Anheuser-Busch Cos. executives may fret about InBev's proposed takeover, but a deal would mean a big payout for senior managers.

August A. Busch IV stands to pocket $31 million in severance benefits if Anheuser-Busch agrees to InBev's $65-a-share and he loses his job.

The chief executive's change-in-control payout would include stock options and restricted stock that would vest immediately if he loses his job after the company changes hands. Other components include an enhanced retirement plan, deferred compensation, a bonus and money to offset taxes from the extra pay.

The payout would be in addition to nearly $182 million in other stock Busch owns directly or indirectly, based on his beneficial ownership listed in this year's A-B proxy statement. Beneficial ownership includes about 4.6 million shares he owns directly or through trusts, as well as 4.6 million stock options that already have vested.

Stock options give an executive the right to buy shares at a fixed price, normally the market price of the stock when the option is issued. At Anheuser-Busch, stock options become vested, or usable, in batches, usually a third of the options each year over a three-year vesting period.

The InBev bid raises the value of Busch's options and stock by at least $66 million above their value before rumors of the bid began circulating. The value of options is the difference between the exercise price and the stock's price when the option is exercised, multiplied by the number of options.

Other executives also would reap millions from the deal if they lose their jobs. They include:

— W. Randolph Baker, chief financial officer, who would get $20 million in change-of-control payments. About half of Baker's benefit is from deferred compensation, or money he already has earned that he has agreed to take at a later date. Baker owns or controls another $154 million in stock.

— Douglas J. Muhleman, group vice president of brewing operations, who would get $6 million in change-of-control payments. Muhleman's stock holdings are worth $88.5 million.

— Michael J. Owens, vice president of business operations, who would get $5 million in change-of-control payments. Owens' stock holdings are worth $67.6 million.

Companies are required to disclose payments top executives would receive if they lose their jobs in takeovers.

Companies generally justify change-of-control payments by saying they're needed to help executives remain neutral when evaluating any possible transaction involving the company, said Eric Marquardt, a compensation consultant with Towers Perrin, a benefits consulting firm.

"It gives them a level of income protection so they're not influenced in one way or another" by the possibility that they would lose their jobs in a merger, Marquardt said. He declined to comment on the A-B payments because his company does work for the brewer.

But critics say change-of-control benefits can give executives incentives to sell their companies. In a takeover situation, executives benefit even if they weren't doing a good job of running the company.

Richard Ferlauto, director of corporate governance and pension investment for the American Federation of State, County and Municipal Employees, said change-of-control payments generally don't work as intended.

Ferlauto said change-of-control packages can provide "huge incentives for some CEOs to negotiate their own deal and not one in the shareholders' best interest.

"In any case, it's money out of the shareholder's pocket that could have paid for performance," he said.

Ferlauto says he suspects that A-B's board is involved in a tug-of-war between interests that want to keep the brewer independent and retain Busch family leadership set against those who would like to take InBev's offer. Ferlauto's union owns A-B shares.

To resist the offer, the board must be able to argue persuasively that A-B's current management can improve performance enough to warrant a stock price higher down the road than shareholders could realize now from the InBev offer. But with A-B's performance in the market in recent years, that would be a tough argument to sell.

"It's been a very sleepy company for years," Ferlauto said. "And they haven't performed."

Dan Pedrotty, director of the AFL-CIO Office of Investment, agrees.

"The company's performance over one, three and five years has lagged competitors and the (Standard & Poor's 500 index)," Pedrotty said. "The question is, have they managed themselves in a way that makes them a target for being picked off and rewards managers without generating value for long-term shareholders."

Paul Hodgson, a senior research associate for The Corporate Library, says the corporate governance group regards most change-of-control benefits as a conflict of interest for executives. The group would rather see unvested stock-based pay canceled in the event of a takeover.

If the executive stays on after a takeover, Hodgson said, he would rather see the stock-based pay in the old company converted to pay based on the new owner's stock. However, he said that could be difficult to accomplish when the buyer is a foreign entity like InBev.

Hodgson said shareholders probably won't object to executives taking advantage of any premium in the stock price with options that already have vested.

"Shareholders benefit from the same premium," Hodgson said.

jerristroud@post-dispatch.com

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