CHARLOTTE, N.C. — L.M. “Bud” Baker Jr., head of Wachovia Corp., stands to make more money if he retires after he sells to First Union Corp. than if he sticks around to head the new company as planned under the recently announced merger deal.

In a filing with the Securities and Exchange Commission last week, the companies revealed that under the agreement unveiled April 15, Mr. Baker, 58, would take home an annual pay package of $1 million plus bonuses as chairman of the combined bank.

If Mr. Baker retires earlier for any reason, however, he would receive a minimum of $2 million a year for life, in what one executive-pay expert called a “nice golden boot” and perhaps an effort to coax him out the door.

Mr. Baker’s retirement agreement “certainly is enough compensation so he won’t go away unhappy” if he retires or is pushed out early, said Judith Fischer, managing director of Executive Compensation Advisory Services in Alexandria, Va.

“I wouldn’t be surprised if next year he was not on the board,” she added.

Wachovia spokesmen did not return calls to discuss when Mr. Baker would retire.

Regulators and shareholders have yet to approve the deal, under which the merged company would take the Wachovia name, though First Union is the buyer.

The SEC filing Thursday included details of the $13.4 billion agreement, which calls for First Union to trade two of its shares for each share of Wachovia, which is based in Winston-Salem, N.C. If completed, the deal would create the nation’s fourth-largest financial institution, with assets of about $330 billion and 19 million customers from Florida to Connecticut.

Mr. Baker’s receiving more in retirement than as chairman could certainly be viewed as an incentive for him to retire before the slated 2004, Ms. Fischer said.

The package for Mr. Baker, who is chairman, chief executive, and president of Wachovia, is not unprecedented. When First Union directors offered former chairman and chief executive Edward Crutchfield an annual retirement package of $1.8 million last August, he agreed to retire ahead of schedule.

G. Kennedy Thompson, First Union’s chairman and chief executive, would receive no more than Mr. Baker in salary, according to the filing.

First Union has been slashing senior executives’ retirement pay in a campaign to rein in expenses. In March it announced plans to abandon its executive retirement plan and tie future bonuses more closely to its performance. It expects to save $16 million over five years from this move.

Mr. Baker’s postmerger retirement package is not the largest ever, but payments for life remain unusual in corporate America, Ms. Fischer said. “In a merger situation it tends to be a part of the acquiring company’s payoff to the departing executive.”

Thursday’s securities filing also yielded fresh details on the negotiations that led to the merger agreement. Though the deal surprised many in the banking industry and on Wall Street, the filing revealed that Mr. Baker and Mr. Thompson actually began discussing the idea last fall.

The companies also acknowledged for the first time that Wachovia had discussed, then ruled out, merging with another, unnamed company in late 2000. Some observers who were caught off guard by the First Union-Wachovia deal had speculated that the two were pushed into it to keep a third bank — possibly Atlanta’s SunTrust Banks Inc. — from buying Wachovia. SunTrust declined to confirm whether it had ever talked to the company.

The unnamed bank remained interested this spring, and in the midst of Wachovia’s April merger talks with First Union, this third bank’s executives called to see if Wachovia would reconsider.

Mr. Baker and chief financial officer Robert McCoy reported the calls to Wachovia’s board as they sought approval of the First Union deal, according to the filing.

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