Will Southwestern Energy’s CEO Retire?

Last month’s announcement that Harold Korell would succeed Charles Scharlau as CEO of Southwestern Energy Co. on Jan. 1 wasn’t clear about whether Scharlau is considering retirement any time soon. The brief announcement did say Scharlau would remain as chairman of the board.

But there are several factors that would seem to make retirement enticing to the 70-year-old Scharlau, who’s been a director of the Fayetteville-based company since 1966. Southwestern’s stock has languished for months and, most recently, has traded at all-time low levels of about $7 a share. The company faces serious financial difficulty as the result of a recent judgment against it in a class-action lawsuit. If that judgment is upheld, the company could face damages of $90 million.

Retirement could be less stressful but monetarily rewarding. Just last year, the company gave Scharlau options to purchase 82,000 shares of Southwestern stock. Those options vest at the end of three years or immediately upon Scharlau’s retirement or a change in control of the company. At $7 a share, those options would be worth $574,000, although it couldn’t be determined what Scharlau would pay for those options.

Scharlau’s base salary for 1998 is $468,000 and his targeted annual bonus is 50 percent, or $234,000, although he may receive as little as 20 percent or as much as 80 percent.