Senate Candidate Sued Over Safeco Severance

Executive pay has become an issue in a U.S. Senate race.

Emma Schwartzman, great-great-granddaughter of Safeco Corp. founder C.D. Stimson, on Tuesday sued the insurer’s former chief executive, Michael McGavick, saying he wasn’t entitled to as much as $28 million in severance pay when he quit last year to run for a Senate seat in Washington.

The suit, which also names Safeco directors, was filed on behalf of Safeco shareholders in federal court in Seattle.

A McGavick spokeswoman didn’t immediately respond to a request for comment.

McGavick, 48, said July 18, 2005, that he would quit Aug. 31, after running the Seattle-based company for 4 1/2 years, to consider a Senate run. Under his contract, McGavick forfeited all compensation because of his voluntary resignation, the suit alleges.

McGavick later agreed to stay until the end of 2005 and remained on the payroll through February. As a result he received a $2.3-million bonus, was granted options worth $3.3 million and collected millions of dollars of additional stock options, the complaint says.

McGavick filed two separate disclosure forms with the Senate, one of which said he received about $15 million in 2006 from Safeco. The other said he got $28 million, according to the complaint. He’s running as a Republican against Democratic Sen. Maria Cantwell.

“This did not represent a ‘golden parachute’ but a ‘stolen parachute,’ ” said Knoll Lowney, Schwartzman’s lawyer.

Schwartzman, 27, is a student at the University of Washington. She holds Safeco shares that were passed down from her great-great-grandfather.