Yesterday it was announced that Jon Corzine, former Governor of the State of New Jersey, has been appointed chairman and CEO of MF Global (MF). The company provides execution and clearing services for exchange-traded and over-the-counter (OTC), derivative products, as well as for non-derivative foreign exchange products and securities in the cash market.
Corzine served as the 54th Governor of New Jersey from 2006 to 2010. Corzine began his career in banking and finance and in 1975 he moved to New Jersey to work for Goldman Sachs (GS). He became Chairman and co-CEO of the firm, but in 1998, he was pushed out – although he did earn a reported $400 million during the 1999 initial public offering of the company.
The SEC filing on the appointment makes for very interesting reading, which was first brought to my attention here (footnoted.org). In addition to his responsibilities with MF Global, Corzine will be a visiting professor at Princeton’s Woodrow Wilson School. There’s more: Corzine will also be an operating partner at private equity firm J.C. Flowers & Co. Interestingly, Flowers owns 10% of MF Global. The private equity firm is owned and founded by Chris Flowers, a well-known financier.
According to the SEC filing, Corzine is expected to “spend substantially all of his business time and attention” on his day job at MF Global. He’s only allowed to spend time with Flowers “so longas the activities…do not significantly interfere with your performance of your responsibilities under this Agreement”.
MF Global is also giving up access to the best investment ideas Flowers can come up with, saying, “[we] renounce any interest or expectancy of the MF Global Group in … business opportunities that are from time to time presented to you by [JC Flowers] … or in which you acquire knowledge through your association with JCF.”
Corzine’s salary for the position with MF Global is $1.5 million and he has a guaranteed bonus of at minimum $2 million for the next fiscal year. His payout for dismissal totals $9 million.
“Just for signing on with MF Global, he’s getting not only a $1.5 million signing bonus within the next month, but also an option for 2.5 million shares that vests if he makes it through March 31 next year. The option’s strike price will be set April 7, but at Tuesday’s close it would have been worth $18.3 million. It takes money to manage all that money, so MF Global will pay up to $200,000 toward Corzine’s tax and financial-planning expenses”, footnoted.org said in its article.
Although Corzine will not be earning any salary at JC Flowers, he does get 3.5% of profits over and above what he invested in the firm.
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