Shareholders shoot down Chubb CEO's $80M golden parachute

Chubb Corp. CEO John Finnegan will not receive an $80 million payment as part of the company's deal to sell to rival ACE Ltd.

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Chubb Corp. shareholders have opposed an $80 million golden parachute payment for Chief Executive Officer John Finnegan, who reached a deal to sell the insurer to Ace Ltd.
 
About 61 percent of voting stockholders said no to the packages for Finnegan and his deputies in the non-binding, advisory measure, in accordance with a filing today from Warren, New Jersey-based Chubb.
 
Institutional Shareholder Services Inc. advised investors to reject the golden parachute arrangement, which would include a $23 million tax compensation for Finnegan. He'd be eligible for the package if he is terminated or voluntarily resigns as a result of} a demotion following the deal. As part of the compensation the parachute would include about $24 million in cash along with $33 million in equity.
 
The excise tax compensation, which can be also known as a gross-up, significantly increases the total cost of severance payments and isn't justified by current market practices, according to an Oct. 2 report from ISS.
 
Proposed packages for Finnegan's deputies including Chief Financial Officer Richard G. Spiro don't include an excise tax gross-up. Mark Schussel, a spokesman for Chubb, and Ace's Jeff Zack immediately return messages from Bloomberg reporters seeking comment.
 
 
'Eye Popping'
 

 
Finnegan "did create an awful lot of value while running the business," Meyer Shields, an analyst from Keefe Bruyette & Woods Inc., said in a phone interview. "You could make the argument that compared to that, maybe the golden parachute wasn't as golden as it could have been. Having said that, it's still an eye-popping amount."
 
Chubb investors approved the plan to sell the business to Zurich-based Ace for about $30 billion in stock and cash. Finnegan, 66, will help the combined business with integration and be an executive vice chairman once the deal is completed, the companies have said. Prior to the arrangement being announced, he had revealed plans to step down at the end of 2016.
 
The size of Finnegan's golden parachute, which was disclosed in an Sept. 11 merger agreement filing, is an estimate based on Chubb's average closing price during the five-day period following the deal's announcement in July.
 

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