allan W. Smith Jr. would receive nearly $17.1 million in total compensation; Chief Technology Office Steven Miller would receive nearly $7.2 million in total compensation; and Vice President, Chief People Officer Donna Flynn would receive nearly $7.1 million in total compensation, according to documents filed with the SEC associated with the acquisition.
Compensation estimates include cash, equity, deferred compensation, benefits and a 280G Gross-Up — an additional payment made by a company to an executive to cover federal excise tax and any associated income taxes that are triggered by “excess parachute payments” received in a change of control event, such as a merger or acquisition.
Of course, these golden parachute payments would only be made if these executives are terminated or leave for good reason, but they show how executives are protected during acquisitions. The golden parachute for Steelcase executives would also include “outplacement services for up to 18 months.”
Under terms of the golden parachute, Armbruster, for example, would receive $8.6 million in cash; $26.5 million in equity (restricted and performance-based restricted stock); $3.1 million in deferred compensation; $337,717 in benefits; and $12.1 million in 280G Gross-Up.