Invensys investors still have to worry about corporate shortfalls, but they can rest a little easier knowing that their CEO isn’t going to collect a windfall for failing.
Rick Haythornthwaite, who runs the money-losing British engineering conglomerate, announced in May that he would replace his annual compensation agreement with a monthly contract. That way, if he gets the boot, his severance will be based on -- at most -- a few weeks of remaining salary. The savings for the company could be substantial: Haythornthwaite’s annual take is £660,000 ($1.1 million).
The 47-year-old CEO is also giving up a change-of-control clause in his contract that would have paid him almost £1 million if the company were sold. The clause dates back to his arrival nearly three years ago. “Morally and ethically, that was an unexercisable clause,” says Haythornthwaite. He declines to offer details on his remaining incentives -- all based on profits.
Shedding major parts of his compensation agreement was “a liberating experience that’s built confidence with shareholders,” even if it may cost him some cash, says Haythornthwaite. Invensys stock has risen 25 percent since his liberation.
