Ousted Target CEO to get $16 million in severance

Former Target CEO Gregg Steinhafel will receive a severance package worth about $16 million, including cash, other payments and compensation for stock options.

Steinhafel also will receive $33.1 million from his deferred compensation plan.

The details of his severance emerged Monday in a regulatory filing with the Federal Securities and Exchange Commission. He also is eligible for a company pension, the value of which is unclear.

• More on Steinhafel's departure

Since 2000, 21 executives, including former Target CEO Robert Ulrich have received severance packages worth more than $100 million. That's according to GMI Ratings, which tracks executive compensation.

Although the package will likely strike average people as a fortune, Steinhafel's parachute was far from exorbitant for a Fortune 500 CEO, industry experts who follow the company said.

"It's not too large," said Brian Yarbrough, a retail analyst for Edward Jones. "I don't think there'll be any uprising over his numbers."

That's because Steinhafel worked at Target for more than 30 years and had a strong track record outside of the last 18 months or so.

In recent months, the company suffered a massive theft of customer data, lost nearly $1 billion in its foray into Canada and endured disappointing sales in the United States -- all of which figured in the Target board pushing out Steinhafel as CEO.

The company disclosed today Steinhafel's departure was "an involuntary termination for reasons other than for cause." The company's share price closed essentially flat at $58.29.

Target's regulatory filing indicated there had been something of a shareholder uprising over Steinhafel's pay. The company said a year ago that investors approved executive pay packages by an unacceptably slim margin.

Target has struggled, and the board's subsequent compensation review and direct talks with investors led to a 37 percent pay cut for Steinhafel this past year. His total compensation fell to about $13 million last year, from nearly $20 million the previous year.

The board's message was right out of the company's motto, "expect more, pay less."

Given the current economic climate, Steinhafel's severance seems to be about average.

"This is probably in the middle in terms of severance packages that you see from a major U.S. corporation," said Mark Borges, a principal with Compensia Inc., an executive compensation consulting firm. "Typically, they're going to one or two times annual base salary and bonus and accelerated equity. So, it's not uncommon to see those packages between $10 [million] and $20 million."

Target apparently followed its own rules in figuring out Steinhafel's severance, said Wayne Guay, an accounting professor at the Wharton School who has studied executive compensation.

"There was nothing here that was unusual, nothing that was subjective," Guay said. "Everything was sort of by the book."

He said Target followed a plan laid out in advance for the departure of top executives.

"The payments were computed via a variety of formulas," Guay said. "And he received pretty much what any named executive officer would receive upon severance. So, there wasn't any board subjectivity here."

Target officials would not answer any questions about the regulatory filing about Steinhafel's exit package or his pay for last year.

• The Daily Circuit:What Target's Steinhafel did wrong, and didn't