Snow Leaves Behind Cold Cash

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††† Treasury Secretary John Snow grew nearly $69 million richer for leaving railroad operator CSX Corp. — but he waived a peculiar clause in his contract that could have brought in a lot more. Snow forfeit $15 million that CSX would have paid him even if he left the company for "good reason" before his term was up. His contract defined that term in five ways, but only one raised a red flag among analysts: He'd get the package, which included privileges such as lifetime air travel, if he were appointed to "a public office or a similar quasi-governmental role benefiting the Company and its mission." In December Snow had issued a statement declining "any future compensation or benefits that were in my employment contract with CSX...." He explained to Senators at his confirmation hearing in January that the $15 million was part of an executive transition plan that he forfeit, along with stock options.

††††††† But did he dump the pay at least in part because accepting it would link his new Cabinet post to the well-being of CSX shareholders? One Treasury spokesman declined to comment, and another referred to CSX for contract details. A CSX spokesman couldnít say how the "public officeĒ clause entered the contract, which is chock-full of special favors that otherwise add up to $68.9 million. And the company's current CEO, Michael Ward, has no such clause. Analysts say it could be unique. Perhaps its implications were not thought through at the time the contract was signed.

††††††† Much of the pay Snow did receive breaks down handily: $18.9 million in stock; $8.7 million in deferred compensation; $8.1 million to buy a $25 million life insurance policy that CSX promised him but never bought. These items were detailed in CSX's annual proxy, released last week.

††††††† From there it gets trickier. For example, Snow worked 44 years at CSX between 1977 and 2003. (The company artificially boosted his tenure in the 1990s so that he could qualify for a higher pension.) Usually, pensions are calculated by time-on-the-job and a percentage of salary and bonus. In Snowís case, CSX threw into the mix a 1999 stock grant of 250,000 shares as well. That's a lot of math. What it means is that his annual pension balloned to $2.9 million — as much as $500,000 a year more than he ever made with salary and bonus as CEO, according to Brian Foley, a White Plains, New York analyst. "Itís a pattern of conduct," Foley says. "I understand his reputation as a reformer, but I donít understand how that works in his real life." His total pension, which he took in a lump sum, came to $33.2 million. †††

††††††† Snow has always followed the rules, and waiving the clause was the right thing to do. The only thing you could accuse him of is being well paid. When last yearís Sarbanes-Oxley financial reforms kicked in, Snow had to add personal collateral, in the form of CSX stock, to back a bank loan when it became illegal for the company's to guarantee the loan, as it had previously. But it probably didnít set him back much. "While he's at Treasury, we donít have to worry heíll be eating spaghetti at the end of the month," says one executive compensation specialist.