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GE executive’s parting gift a $28M ‘footnote’

Thursday, January 3, 2013
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It’s that time of year when the media like to look forward and back: reviewing what happened in the 12 months just completed and anticipating what might occur as the new year unfolds.

For the folks at footnoted.com, the website that finds news nuggets in U.S. Securities and Exchange Commission filings, that means it’s time to bestow “worst footnote” honors — or the most eyebrow-raising disclosure by a public company in the past year.

For 2012, the site picked a filing with ties to the Capital Region: The announcement in July that General Electric Co. would pay $89,000 a month over the next decade to an executive whose job was eliminated in a reorganization of GE Energy.

John Krenicki, a GE vice chairman, recommended breaking up the energy business he headed into three stand-alone entities: GE Power & Water; GE Oil & Gas; and GE Energy Management.

Together, they were a $50 billion business that easily could have ranked in the Fortune 100. As stand-alones, they will still post hefty revenue and profit numbers, but would be expected to perform more nimbly.

Power & Water is headquartered in Schenectady, and Steve Bolze, who has led the power business there since 2005, will now report directly to GE Chairman and CEO Jeffrey Immelt, as will the other two stand-alone heads. Krenicki became extraneous.

For most workers, elimination of their job in a restructuring puts them in the unemployment line. Krenicki, though, received a package that one executive-compensation expert valued at about $28 million, according to the Wall Street Journal.

Footnoted.com, which first disclosed the payout, called the decade-long monthly stipend “hardly chump change, even for GE.” The package also guaranteed Krenicki a 2012 bonus of at least $2.9 million, let him cash in equity awards that wouldn’t have vested until the end of 2014 and kept him eligible for a GE supplemental pension when he turns 60. He is 50 now.

Of course, there are some strings: Krenicki cannot work for or serve as a consultant to GE competitors in the energy, power or water industries worldwide for three years — much longer than most non-compete pacts, experts say.

But Krenicki will not be jobless: Soon after his planned departure from GE was announced, a New York City hedge fund, Clayton, Dubilier & Rice, said he would become a senior operating partner. His last day at GE was Dec. 31.

Krenicki worked at GE for 29 years. A 2011 profile in Fortune magazine said he was recruited by the company right out of college, spent a decade in the plastics business, then ran lighting and transportation. He returned to plastics, in Pittsfield, Mass., in 2003 when CEO Immelt picked him to turn that business around. The Berkshires have been the family’s home base ever since, the magazine said.

Krenicki’s non-compete agreement, filed with the SEC in November, says he not only cannot work for a competitor, but also cannot try to lure away others from GE. He got to keep his “Rolodex and other address books, so long as they only contain contact information”; cellphones and laptops had to be returned.

And while the agreement says Krenicki must “make himself reasonably available” to GE should it need information from him, “Employee agrees never to seek employment with the company or any of its subsidiaries or affiliated companies.”

Not that he’d need to anyway, given his going-away package.

Marlene Kennedy is a freelance columnist. Opinions expressed in her column are her own and not necessarily those of the newspaper. Reach her at marlenejkennedy@gmail.com.

 
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