The board of First American Financial has restructured its leadership following the arrest of its CEO, Kenneth D. DeGiorgio, who was charged with misdemeanor assault. The company’s CFO will assume the role of CEO, with the board chairman transitioning into the position of executive chair. Despite DeGiorgio’s termination, described as without cause, he is set to receive millions in severance based on his contract, according to the company’s update to investors.
DeGiorgio’s departure follows an incident aboard a Virgin Voyages cruise ship, where he was accused of assaulting a fellow passenger. The alleged altercation, captured on surveillance footage, included claims of DeGiorgio choking another passenger. Days later, First American Financial announced DeGiorgio’s termination, which still entitles him to approximately $18.6 million. This sum includes $7.24 million in severance, $9.14 million from accelerated vesting of equity, and $2.2 million from the company’s retirement plan. A cause-based termination would have resulted in no such payouts.
Jason Schloetzer, a corporate governance expert, highlighted that boards might choose to terminate a CEO without cause to safeguard the company’s reputation and maintain stability, especially when evidence doesn’t support a cause-based termination. Severance, often a multiple of salary and bonus, here amounts to two times each, aligning with market norms, according to Eric Hoffmann of Farient Advisors.
In light of DeGiorgio’s exit, First American Financial has appointed Mark Seaton as the new CEO. Seaton, previously the CFO, has been with the company since 2006 and CFO since 2013. Matthew Wajner, the former treasurer, has been promoted to CFO, while board chairman Dennis Gilmore will become executive chairman. The company issued an updated shareholder report reflecting these leadership changes and addressing prior proxy statement inaccuracies.
Gilmore mentioned the company’s anticipation of a new chapter under Seaton’s leadership, acknowledging Seaton’s pivotal role in strategic initiatives. DeGiorgio’s legal team asserted that the onboard incident involved him defending his wife from harassment. Meanwhile, authorities continue to investigate, following allegations that DeGiorgio responded to provocation at the bar by threatening the passenger involved.
No further comments were provided by First American Financial beyond official statements. Attempts to reach DeGiorgio himself were unsuccessful, and the FBI continues to take the incident seriously, emphasizing that crimes at sea fall under federal jurisdiction.
This account was initially reported by Fortune.com.
