By James McNair
The Cincinnati Enquirer

The employee who had an affair with former Ashland CEO Paul Chellgren received a special severance deal when she left the Covington-based company in July, Ashland said in its latest report to federal securities regulators.

Chellgren

Terms of the sendoff package were not disclosed in the company's annual report to the Securities and Exchange Commission. The deal between Ashland and the unnamed investor relations employee was referred to in Mr. Chellgren's 15-page separation agreement with the company, which was included in the annual report.

Mr. Chellgren, 59, was forced to step down as chairman and CEO after the board learned that he had been dating the woman in violation of company policy on office relationships. The Aug. 2 announcement came a week after his wife of 31 years filed for divorce. James J. O'Brien succeeded Mr. Chellgren as CEO Oct. 1 and as chairman Nov. 15, ending Mr. Chellgren's 28-year career with the $7.5 billion-a-year oil and chemicals company.

With its former CEO gone, Ashland wants no part of any lingering disputes with the woman. Mr. Chellgren's separation agreement calls for him to excuse the company from any lawsuits or claims that might arise from the relationship. It does not, however, relieve the company of its undisclosed obligations to the woman under terms of her severance deal.

Company spokesman Stanford Lampe would not provide a copy of her severance agreement or to discuss its terms.

"We consider that to be confidential information and proprietary," he said.

Paul Tobias, a nationally known labor lawyer in Cincinnati, said Ashland is simply insulating itself from any future claims by the woman, be it sexual harassment or otherwise.

"They made a settlement with the woman; but they're afraid if she sues him, he's going to come back to the company," said Mr. Tobias, author of the book Job Rights and Survival Strategies: A Handbook for Terminated Employees. "They don't want to pay any more money to the woman. They're saying, `It's your problem from now on,' it looks to me."

Mr. Lampe would not answer questions that cited the woman by name. The woman did not return a telephone call Thursday to her Boone County home.

Mr. Chellgren has reconciled with his wife.

Unlike executives who left Ashland during Mr. Chellgren's tenure, Mr. Chellgren won't remain on the company payroll in any significant fashion.

According to Mr. Chellgren's company separation deal, Ashland gave him a two-year consulting contract at $2,000 a day plus expenses - but doesn't have to use him. Ashland agreed to pay a year's worth of rent for his new office in Crescent Springs and to hire a $30,000-a-year assistant for one year if he chooses not to accept the services of his former assistant at Ashland. The company let Mr. Chellgren, an art collector, keep some of his office furnishings and equipment, albeit as taxable income.

The former CEO's cash compensation and any severance pay were not disclosed. The separation agreement says he will receive $164,113 in long-term incentive plan payouts and is entitled to additional incentive and bonus plan compensation. Last year, he received $2.7 million and options to buy 120,000 Ashland shares at $36.38 apiece, or about $7 more than the stock's closing price Thursday.

E-mail jmcnair@enquirer.com