USEC Inc., a supplier of enriched uranium based in Bethesda, said yesterday that it may have to pay former chief executive William H. "Nick" Timbers Jr. up to $18 million if it is found that Timbers was terminated without cause.
USEC announced Timbers's abrupt departure last week, offering no explanation. USEC Chairman James R. Mellor is serving as chief executive until the board finds a replacement.
But a filing yesterday with the Securities and Exchange Commission indicated the parting was not entirely amicable. USEC officials said the company plans to "engage in a dialogue" with Timbers over the terms of his termination and that any dispute would be subject to arbitration.
If Timbers can show he was terminated without cause, the company estimated it would have to make a maximum cash payment of $18 million under terms of his employment contract, reducing its after-tax earnings by $8 million, the filing said. The rest, said spokesman Charles Yulish, was previously accrued.
"USEC believes that it is not obligated to provide the payments and benefits required," the company said in the filing.
Timbers, a former investment banker, became USEC's chief executive in 1999, after overseeing its transition from a government corporation to a publicly traded company. Timbers agreed to a five-year contract, with automatic one-year extensions, unless he or the board chose not to renew the contract, according to the company's March 31 proxy statement filed with the SEC. Timbers received an annual salary of no less than $600,000, in addition to performance-based annual bonuses, stock options and other benefits.
Timbers's contract provided that he would receive a severance package under two circumstances: if he was terminated by the company without cause or if he departed "for good reason." In either circumstance, it requires USEC to pay him a cash lump sum equal to three times the sum of his average annual base salary and bonus for the most recent three years, continue providing benefits for up to three additional years, and supply him with office space and administrative support for two years.
In 2003, Timbers received a salary of $660,000 and a bonus of $612,448. He also owns 1.3 million shares of USEC stock. Timbers did not return phone calls to his home last night seeking comment.
USEC supplies enriched uranium to nuclear power plants around the world. It has struggled in recent years because of low prices for uranium, dumping by foreign competitors and outmoded enrichment plants.