Like many Fortune 500 CEOs, General Motors Corp.'s Rick Wagoner has a multimillion dollar golden parachute to protect him if the automaker is ever to be taken over.
But this year, GM tightened its policies under which its top executives can receive severance payouts.
Wagoner stands to receive up to $14 million in severance and stock payouts, according to GM's proxy filed April 27. Other top execs have similar exit packages.
In the past, only a change of control at GM was required to trigger the payouts. But under GM's new policy, the executives also would have to be fired without cause to receive the payouts. Corporate governance experts say revised policy is more fair to shareholders.
The requirement may be one reason why GM decided to change its policies this year.
"It's a combination of 'We have to disclose this stuff, so we need to make it as pretty as we can,' and just wanting to be more responsible," said Dan Moynihan, an executive pay expert with Compensation Resources Inc. in New Jersey. "Companies are doing this out of a desire to make executive compensation as shareholder-friendly as possible."
This the first year the SEC has required public companies to disclose details about what executives could get in total compensation if they were to be fired.
The new rules come in an era of heightened scrutiny surrounding corporate accounting practices and executive pay packages.
The disclosures show the severance packages have become commonplace among large corporations. That's especially true in the auto industry, where the growing clout of cash-rich private equity firms combined with the diminishing capital of auto companies is making even the biggest players more susceptible to takeovers.
"In the current environment, every company needs to be concerned with protection from a takeover," said analyst John Casesa, managing partner of Casesa Shapiro Group. "It's not unusual anymore."
Wagoner's payment would come in the form of $9.4 million in stock and options that would become fully vested upon his termination. He would then be eligible for up to three times his annual $1.65 million salary -- or about $5 million, according to GM's proxy.
Tightening the policy was "a good thing to do from a corporate governance standpoint," GM spokeswoman Julie Gibson said, adding that such provisions are increasingly common in corporate America.
GM has provisions in place for four other executives. Vice Chairman Bob Lutz has the second richest deal, with $4.8 million in stock and options and potentially $3.5 million in severance pay.
Chief Financial Officer Fritz Henderson would get $2.9 million in stock and options and up to $3.5 million in severance; and manufacturing chief Gary Cowger would get $1.4 million in stock and options and $2.6 million in severance.
At Ford Motor Co., chief executive Alan Mulally could get $27.5 million if he were to be fired as part of a Ford buyout.