Robert Trosten, a former chief financial officer for Refco Inc., received a whopping $46 million severance payment when he left the commodities brokerage last October, according to The New York Post, which cited a person with knowledge of the arrangement.
The paper noted that Trosten left Refco — which filed for bankruptcy protection late Monday night — about six months after buyout firm Thomas H. Lee Partners bought a 50 percent equity stake in the firm. It added that a Refco spokesman was unavailable for comment.
Details about Trosten’s huge payoff became public this past summer during former Refco consultant Edward McElwreath’s successful arbitration hearing against the firm, according to the Post, which cited Sean O’Shea, McElwreath’s attorney. O’Shea told the paper that during his testimony, Trosten “very reluctantly” confirmed having received the amount as “an exit package.”
According to a regulatory filing before Refco went public this past August, Trosten’s 2005 salary and bonus totals $2.21 million, down from $3.13 million in 2004.
Meanwhile, on Monday Refco and certain subsidiaries filed for Chapter 11 bankruptcy protection. The company stressed that none of its regulated subsidiaries, including its futures brokerage business, have filed for protection.
The New York Stock Exchange suspended Refco’s common stock, effective immediately. Trading had been halted in the stock on October 13, a few days after the firm suspended chairman and chief executive officer Phillip Bennett over a questionable series of transactions with a hedge fund he controlled.
The company also announced that it has entered into a memorandum of understanding with a group of investors to sell J.C. Flowers & Co. LLC, its futures brokerage business, for $768 million. The investor group includes entities associated with J.C. Flowers, The Enstar Group Inc., Silver Point Capital, MatlinPatterson Global Advisers LLC, and Texas Pacific Group.