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It was announced Sept. 10, 2012, that Talisman CEO John Manzoni would step down.Jeff McIntosh/The Canadian Press

John Manzoni is leaving Talisman Energy Inc. and that announcement means the veteran oil and gas executive could walk away with more than $20-million in severance pay.

Talisman announced Monday that its president and chief executive would step down after five years at the top.

Although the words used in the press release weren't exactly clear (it said Mr. Manzoni "has agreed to step down," so theoretically he could have resigned), it's plausible he was asked to leave, which would make his status "terminated without cause" in proxy circular speak. A spokesperson for Talisman said that the company is "still working through details of John's contract," but pointed to the company's 2011 management proxy as an indicator of what Mr. Manzoni would receive.

Mr. Manzoni, who is also well known for his work at BP Plc, departs amid some shareholder criticisms that the company has been spread too thin to manage its extensive global operations. Talisman board may have acted to try to head off an activist-investor fuelled proxy battle before it could really get going.

While the company did not give any formal reason for Mr. Manzoni's exit, there has been plenty of investor movement around the company recently – profits were dented last quarter by mounting commodity prices and increasing costs. Firms such as hedge fund West Face Capital and the Ontario Teachers' Pension Plan recently increased their own holdings to roughly 1 and 1.7 per cent respectively.

But one thing is certain: If Mr. Manzoni did exit upon the request of the board, he stands to make a lot more money with healthy salary, option and pension payments than if he resigned on his own.

As of the most recent proxy circular, he would be entitled to two and a half years of base salary, which is a healthy multiple applied to the $1,481,077 he earned as of 2011, based on other comparable companies. That figure did include, though, a deposit of $141,077 for his unused vacation days last year.

On top of salary, Mr. Manzoni would get two and a half times his annual target variable pay – an amount that is 110 per cent of his annual salary figure – as well as the proportional amount that he's already earned this year up to the day he was dismissed. There's also some compensation awarded for long-term incentives with all unvested stock options vesting immediately upon the executive's termination. This amount depends on share price, of course, with the proxy circular using the closing price on Dec. 31, 2011, of $12.98. Today, the stock is up above $14.

All that exit money is defined as his severance payment, and on top of it he would also receive a lump sum of 15 per cent of the total amount to compensate him for his loss of benefits.

He'll drive off into the sunset with an additional two and a half years of pension benefits, on top of what he has already accrued for 2012. He'll drive, that is, if he opts to buy out his personally assigned vehicle – another severance perk.

How does this all add up? Well, as of the end of 2011, Mr. Mazoni would have walked away with $8.6-million in severance pay, $1.3-million in benefits, $4.8-million in share-based awards and $7.8-million in pension. That totals about $22.5-million.

As a loot bag, there are a few bonus items thrown in. Mr. Manzoni could take advantage of a little management termination counselling, and will hang on to his liability insurance.

For comparison, if Mr. Manzoni resigned, benefits and salary end immediately, variable pay evaporates and all long-term incentives end on his last day of work. Pension is paid out at its commuted value.

But we won't know the exact number for sure until the company's next major filing.

Mr. Manzoni has been replaced with Hal Kvisle, a former director at Talisman who once served as CEO of natural gas and power company TransCanada Corp. And when it comes to his pay, a few new rules will apply: There's finally a double trigger clause at the company to prevent any future executives from cashing in on a change in control without the loss of their job. They've also added some new non-competition and intellectual property provisions.

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