U.S. Rep. Steven C. LaTourette (R-OH) says 14 National City Bank executives could share nearly $50 million in severance pay, $10 million in deferred compensation, golden parachutes that won’t reflect a tax hit, and numerous other perks, according to documents filed today by PNC at the Securities and Exchange Commission (SEC).

 The perks apply to 14 National City executives, but only three are named in the filing:  Peter E. Raskind, Chairman and CEO; Daniel J. Frate, Vice Chairman and Executive VP of Retail Banking; and Jon L. Gorney, Executive VP of Corporate Operations and Information Services.  National City’s web site identifies just 10 members on its Executive Leadership Team, excluding Raskind.

 “When you have 29,000 National City Bank employees in nine states worried about their jobs and retirement, how do 14 people get these perks when billions of taxpayer dollars are making this merger possible?  What about the other 28,986 employees and the shareholders?”  LaTourette said.

 LaTourette said today’s filing came after PNC internally announced that National City and PNC employees will soon learn about job cuts.

 Today’s filing outlines perks that could be shared by 14, mostly unnamed National City Bank executives, providing the merger is completed by year’s end:

• $49.49 million in severance agreements, plus any executive subject to the ‘golden parachute’ excise tax will generally “be paid an additional payment such that he will be placed in the same after tax position as if no excise tax had been imposed.”
 
• $9.4 million in deferred compensation

• Nearly $6 million in Management Incentive Plan (MIP) awards

• $9.3 million in Long Term Cash and Equity Incentive Plan (LTIP) awards

• Retirement:  Nearly $4.4 million in Supplemental Executive Retirement Plan (SERP) funds or Supplemental Cash Balance Pension Plans (SUPP).  The filing notes that Raskind and Frate will benefit from accelerated vesting, and Gorney is already fully vested.

• Stock Perks:  The 3.2 million unvested National City stock options held by the 14 executives will have a weighted average of $13.82 per National City share upon completion of the merger.  Under the merger agreement, National City’s stock will be worth just $2.23 to shareholders.  Also, about 1.1 million other unvested stock units held by executives will vest upon completion of the merger.

• Life Insurance Premiums:   The filing states that annual premiums will be $69,700 and that future premiums will be $727,800 for all executive officers.  National City also has split-dollar insurance agreements with seven executives, but Raskind and Frate are not participants.  National City cannot terminate the arrangement after the merger, and must continue to pay premiums regardless of a participant’s employment status.

• Protection Against Lawsuits:  The filing states that PNC will “to the fullest extent permitted by law indemnify, defend and hold harmless” all present and former directors, officers and employees of National City before or at the completion of the merger. In addition, National City’s Directors and Officers (both current and former) will have liability insurance for six years after the merger is completed.  The coverage must meet National City’s existing coverage.

 LaTourette said the SEC filing also spells out additional details of severance agreements for the 14 executives. It states that certain executive officers, including Raskind, Frate and Gorney, can voluntarily terminate their employment for any reason in the 30 days following the one-year anniversary of the merger’s completion.

 The filing says those executives could be entitled to:  “(i) an amount, payable in a lump sum, equal to three times (two times in the case of the severance agreement for one executive officer) the executive’s annual base salary and the highest incentive award in the three years preceding the year of the change in control; (ii) an amount, payable in a lump sum, equal to 0.25 times the amount described in (i) above in lieu of continued welfare benefits; and (iii) an amount, payable in a lump sum, equal to 36 times (24 times for one executive officer) the executive’s monthly COBRA premium cost in effect on the executive’s date of termination.”

 Raskind has already announced he will not stay on with PNC after the merger and earlier announced he will donate a significant portion of his expected $8 million severance package to the Cleveland Foundation, LaTourette said.

 LaTourette said it’s unclear if the $7.7 billion PNC is expected to receive from Treasury will derail any of the perks.  The bailout law does have some provisions about executive compensation and golden parachutes, but LaTourette said it might apply to the top 5 executives at a firm participating in the Troubled Asset Relief Program (TARP) – the CEO, the Chief Financial Officer and the three other most highly compensated executives.  He said National City Bank is not receiving TARP funds, and its share will go to PNC.

 The filing also says National City agreed Sep. 30th to pay Goldman Sachs $25 million for its work on the merger agreement, but $22 million is contingent on its completion.