dw - I have highlighted some of the areas that discuss equity awards.  Do any ECE members have plans like this in place at their company?

Companies Promise CEOs

Lavish Posthumous Paydays

You still can't take it with you. But some executives
have arranged for the next best thing: huge corporate payouts to their
heirs if they die in office.

PARTING GIFTS

 

See a chart of benefits for some CEOs if they die in office.

Take Eugene Isenberg, the 78-year-old chief executive of Nabors Industries
Ltd. If Mr. Isenberg died tomorrow, Nabors would owe his estate a
"severance" payment of at least $263.6 million, company filings show.
That's more than the first-quarter earnings at the Houston oil-service
company.

Dozens of other companies offer lush death-benefit
packages to their top executives, according to a Wall Street Journal
review of federal filings. Many companies accelerate unvested stock
awards after a death, which by itself can amount to tens of millions of
dollars. Some promise giant posthumous severance payouts, supercharged
pensions or even a continuation of executives' salaries or bonuses for
years after they're dead.

The CEO of Shaw Group Inc. is in line to be paid $17 million for not competing with the engineering and construction company after he dies.

Lockheed Martin
Corp.'s top officer didn't even need to die to get a death benefit;
Lockheed paid out the sum, about $1 million, in March while he was
still very much alive.

Death benefits, sometimes called golden coffins, have
been around for years, but until recently the amounts were often
impossible to determine or were shrouded in the fog of proxy-statement
language. A federal rule change 18 months ago required companies to be
clearer about what they're obliged to pay if top executives end their
employment, under various circumstances.

A death of a CEO or chairman often is a traumatic
event, both for the family and for the suddenly leaderless company. But
compensation critics say that's no reason to lose sight of the
pay-for-performance principle that many boards now espouse. And they
call death benefits the ultimate in pay that isn't based on performance.

Companies defend the practice as an appropriate way to
take care of an executive's family after an unexpected death. They also
note that the benefits often are negotiated as part of a pay package
that has many components. In many cases, compensation attorneys say,
death benefits are really a form of deferred compensation, structured
partly for estate-planning or tax reasons.

Companies often say one goal of their pay packages is
to keep executives from leaving. But "if the executive is dead, you're
certainly not retaining them," says Steven Hall, an executive-pay
consultant in New York.

Mr. Hall says death benefits have become more
controversial in recent years: "Shareholders say, 'Why should we write
a big check to a CEO who's been quite well paid all along?' He should
have bought life insurance."

At many companies, a top executive's death does trigger a big insurance payout to heirs -- on a policy the company paid for.

A $3 million life insurance policy is just a minor part of the death benefits that XTO Energy Inc. provides to its CEO, Bob R. Simpson.

Had Mr. Simpson died on Dec. 31, according to the
natural-gas producer's latest proxy statement, XTO would have owed his
heirs a $111 million "bonus." Stock options that the 59-year-old
executive had been granted, but that weren't yet vested, would
immediately vest, bringing his heirs an additional $20.5 million.

The Fort Worth, Texas, company also would have owed
$4.4 million in salary for its deceased employee. And his death would
trigger a $158,400 payment listed as a "car allowance."

A spokesman for XTO didn't return calls seeking comment.

A salary-after-death provision has just been scrapped at Comcast
Corp. The board in late December had renewed a provision that gave
Ralph J. Roberts, the 88-year-old chairman of its executive committee,
his $2 million annual salary for five years after his death. But in
February, Comcast canceled the deal amid criticism from a big
shareholder, Chieftain Capital Management. David Cohen, a Comcast
executive vice president, said Mr. Roberts voluntarily relinquished the
benefit, in a move that had been under consideration for some time.

Still, as of Dec. 31, Mr. Roberts was entitled to an
estimated $87 million in posthumous benefits from the
Philadelphia-based cable-television company. Most of it consisted of
continued company funding of joint life insurance covering him and his
wife, filings show. The insurance would pay a total of $130 million to
their estates after both are deceased.

Salary Keeps Coming

Comcast is still committed to paying the salary of Mr.
Roberts's son, CEO Brian L. Roberts, for five years after his death in
office, along with his bonus for five years. The potential payout was
valued at more than $60 million on Dec. 31.

The 48-year-old CEO's heirs would also receive $223
million from his company-funded life insurance. And the heirs would be
entitled to an acceleration of stock awards and other payments, which
would have totaled $14 million had he died on the last day of 2007.

"We think the compensation has been grossly too high
already" at Comcast, said Glenn Greenberg, a partner at Chieftain
Capital. "There's no need to pay them more when they're dead."
Chieftain has been seeking the ouster of the younger Mr. Roberts and
the end of a two-tier stock arrangement that gives the Roberts family
voting power beyond the number of shares it holds.

Comcast's Mr. Cohen called the five years of
postmortem salary and bonus for the chief executive "fair and
reasonable." He noted that many large companies offer death benefits.

As for the large company-funded life-insurance
policies, Mr. Cohen said the burden of making the payout would fall on
an insurer, not Comcast. He said part of the CEO's life insurance is
term insurance Comcast bought at favorable rates, and that the company
discloses this insurance's annual $415,000 cost to Comcast in yearly
pay tables.

Pay consultants trace one of the earliest golden coffins to Armand Hammer of Occidental Petroleum Corp. His contract called for his salary to be paid until his 99th year, whether he was alive or dead. He died at 92 in 1990.

Another early beneficiary was Steven J. Ross, the late chairman and co-CEO of Time Warner
Inc., who died in 1992 at age 65. His contract called for the company
to pay his salary and bonus for three years after his death. It also
gave his heirs nine years to exercise stock options on 7.2 million
shares, a package estimated at the time of death to be worth between
$75 million and $300 million.

Today, most public companies include death benefits
with other types of termination-related pay due their CEOs, with
variations for whether the person is fired, becomes disabled or dies in
office. Death benefits are layered on top of pensions, vested stock
awards and deferred compensation, which for most CEOs already amount to
large sums.

Rupert Murdoch, the 77-year-old chairman and CEO of News Corp.,
parent of Dow Jones & Co., which publishes The Wall Street Journal,
doesn't have an employment contract. News Corp. filings show that on
June 30, his death would have triggered $1.37 million in payments to
his beneficiaries. The beneficiaries of News Corp.'s 57-year-old
president, Peter Chernin, would have been entitled to a $5 million
payout of company-funded life insurance plus $31.9 million in
acceleration of equity awards and other benefits had he died June 30. A
spokeswoman for News Corp. confirmed the numbers and declined further
comment.

A recent study of 93 big companies found that 17%
offered severance-style death benefits to their chief executives in
2006, while 40% provided corporate-funded life insurance. Equilar Inc.,
a research firm in Redwood Shores, Calif., did the study.

CEO deaths, though uncommon, do happen. McDonald's
Corp. faced two in nine months. James Cantalupo died suddenly in April
2004 at age 60. The board awarded him a $1.8 million "discretionary
bonus" and waived other rules to give his estate an early $790,000
payout of a long-term award.

His 43-year-old successor, Charles Bell, had cancer
surgery just two weeks after taking over and was gravely ill for part
of his brief tenure. He stepped down after seven months and died two
months after that. The company then gave his estate a $3.2 million
bonus.

Vesting Upon Death

Though not all companies provide it, the most common
posthumous benefit is acceleration of unvested stock options and grants
of restricted stock. The rationale is that if the executive hadn't
died, he or she would probably have stayed long enough for the awards
to vest.

At Occidental Petroleum, the successor to Mr. Hammer,
Ray R. Irani, would get immediate vesting of all of his options,
restricted stock and performance-related awards if he died on the job.
It's a benefit Occidental's filings said was worth $101.9 million as of
Dec. 31.

A spokesman for the company said that amount "isn't a
death benefit per se -- it's what his family would get upon his death."
The spokesman, Richard Kline, added that the only reason the unvested
awards are so valuable is the stock's superb performance under Dr.
Irani's leadership.

The CEO is already wealthy. Dr. Irani has earned more
than $700 million from Occidental since 1992, including profits on
stock-option exercises, according to Standard & Poor's ExecuComp.

Multiple Stock Awards

An unusual death provision appears in the contract of the CEO of Plains Exploration & Production
Co., James C. Flores. If he dies in office, his heirs get a giant
payout from restricted-stock awards that Mr. Flores hasn't yet been
granted.

The board of the Houston oil-and-gas concern has
promised Mr. Flores annual grants of 300,000 shares of restricted stock
through 2015, as part of a "long-term retention and deferral
agreement." Had he died at the end of last year, company filings say,
his estate would have been entitled to seven future years of stock
awards -- 2.1 million shares then valued at $113 million -- all of
which would be vested.

His death on Dec. 31 also would have triggered $53
million in additional benefits, mostly from acceleration of already
granted awards that hadn't yet vested.

In an interview, Mr. Flores said he cut the
restricted-stock deal when Plains stock was about one-eighth its
current price, when "it wasn't that much money." He also said his years
of promised restricted-share grants provide a continuing incentive for
him to focus on the company's stock price. "It's a retention clause. It
allows me to work and earn it every year," he said.

An Early Payment

At Lockheed Martin, the company recently eliminated a
"post-retirement death benefit" for top executives but gave the
executives the money anyhow. For its 56-year-old CEO, Robert J.
Stevens, that meant an extra $1 million payment in March.

A spokesman for Lockheed Martin, Jeffery Adams, said
the company canceled the plan as part of a broader effort to eliminate
"nonperformance-based compensation programs." As to why it paid out the
death benefit to a still-living executive, Mr. Adams said Lockheed
"thought it was appropriate to compensate officers who would have
otherwise expected to be eligible for the benefit following retirement."

As of the end of last year, the Lockheed CEO was
eligible for an additional $48 million in death benefits, from
acceleration of stock awards and long-term incentive plans, Lockheed
filings show.

'Noncompete' Agreement

Companies often have "noncompete" agreements with top
executives that bar them from joining a competitor after they leave.
Shaw Group has one. The Baton Rouge, La., company would pay $17 million
to CEO James M. Bernhard Jr. "not to compete with us for a two-year
period following termination of employment," its latest proxy statement
says.

The pay for not competing would still be due if Mr.
Bernhard were dead, a footnote shows. Shaw officials didn't respond to
requests for comment.

At Nabors, Mr. Isenberg, who is chairman as well as
CEO, has long been one of the highest-paid executives in the U.S. His
compensation from 1992 to the end of last year totaled more than $500
million, according to company filings and Standard & Poor's
ExecuComp.

The oil-service company reported first-quarter net
income of $230.5 million -- or less than the severance payment Mr.
Isenberg would have been due had he died in office Dec. 31. Nabors,
which is registered in Bermuda but has headquarters in Houston, has a
market value of about $12.7 billion.

The death payout "is a great present to his estate,
but it would be very costly to shareholders and it would be a big hit
to the company's balance sheet," said Richard Ferlauto of the American
Federation of State, County and Municipal Employees, where he is
director of corporate governance and pension investment. Mr. Ferlauto's
union backed a shareholder proposal to rein in another executive-pay
benefit at Nabors, which was defeated at the company's annual meeting a
week ago.

A spokesman for Nabors, Denny Smith, said the size of
Mr. Isenberg's death benefit has grown because, under his employment
contract, it is linked to the company's performance. Strong cash flow
and earnings in 2006 resulted in a substantial increase in the benefit,
he said.

The size of Mr. Isenberg's severance benefit has
contributed to boardroom tensions in recent years, according to people
familiar with the situation. They say directors have tried to
renegotiate the package but haven't been able to come to an agreement
with Mr. Isenberg.

The Nabors spokesman, Mr.
Smith, denied there is any friction on the board. He said directors and
executives are "actively working to restructure" the contract and hope
to reach an accommodation that is in the best interests of shareholders.

Write to Mark Maremont at mark.maremont@wsj.com