According to documents filed with the SEC, Safeco is tweaking its rules to funnel outgoing CEO Mike McGavick millions of dollars and stock options that he wouldn’t have gotten otherwise.

You have to wonder if Safeco and McGavick worked out the changes—like changing the vesting date for an extra $4.5 million in stock options —so that McGavick will have extra reserves to take on Sen. Maria Cantwell.

It’s certainly a clever way for Safeco to contribute to McGavick’s upcoming Senate campaign without having to report contributions to the FEC.

Here’s the Dems fact sheet on it:

MIKE MCGAVICK'S GOLDEN HANDSHAKE
By keeping him on as an employee for an extra two months of 2005 and changing the rules for his stock options, Mike McGavick is now getting a golden handshake that doubles his stock options in Safeco. The company explicitly is making him eligible for $4.5 million in option profits that he wouldn't have gotten unless he stayed through May 2006. By staying on as an employee for part of 2006, he is also getting the rights to another $9.8 million in options that he becomes eligible for in late January 2006.

What McGavick Is Getting:
• $4.5 Million In Options They Changed To Let Him Have: According to documents filed with the SEC yesterday , Safeco is changing the vesting date for stock options so McGavick will be able to cash them in before leaving. "Safeco will accelerate vesting of unvested options to purchase 210,298 shares of Safeco common stock. Assuming a share price of $57.10, this acceleration has a value of approximately $4.5 million to Mr. McGavick.� (http://www.sec.gov/Archives/edgar/data/86104/000119312505238392/d8k.htm , See Item 1.02]
o McGavick would have vested in these options in May of 2006 otherwise, but because he would no longer be an employee of the company, he would have forfeited he rights (and profits) to them.
• Gets $9.8 Million More In Options Due In January He Would Have Lost: By keeping him as an employee for January and February of 2006 after he steps down as CEO and Chair of Board, McGavick is being allowed to vest in another $9.8 million in option profits, for which be becomes eligible on January 26. If he had left the company before this date, he would have lost these.
o These options for 300,000 shares were issued in 2001, and were described in the "definitive proxy statement� for Safeco in 2002. They vest in their entirety in January of 2006. [http://www.sec.gov/Archives/edgar/data/86104/000103221002000400/ddef14a.htm , p. 17]
• This Doubles His Stock Options: This additional $14.3 million in options he can now get that he would have lost represent a doubling of what he would get if he had left under the original contract.
o Based on the detailed schedule of stock option grants and vesting dates (see next page), McGavick is currently vested in about $14.1 million in stock options at current prices, from options granted in 2001-2003 that have already vested.

What Else Is Still On Out There:
The materials filed yesterday show that McGavick is still eligible for a 2005 bonus. (http://www.sec.gov/Archives/edgar/data/86104/000119312505238392/dex101.htm, page 2) His bonus for 2004 was $2 million. (http://www.sec.gov/Archives/edgar/data/86104/000119312505059849/ddef14a.htm , page 23)