How this chief executive got paid $US1.8 million and didn’t even turn up on his first day

A chief executive in the US has been paid a $US1.8 million ($2.3 million) severance package as compensation for his top tier pay packet, despite the fact he never worked a day with the company.

Elio Leoni Sceti, the former chief executive of frozen food company Iglo Group, accepted the top job at global beauty products manufacturer Coty in April and was due to start next week.

But Coty, whose portfolio includes fragrances by Calvin Klein, Chloé and Marc Jacobs, on Tuesday announced Leoni Sceti had “reconsidered and decided not to join Coty”. It gave no other reason for his decision.

Despite the last-minute pull out from the job, and despite the fact he never actually worked a day for the company, Coty told investors it would still pay Leoni Sceti a severance package of $US1.8 million – his yearly salary.

The payout was part of the employment agreement Leoni Sceti signed in April. Coty will also pay about $55,000 to buy back preferred stock Leoni Sceti had purchased.

Mashable reports the terms of the severance package, according to a SEC filing by the company, are that Leoni Sceti can’t work for a competitor in the next year, and that he can’t hire away any Coty employees for the next two years.

In a statement, the $US4.6 billion ($5.9 billion) company said it “certainly understands Elio’s decision not to join Coty as planned”.

“[We] thank him for his professionalism throughout this process and we wish him all the best in his future endeavours,” said Coty.

The company said Bart Becht, Coty’s current chief executive, will remain in the role until a replacement is found.

Employment lawyer and M+K Lawyers partner Andrew Douglas told SmartCompany it would be very unlikely an employer in Australia would have to pay out a severance package if an employee never actually started with the company.

“A properly drafted contract would preclude that from happening,” he says.

Douglas says drafting a specific employment contract for senior positions is absolutely critical.

“When dealing with senior level people, firstly, don’t ever use a template contract,” he advises.

Douglas recommends the contract focus on the development and strategic plan of the business, as well as any incentive programs based on the delivery of those objectives, and must also include a clause that if the person does not start, they get nothing.

“In fact, their failure to start may be seen as a failure to give appropriate notice, and the organisation may be able to peruse them for a breach of contract,” he says.

SmartCompany contacted Coty but did not receive a response prior to publication.