Layoffs possible, Golden Parachute for Executives

Barrons cites a Wedge Partners report that "the company's business is "deteriorating" and that the company is readying layoffs that could affect 10% of the company's 15,000 employees."

If there are layoffs, it will be interesting to compare the severance packages of "regular employees" and managers with those of eBay's top executives.

Like many corporate boards, eBay's Board of Directors put into place Golden Parachutes for its top executives. It appears from SEC filings that some top execs will receive two years' target cash compensation, defined as annual base salary plus target annual incentive bonus. That "bonus" is usually 100% of salary, so it would be like getting 4 years' worth of pay if they are laid off. (President and CEO John Donahoe's target bonus is 125% of salary.)

Donahoe and Dutta's severance packages are detailed in this SEC filing.

Here's one example of a Golden Parachute. On July 16, 2008, eBay revealed in an SEC filing that the company's Chief Financial Officer Bob Swan would receive a severance package in the event of his termination without cause:

providing a cash payment equal to two years' target cash compensation (defined as annual base salary plus target annual incentive bonus) if the termination occurs within two years of the date of the severance agreement, one and one-half years' target cash compensation if the termination occurs more than two but within three years of the date of the severance agreement, and one year's target cash compensation if the termination occurs more than three years after the date of the severance agreement.

Meg Whitman and her inner circle of top executives are gone. I use that term loosely, since some, including Bill Cobb and Whitman herself, are on the payroll through the end of the year; Whitman gets office space and IT and secretarial support for 3 more years and will stay on the Board at least until June 2010. Rajiv Dutta, who retired recently, is working with his replacement Lorrie Norrington on the transition until October 2008 and will subsequently act as a consultant through the end of the year.

With layoffs reportedly looming, it now seems quite significant that Bob Kagle, the Benchmark venture capitalist who has been on the Board from the beginning, chose to step down from the Board in June.

The cynic might say Whitman would prefer any large-scale layoffs to come after election day - she and Carly Fiorina are economic advisors to Republican candidate John McCain, and bad news at eBay would not reflect well on the campaign. But layoffs in the prime holiday shopping month of November would not be good for eBay business.

I have no inside information about the likelihood of layoffs. The management of eBay has been a bit of a mystery for the last year or so. But if they are coming, I'm eager to see exactly where the cuts occur