For some senior executives at major companies, retirement does not lead to the cessation of income. Aside from pension and/or severance benefits, some retired executives are retained as consultants. The Wall Street Journal illustrates the variety of purposes former executives can serve as consultants, including relationship management, closing deals, and facilitating new executive transitions.
For example, Phillip E. Powell of First Cash Financial Services, Inc. is former executive who received a lucrative consulting arrangement after retirement. According to First Cash Financial Services Inc.’s most recent proxy statement, Powell performs “such services as may be requested by the Board of Directors.” This consulting arrangement began in 2005, and the term of this arrangement extends through the end of 2016. For his services, Powell receives $700,000 per year for an unspecified number of hours of work. If the company terminated his contract in 2011, he would have been paid out the remaining $3.5 million on his contract.
This is a highly rewarded consulting contract. Based on 2011 salary alone, Powell earned one of the highest salaries of any First Cash Financial Services Inc. employee in that year. In 2011, no employee other than the President and CEO earned a higher base salary than Powell. In terms of 2011 total compensation, Powell would be within the top five most highly compensated employees, earning more than two Named Executive Officers: General Counsel Peter Watson and Vice President of Finance Jim Motley,.
The fact that Powell’s total package places him among the ranks of the most highly compensated employees of First Cash Financial Services Inc. is noteworthy, especially considering his salary is guaranteed—there is no performance-related element to his pay package. This means that Powell is not held accountable for his performance in the same way that executive officers are. This clearly demonstrates that the Board of Directors of First Cash Financial Services Inc. considers Powell’s consulting services to be extremely valuable.
Powell is one of many executives who benefit from consulting contracts after stepping down from their executive role. According to Business Insider, “semi-retirement” can allow for either an effective transition from one executive to another or potentially be a new pool of funding for severance packages. In either case, the pay packages are lucrative.
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