President Barack Obama’s nominee for Treasury undersecretary for domestic finance will leave a job that paid him $15.4 million in the past 23 months for government work that pays $167,000 annually. Under the terms of his departure, the bank agreed to grant him unvested income ahead of schedule: about $16.2 million in stock and as much as $5 million in deferred pay if confirmed for the job.
When executives jump from the corporate world to high government posts, they sometimes are allowed to redeem unvested compensation ahead of schedule. That keeps employees from losing the money, and makes heading to Washington less financially punishing. The practice is under scrutiny from the AFL-CIO, the nation’s largest labor organization, as a move that harms shareholders.
“There are a lot of reasons why the company wouldn’t be opposed,” to accelerating vesting, said David Schmidt, senior consultant with a specialization in executive compensation at Arthur J. Gallagher & Co. They may want to stay in their former employee’s good graces for policy influence, and “if he does come back after his term in government, he’s coming back with a pretty interesting resume that could be helpful to the company.”