Former CEO of First American fired but to receive $18.6M payout

Ken DeGiorgio, the former CEO of First American Financial Corp., recently faced termination and is looking at a substantial pay package amounting to $18,571,852 as stated in a company filing with the Securities and Exchange Commission.

This noteworthy payout includes $7.24 million in severance pay. Additionally, about $9.1 million accounts for the accelerated vesting of restricted stock and roughly $2.2 million comprises supplemental executive retirement plan funds.

DeGiorgio’s dismissal from First American came following a regrettable incident aboard a Caribbean cruise ship. Allegedly, he choked a man during a dispute with his spouse, leading to an FBI arrest and a charge of assault.

The former CEO’s eligibility for this indulgent severance package stems from his removal without a cause. Terminating chief executives “for cause” is a rare occurrence in the corporate realm. With strict standards required to prove cause, publicly traded companies often opt to avoid protracted legal battles in the public view.

According to the SEC report, DeGiorgio’s termination entitles him to severance characterized as “two times the executive officer’s base salary prevailing immediately before the termination date and two times the median of the executive officer’s last three annual incentive bonuses.”

In light of DeGiorgio’s lucrative earnings despite his recent firing, it is evident that executive compensation packages at major firms continue to raise eyebrows. This case highlights how even in instances of dismissal due to unfortunate incidents, high-ranking executives can, in some circumstances, receive hefty payouts and exit packages.

The relation between executive compensation and ethical or moral liabilities remains an ongoing point of discussion and contention. Critics argue that excessive compensation packages, such as that of DeGiorgio’s, set a questionable precedent in the corporate world, where executives facing termination receive substantial payouts regardless of the circumstances of their departure.

As the world scrutinizes corporate governance practices and executive accountability, instances like this emphasize the need for transparency and clarity surrounding executive compensation. The discrepancy between lucrative exit packages and ethical considerations undoubtedly raises questions about board oversight in major corporations and their commitment to responsible business practices.