Richard Kraemer is about to get a big raise.
Mr. Kraemer, 49, is the man the Federal Deposit Insurance Corp. picked to run Crossland Federal Savings Bank when it nationalized the Brooklyn thrift in January 1992. He signed on for $200,000 a year, plus a $100,000 bonus.
Though upper bracket, it wasn't a flashy salary by Big Apple standards. But, then again, he was working for Uncle Sam.
Now the government is selling Crossland to a group of institutional investors, and it has worked out a deal with the private-sector owners that gives Mr. Kraemer $450,000 with annual bonuses up to $225,000, which is enough for a pretty fair lifestyle, even in New York.
That's not all. According to the FDIC's prospectus for Crossland, if the investors sell the thrift, Mr. Kraemer gets a golden parachute equal to three years' salary and bonus, or more than $2 million.
Financial Inducements Needed
The FDIC's director of resolutions, Harrison Young, said the FDIC had to offer lucrative employment contracts to Crossland's top executives in order to keep them.
"It was hard to get people to stay at or come to Crossland," Mr. Young said.
He added that Mr. Kraemer would have to pay substantial taxes on his parachute income. "It's not quite the bonanza it looks like," Mr. Young said.
If Crossland is not sold but Mr. Kraemer is fired without cause or quits for good reason, then he will be paid a lump sum equal to 150% of his base salary multiplied by the number of years left in his contract. That could amount to a payment of more than $2 million.
When the deal is completed next week, Mr. Kraemer also will get the option to buy 238,660 shares or 1.72% of the recapitalized and privatized Crossland.
And what if Mr. Kraemer is disabled while employed by Crossland? The thrift must pay him $225,000 a year or half of his current base salary, whichever is greater, until he reaches the age of 65.
Mr. Kraemer, chairman and chief executive, is not the only Crossland official protected by the deal.
Promotion to President
George Kondos, Crossland's executive vice president since March 1992, will become president of the thrift when the transaction is concluded. As a result, Mr. Kondos, 45, will see his annual salary rise to $250,000 from $175,000. He, too, will be eligible for annual bonuses equal to half his base pay, or $125,000.
If the investors sell Crossland, Mr. Kondos also gets a golden parachute. His totals two years' salary and bonus, or $750,000.
And Mr. Kondos will get stock options to buy 83,300 shares or 0.6% of the company.
Mr. Kondos' employment contract runs for two years. If he is fired during that time or quits with good reason, then Crossland must pay him up to $750,000, depending how much time is left in his contract.