Xerox to Pay Fired CEO $800,000 Per Year for Life, SEC Filing Shows

Xerox Corp., the world’s largest copier company, will pay ousted Chief Executive Richard Thoman $800,000 a year for life, according to a filing with the Securities and Exchange Commission.

Xerox also will pay Thoman, who was fired in May after a little more than a year as CEO, a cash payment of $200,000 in lieu of a continuation of life-insurance benefits, and $375,000 as a prorated 2000 bonus in February of next year.

The payments were disclosed in a May 11 letter sent to Thoman by Xerox Chairman Paul Allaire, who has stepped back into the CEO position while Xerox searches for Thoman’s replacement. The letter was sent to the SEC along with the company’s second-quarter earnings statement.

The $800,000 a year would go to Thoman’s wife if he dies, Allaire wrote to Thoman. The payments were reported earlier by Reuters and by NYTimes.com/TheStreet.com.

Thoman also will receive a 2000 physical exam, preparation of his taxes for the 2000 tax year, financial counseling through the end of the year, and an office and administrative support through May 15, 2002, according to the letter.

Thoman was lured from his job as chief financial officer at IBM Corp. in June 1997 and named Xerox’s president and chief operating officer. He was groomed for the CEO job and was named to the post in April 1999. At that time, he was credited with cutting costs and boosting revenue by entering new markets.

Thoman stumbled in a January 1999 plan to reorganize 15,000 salespeople along product lines rather than geography. Stamford, Conn.-based Xerox said it retrained too many workers at once, which cut into sales. At the same time, the company reorganized billing centers, forcing salespeople to return from the field to iron out billing problems instead of selling machines and service contracts.

Xerox shares were unchanged at $16.69 on the New York Stock Exchange. They’ve dropped 62% in the past year.