March 10--Tuesday's Business section of one of America's great newspapers brought to mind the opening of Charles Dickens' "A Tale of Two Cities."
Splashed across the top of the page was a story about the more than $150 million in golden parachute payments H.J. Heinz chairman, president and CEO Bill Johnson and other top executives stand to collect if regulators and shareholders approve the $28 billion offer for the Pittsburgh food company from Berkshire Hathaway's Warren Buffett and 3G Capital.
Below that account was a story about women in minimum wage jobs struggling to make ends meet. President Barack Obama has proposed raising the minimum wage to $9 an hour. The current $7.25 hourly rate produces about a $15,000 annual paycheck.
Indeed, it is the best of times. It is the worst of times.
But mostly, it is the age of foolishness ... it is the epoch of incredulity.
Based on the pay disclosures Heinz made Monday, 13 current and former Heinz executives and a dozen nonemployee members of Heinz's board stand to collect $459.6 million upon the completion of the sale.
In addition to the $161.3 million in golden parachute payments Heinz executives will receive if they lose their jobs within two years of the takeover, the pot includes compensation that the executives and directors are entitled to regardless of whether Heinz is sold. That consists of $212.9 million in vested stock they already own and $85.4 million in deferred compensation and pension benefits.
Mr. Johnson tops the list. The $212.6 million he will receive includes a $56 million golden parachute, $99.7 million in vested stock awards and $57 million in deferred compensation and pension benefits. CFO Arthur B. Winkleblack is a distant second at $37.6 million.
Here's how Heinz looked at Mr. Johnson's pay package in a statement issued to the media: "The payments reflect Mr. Johnson's success in creating billions of dollars in shareholder value over his successful 15-year tenure as president and CEO. This success includes delivering total shareholder returns of 177 percent since 2006 and the 19 percent premium to Heinz's all-time high share price that all Heinz shareholders will receive in this merger. This compensation consists of equity that Mr. Johnson accumulated over his 30-year career with Heinz and existing equity awards and contractual rights that were in place well before the announcement of the proposed merger."
The carefully crafted statement was supplied by Heinz senior vice president of corporate and government affairs Michael Mullen, who stands to walk away with $4.8 million, the lowest of the 13 current and former executives named in the report. (Two former executives, Michael D. Milone and C. Scott O'Hara, left in June and will receive a combined $10.9 million in their golden parachutes, all of it from accelerated vesting of stock awards and incentive payments.)
It should be noted that the 177 percent return since 2006 coincides with activist shareholder Nelson Peltz waging a proxy fight that put him and one of his representatives on Heinz's board over the objections of Heinz management. Mr. Peltz won the seat by suggesting cost cuts and strategic moves that Heinz management balked at.
The magnitude of the shareholder value improvement is all the more impressive in light of the fact that women -- who are responsible for a majority of household spending decisions -- are noticeably absent from Heinz senior management. The list of 25 executives and directors includes one female executive and two female directors.
No doubt when Mr. Johnson and the other two dozen Heinz officials go to sleep every night, they are convinced their pay reflects their value to Heinz shareholders. As proof, they need look no further than the pay disclosures of their competitors.
In Mr. Johnson's case, he can look to a January 2012 report from GMI Ratings, a research firm that compiled a list of 21 CEOs who received golden parachute payments in excess of $100 million. Greg Ruel, co-author of the report, said Mr. Johnson's package would rank seventh on that list.
He falls just above Fred Hassan, who received $189.4 million when Merck and Schering-Plough combined in 2009, and just below John Kanas, who received $214.3 million when he retired after 29 years as CEO of North Fork Bank when it was acquired by Capital One in 2006.
Former General Electric CEO John F. Welch Jr. topped the list, with a $417.4 million payout, including a pension worth $96 million based on GMI's analysis.
Unlike Mr. Johnson, who would be leaving on a high note, several CEOs on GMI's list left under a cloud. They include former UnitedHealth Group CEO William D. McGuire. He exited because of a scandal involving backdating stock options, an executive-enriching practice that's been compared to allowing bettors to wager on a race that's already been run.
Despite the scandal, Mr. McGuire departed with $286 million.
Mr. Ruel said Mr. Johnson's compensation is on the high end but is typical of the way departing executives are treated.
"At least this was built over a 30-year period," he said. "The company has performed well, but it's still an excessive amount."
Len Boselovic: firstname.lastname@example.org or 412-263-1941.