Non-compete agreements usually cover a short timeframe. But this company asked its CEO not to compete with the firm after he dies.
The Shaw Group, Inc., has a non-compete deal with its CEO. In exchange for signing it, he’ll get a $17 million check when he successfully goes two years after the end of his employment without working for a competing firm.
The twist: The agreement says that if he dies while still employed, the money goes to his family. (After all, he can’t work for a competitor from beyond the grave, can he?)
Apparently, this sort of thing has been happening for a while, but new federal rules requiring companies to be open about severance packages mean more of these so-called “golden coffin” payments are coming out into the open.
Often, those payments still get paid even when an exec’s severance comes via death. One McDonald’s CEO received a $1.8 million “discretionary bonus” after he died.
The deals have come under fire recently because they’re pretty much the opposite of the pay-for-performance deals shareholders are looking for these days.
