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Ousted First American Financial Corp. CEO Kenneth DeGiorgio is set to receive $18.6 million in severance and other pay after being accused of choking a passenger on a cruise ship in March, according to a revised proxy statement.
First American terminated DeGiorgio “without cause,” effective April 10, after the two-decade veteran of the title insurance firm was arrested and charged with misdemeanor assault. Despite the altercation, the former CEO is entitled to $7.24 million in severance and $11.34 million in accelerated vesting of stocks and retirement plan benefits, according to the amended proxy statement.
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The altercation aboard a Virgin Voyages cruise ship on March 31 began after DeGiorgio’s wife, Nichol, asked an unidentified passenger to put his shoes on after the man had been dancing barefoot inside the ship’s “On The Rocks Bar.” When the passenger — referred to as “M.A.” in the complaint — refused, DeGirgio threatened the man at a bar before choking him, according to an affidavit filed in the U.S. District Court in Puerto Rico.
“Look, we are all adults here. Can you put your shoes on?” Nichol reportedly asked as the cruise waded approximately 70 miles west of Fort-de-France, Martinique. The passenger allegedly responded with an obscenity, calling her a derogatory name before flipping her off.
Although DeGiorgio’s legal team contends he acted in defense of his wife and will be cleared of wrongdoing, First American opted to part ways with the former CEO.
If DeGiorgio had been terminated due to a change in control — such as a merger or sale — his payout would have totaled nearly $27 million, the proxy statement shows. It also reflects a correction: an earlier version listed DeGiorgio’s payout as $16.4 million, excluding additional elements incorrectly categorized under “Disability,” according to Fortune.
Amid the fallout, First American swiftly announced a series of executive changes on April 15, with longtime executive Mark E. Seaton replacing DeGiorgio as CEO and Matt Wajner promoted to Chief Financial Officer. Dennis Gilmore, meanwhile, was named executive chairman.
The salaries of several executives, including DeGiorgio, were also recently adjusted, according to the proxy statement, with the former CEO’s base salary rising from $925,000 to $1 million annually through the end of 2027. Seaton and Wajner also saw salary adjustments.
Georgetown University professor and corporate governance expert Jason Schloetzer told Fortune that boards occasionally terminate CEOs without cause when facing misconduct allegations — even without conviction — to protect the company’s reputation, maintain stability and avoid legal battles.
“Terminating without cause reduces the risk of a wrongful termination lawsuit,” Schloetzer told Fortune, “especially when the charges haven’t yet resulted in a conviction and the board cannot prove the CEO’s involvement in the misconduct.”
