Despite having served as head of Chiquita Brands International for just a couple of years, Ed Lonergan was awarded a substantial severance payout to the tune of US$16.2 million following the Brazilian takeover in January.

However, in a report to the U.S. Securities and Exchange Commission (SEC), Chiquita noted the majority of this sum would have been awarded regardless of his dismissal which took place on Jan. 6.

The former CEO received US$13.5 million in payments relating to the acceleration of Performance Stock Unit Award, unvested restricted stock units (RSU's) and unvested stock options, all of which were payable upon the acceptance of the 'merger agreement'.

Lonergan also received US$1.9 million in cash severance pay, which was made up of his annual base salary plus the target bonus, along with US$703,000 as the 2014 annual bonus based on the company's performance.

Last year Chiquita agreed to a takeover by Brazilian companies the Safra Group and the Cutrale Group for a total transaction value of US$1.3 billion, considering an assumption of the produce multinational's net debt.

The report also showed that former COO Brian Kocher - who was still acting as interim CEO when the report was filed - stood to receive a US$7.6 million payoff if he were to be dismissed for the same reason as Lonergan - "Good Reason Termination pursuant to a Change in Control".

Of the total sum, US$1.8 million would be awarded in cash severance - calculated from twice the annual base salary plus target bonus - and US$4 million would come in payments relating to the acceleration of unvested long-term incentive plan (LTIP) and performance awards.

Former Chiquita CEO Ed Lonergan

However, Kocher's payment would be almost US$5 million less in a scenario of "Involuntary Not for Cause or For Good Reason Termination".

Chiquita announced in January that former Dole head and European food industry veteran Andrew J. Biles would take on the role of CEO for the company's banana and pineapple businesses, while last month the multinational announced Kenneth Dively would be CEO for its Fresh Express and Chiquita fresh solutions segments.

In another report, the multinational said roughly 300 employees in Latin America were affected by the company's "refinancing and restructuring activities" under the new ownership.

"In January and February 2015, a reduction in force affected approximately 300 employees in Latin America," the company said.

"Because most of the related severance expense was included in the severance plan liabilities described in Note 16, additional expense totaled less than $1 million, which was recorded in January and February of 2015. Payments were approximately $5 million."

As of Dec. 31 last year, the company had around 20,000 employees of which 16,000 worked in Latin America; the majority of the latter are covered by labor contracts.

"Latin American labor contracts covering approximately 9,000 employees are currently being negotiated, and contracts covering approximately 1,000 employees are set to expire in 2015.

"Under applicable law, employees are required to continue working under the terms of the expired contract. Approximately 2,000 Fresh Express employees in the U.S. are covered by labor contracts, with the majority set to expire in 2015 or are under negotiation."

Between $25-40 million is also expected to be spent on "initiating restructuring activities designed to more closely align corporate services with operations and the strategies of new management," as well as announcing the closure of Chiquita's Charlotte headquarters.

Photo: Mike Mozart, via Flickr Creative Commons

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