Target’s CEO Gregg Steinhafel is out.
“Today we are announcing that, after extensive discussions, the board and Gregg Steinhafel have decided that now is the right time for new leadership at Target,” said the company in a statement. “Effective immediately, Gregg will step down from his positions as Chairman of the Target board of directors, president and CEO.”
Steinhafel won’t be walking away from this empty-handed.
While the terms of his exit package have yet to come out, Target’s last Proxy statement included some details of how Steinhafel would be paid in an early termination. Specifically, he would be getting paid out under the company’s Officer Deferred Compensation Plan (ODCP).
Assuming a voluntary termination, which is what today’s news looks like, the value of Steinhafel’s ODCP package was worth $9,262,907 as of April 2013.
The ODCP is kind of an obscure compensation package that Target closed off to new participants back in 1996. Here’s how it’s described in the Proxy statement:
Participants’ ODCP accounts are credited with earnings based on the average Moody’s Bond Indices Corporate AA rate for June of the preceding calendar year, plus an additional annual return of 6%. The minimum crediting rate is 12% and the maximum is 20%. The average Moody’s Bond Indices Corporate AA rate was 3.78% as of June 2012, when the rate for calendar 2013 was set… Payouts from the ODCP cannot be made until termination of employment, death, termination of the ODCP, a qualifying change in control, or unforeseeable financial emergency of the participant creating severe financial hardship.
The value of that package was worth $US7.95 million in 2012.
Now, if he had been fired (i.e. an involuntary termination), Steinhafel would be entitled to a lot more. In addition to the $US9.2 million, Steinhafel’s package according to the last proxy statement would have included $11,004,000 under the company’s Income Continuance Policy and $US6,348,471 for his restricted stock units.
Here’s the relevant discussion from Target’s last proxy statement.
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