General Electric (GE) executive John Krenicki is leaving the giant firm at the end of 2012, bound up with the company’s decision to break up his energy division, where he functions as chief executive and president, into three separate operations.
In return for agreeing not to go to work for any of GE’s rivals for three years, Krenicki will be paid a “retirement allowance” of $89,000 a month for ten years, or some $10.7 million. The allowance is a portion of an exit package worth at least $28.3 million, according to the Wall Street Journal.
Krenicki’s deal also includes nearly $15 million worth of stock options and restricted stock units, and a bonus for 2012 equal to last year’s $2.8 million.
These obscene amounts have become entirely standard in America’s boardrooms. If the media treats the issue in more than a passing fashion, the tone tends to be one of awe or jealousy, rather than outrage. This is the narrow world of the American aristocracy.
Mark Reilly, an expert in executive compensation, told the Journal that Krenicki’s exit allowance represented “a generous severance package in exchange for his noncompete agreement.” Considering Krenicki’s rank of GE vice chairman and his 29 years of service, Reilly asserted the package was “fair.”
Krenicki ran GE Energy Infrastructure, the conglomerate’s most important division, a $50 billion business, which he had pledged to increase to $100 billion. As a stand-alone company, GE energy division would have ranked in the top 60 of the Fortune 500.
In addition to the splitting up of Krenicki’s division, which his success in the position apparently helped bring about, Fortune speculates that the GE vice chairman left in part because current CEO Jeff Immelt, now 56, was not likely to depart his position until age 65. By that time, Krenicki—one of the top five figures at GE—would be 59 and an unlikely candidate for the chief executive spot. “It may have become increasingly clear that Immelt has no plans to go anywhere anytime soon, making it plain that Krenicki’s chances at the top job were slim,” writes Fortune.
As a side note, Barack Obama appointed Immelt chairman of his panel of economic advisers, replacing former Federal Reserve chairman Paul Volcker, in January 2011.