April 4, 2013 2:00 pm
Updated: April 4, 2013 4:54 pm

Golden handshake for outbound Yellow Media CEO

Yellow Media chief executive Marc Tellier is expected to leave the company within a few months.

Kevin Van Paassen/Canadian Press

Marc Tellier, the outbound chief of Yellow Media Inc., is poised to leave the struggling directories publisher and online marketing company with millions in severance.

The executive, who will receive $4.3 million according to public documents filed Thursday, joins a few other high-profile CEOs who’ve recently announced plans to leave their respective firms and are set to receive generous payouts.

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At the top of the list is Nadir Mohamed at Rogers Communications Inc., and Ed Clark at TD Bank.

Mohamed will leave the country’s largest wireless provider next January with an $18.5 million handshake, while financial details about the TD chief exit package won’t be known until closer to Clark’s retirement date late in 2014, but it’s sure to be ample, experts say.

Whether multimillion-dollar payouts are necessary or warranted for departing executives is a matter of some debate.

“Most people would say, yeah, they’ve definitely gotten out of hand,” said Don McDermott, president, D.G. McDermott Associates, LLC, a New Jersey-based compensation consultancy.

“Sometimes you say how much is enough? But at the same time, if they’ve been building up value for the company, and they’ve had to make tough decisions that affect people,” he said.

Tellier’s agreement was struck 2002, a time when Yellow Media owned a near monopoly on phone number listings. Yellow, like all publishers, has struggled mightily to transform itself into an organization that can generate the same level of business from online products that its print products once enjoyed.

It appeared Yellow was headed for bankruptcy last year before Tellier pulled off a plan that satisfied creditors and allowed the company to recapitalize and carry on. He plans to leave in the coming months.

Mohamed’s package is comprised of $5.5 million in cash with the remainder in stock options and restricted share units. Like Tellier, terms of the executive’s retirement payout were likely struck when the carrier appointed Mohamed CEO in 2009.

Since then, Mohamed has guided Rogers through an intensely competitive era for the wireless industry, maintaining the company’s edge over chief rivals Bell and Telus Corp., while fending off discount carriers like Mobilicity and Wind Mobile.

Boards of companies have moved in recent years away from stock options toward restricted shares that “vest” or become available to be sold after a set period of time, or when a person leaves the company.

The shift is designed to incentivize company leaders to have the company performing well over time, and at its best as they exit – the better the firm’s performance, the higher the stock price, and a higher stock price means more upside for the person headed for the door and about to inherit their restricted shares.

About a third of Mohamed’s exit package, or $6.8 million, is in the form of restricted share units.

“From an investor’s point of view, I don’t see a problem. They’re tied to the performance of the company,” said Richard Powers, a corporate governance expert and professor at the Rotman School of Management at the University of Toronto.

Both executives’ payouts are relative drops in the bucket compared with what U.S. CEOs have left their companies with.

Although his retirement was in 2001, former General Electric chief Jack Welch takes the cake for the biggest financial sendoff in corporate history.

His initial retirement package – before being forced to amend it somewhat – provided Welch $2.5 million a year, access to a company jet, courtside seats to New York Knicks games as well as box seats to Red Sox and Yankees game among many other perks.

All in, GE was on the hook for $420 million owed to its former CEO when he retired.

There are at least 21 chief executives in the United States that have netted “walk-away” deals worth at least $100 million each – or a combined $4-billion split by less than a couple dozen individuals, according to research firm GMI Ratings.

Some, like Stan O’Neal, the former chief of investment brokerage Merrill Lynch, secured astronomical payouts as their companies tanked on their watch.

O’Neal collected $161 million mere months before Merrill sought an emergency sale to Bank of America in 2008.

“They were put in place in a different era,” McDermott said. “He had something crafted in better times, but today, they wouldn’t probably be as generous.”

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