John Koelmel is set to receive at least $3 million from First Niagara Financial Group Inc. as part of a severance package negotiated in the wake of his termination from the bank.
The former president and CEO will collect $2.9 million in severance pay - including approximately $510,000 by the end of September - plus $204,083 in bonus pay for the 12 weeks he worked at First Niagara in 2013, according to a regulatory filing dated Aug. 9. The bank will also pay $25,000 to Koelmel for legal fees related to the negotiations.
Koelmel, however, could reap much more than $3 million, especially if the bank's stock price rebounds in the next few years, the filing shows. While at First Niagara, Koelmel acquired nearly 895,000 shares with varying exercise options and expiration dates.
But the bank's stock has tanked in recent years, falling well below the exercise prices attached to most of the shares, making the stocks essentially worthless. Koelmel would only benefit if the stock price climbs above the designated exercise prices of his shares.
As of Aug. 9, the only shares Koelmel would only be able to exercise immediately are 208,413 shares granted March 30, 2012 that carry an exercise price of $9.84 per share.
However, Koelmel also received nearly 87,000 in restricted stock, which are fully vested and able to be cashed out or sold at any time. Based on the Aug. 9 closing price of $10.66 per First Niagara share, Koelmel's restricted stock is worth more than $927,000.
Koelmel, a former Buffalo CPA who became the top executive at First Niagara in 2006, was terminated from the bank March 19. No specific reason was given by either the bank or Koelmel, though the bank did say the departure was "for reasons other than for cause."
Some analysts have speculated that Koelmel's ousting was the result of shareholder unrest related to the bank's stock price, which continued a downward trend even after the growth-minded company purchased HSBC Bank USA N.A.'s Upstate New York retail franchise. The move was touted by bank leaders as a positive development for the bank's bottom line, but a series of market events and an ill-timed capital-raising campaign lessened the immediate payoff promoted to shareholders.
Gary Crosby, chief administrative and operations officer, has been acting as temporary president and CEO of the bank, which is still on the hunt for a permanent leader. The bank said in July that it has begun interviewing candidates, but it has set no deadline for naming Koelmel's successor.
As part of the severance package, Koelmel could also be reimbursed up to $10,000 in cash for any outplacement services he may have used following his termination. It is unclear how much, if any, cash he would receive as he already took a new job as president of HarborCenter Development LLC, a Buffalo Sabres-related firm that's building a $172.2 million ice hockey and hotel complex in downtown Buffalo.