Shareholders at Shaw Group Inc., Baton Rouge, La., are scheduled to vote Wednesday on a proposal calling for an end to “golden coffin” payments made following the death of senior executives that are unrelated to earned compensation, according to a statement from Amalgamated Bank, which filed the proposal.
Amalgamated’s $229 million LongView Midcap S&P 400 index fund owns 30,500 shares of the company.
“Golden coffin agreements, which can require a company to make significant payments or awards after an executive’s death, are in our view inconsistent with” a pay-for-performance approach aligning interests of management and shareholders, the bank said in its proxy proposal.
The company agreed to pay J.M. Bernhard Jr., the chairman, president and chief executive officer, upon his death an estimated $38.2 million and an additional $15 million plus interest under an agreement that he “will not compete with Shaw Group after his employment is terminated, whether by death or otherwise,” the Amalgamated statement said.
The Amalgamated proposal “effectively calls for shareholder intrusion into the management of the company, would restrict the flexibility and discretion of our board, and, in our board’s view, would impede its mission to maximize shareholder value” by hindering the company’s “ability to recruit and retain qualified senior executives,” Shaw Group said in a responding statement. It has made such payments related to only one former executive, Richard F. Gill, president of Shaw’s Power Group, who died last year, the company’s statement noted.
The agreement was made to ensure “Mr. Bernhard’s continued employment and also to discourage competitors from actively recruiting him; and if he did leave, to provide for his agreement not to compete with us,” the statement said.
