Maytag boss Ralph Hake would receive a severance package of nearly $10 million if he loses or leaves his job after the Newton-based company is purchased by Whirlpool Corp., according to papers filed with a federal agency.
“I can’t believe that anybody is worth all of that,” said Norma Jean Sharp, a Newton store owner and wife of a Maytag retiree.
“It just seems overwhelmingly large,” she added, especially when families of laid-off workers are struggling and the town is holding its breath about the future of Maytag’s headquarters and washer-dryer factory in Newton.
Six other Maytag executives are eligible for severance packages that total $16.5 million, according to a preliminary proxy statement filed this week with the U.S. Securities and Exchange Commission.
By contrast, a laid-off factory worker with a spouse and two children could draw a maximum payment of $398 a week in unemployment benefits for 26 weeks. Workers also could be eligible for two years of retraining benefits “” up to $15,000 for educational expenses and two years of weekly payments equal to unemployment benefits.
Eric Bosshard, an analyst with FTN Midwest Research in Cleveland, said Hake’s severance package “seems like a lot of money.” Any criticism, however, should be directed at Maytag’s board of directors, which authorized the package, Bosshard said.
Whirlpool is simply honoring the deal that the Maytag board worked out as part of Hake’s overall compensation agreement as chairman and chief executive, he said.
The severance benefits have been in effect since Hake, a former Whirlpool executive, joined the company in 2001. The benefits kick in if Hake loses or leaves his job in connection with a “change of control” of the company.
Maytag declined to comment.
Hake would be eligible for the severance package if he’s fired “without cause” or if he quits for “good reason” such as a big demotion or pay cut if the sale is completed.
Whirlpool hasn’t talked about Hake’s future with a combined company. Industry observers have said it’s unlikely that Whirlpool will need a headquarters operation in Newton.
Some Maytag workers have criticized Maytag executives for collecting big salaries while the company has lost money and market share. Employment at the Newton washer and dryer plant has fallen to about 1,000 people, the lowest level since the 1940s.
Analysts have given Hake mixed marks for his performance, crediting him with making tough, but necessary, decisions to cut costs but also wondering whether he reacted too late.
The proxy statement shows that Hake will receive other financial benefits when the deal closes, whether or not he stays with the company.
Among them: $3 million in long-term incentive payments.
Hake received no bonus in 2004, but he received a $1.2 million pay package, including salary, long-term incentive payout and other payments. He also owns about $1.75 million in Maytag stock, based on the $21-per-share price and his reported holdings as of March 1.
The $1.79 billion Maytag-Whirlpool deal is subject to regulatory approval, including satisfying expected concerns about antitrust issues. A date for a shareholder vote hasn’t been set.
From Des Moines register