SiliconBeat

Calpine, the troubled San Jose power company struggling to climb out of bankruptcy
proceedings, announced last Friday that its executive vice president for commercial
operations, Thomas N. May, “”will be leaving the company effective immediately.” May, who joined Calpine 15 months ago, was paid $500,000 a year, given a sign-on bonus of $500,000 and guaranteed another $500,000 as a minimum bonus for the final seven months of 2006.

No explanation for the sudden departure was given. The terse notice of May’s termination said he “”will be entitled to certain benefits provided under his employment agreement,” without detailing exactly what those would be.

In May’s employment agreement letter in May 2006 the company said he he would be eligible for a so-called success fee following the company’s emergence from bankruptcy to be determined by the company’s chief executive.

However, if Calpine terminated his employment without cause or if he terminated his
employment with good reason, before a confirmed plan of reorganization became effective, he is entitled to receive a minimum success fee of $1 million.

Among the “good” reasons he might quit would be a material change in his duties, the company’s breach of or failure to renew his contract.

Calpine estimates that the total amount to be paid out to its executives in success fees
following the acceptance of its reorganization plan by the bankruptcy court could total $32 million.

But the company has hit some roadblocks this summer. In June Calpine filed a reorganization plan in U.S. Bankruptcy Court in New York, but the federal trustee overseeing the case urged the court to reject it, saying the company failed to provide creditors with enough details.

And earlier this month California Attorney General Jerry Brown called the bankruptcy
reorganization plan “”fatally flawed” because it would illegally allow Calpine to eliminate a
large power supply contract signed with the state.

A new plan submitted by Calpine on Monday promises greater recoveries for investors than previously projected. A hearing on it is scheduled for Sept. 11.

May also received $32,296 in 2006 to cover costs of commuting from his home in Princeton, New Jersey, and temporary local housing during his first six months on the job, along with $18,899 in payments to cover the associated taxes on it. That benefit was eligible to be renewed in six-month intervals by the company’s CEO.

May was eligible to receive assistance in his eventual relocation to San Jose, but clearly he decided not to move. Perhaps it was the weather.