OLYMPIA — The state Democratic Party on Wednesday called for a federal investigation into a multimillion-dollar severance package that Safeco paid to outgoing Chief Executive Mike McGavick after he became a Republican candidate for U.S. Senate.

In a formal complaint to the Federal Elections Commission (FEC), the Democrats alleged that what they termed McGavick's "golden parachute" from Safeco was an illegal campaign contribution.

State Democratic Party Chairman Dwight Pelz said he thinks there is a clear connection between McGavick's severance package and his candidacy.

"I'm assuming if he's elected to the Senate, he's going to be a reliable friend of the insurance industry," Pelz said.

McGavick and a spokesman for Safeco called the Democrats' complaint baseless. And an expert who tracks corporate executive salaries said McGavick's severance was comparable to what other executives have received in recent years.

"This is standard political junk that people are so sick of," McGavick said. "I think people would rather talk about why gas is three bucks a gallon."

McGavick is trying to unseat Democratic Sen. Maria Cantwell. Pelz said Cantwell knew in advance about the Democrats' complaint.

McGavick announced last summer he was stepping down as Safeco's chief executive but agreed to stay on as chairman through 2005. He was on the Seattle insurance company's payroll when he announced his Senate candidacy in October.

When Safeco hired a CEO in December, McGavick signed an agreement to provide "transition services" at the company until the end of February.

He also promised that, for the next three years, he would not work for any Safeco competitor or try to recruit any company employees.

By working two extra months, McGavick was able to collect millions of dollars' worth of additional pay and stock options that he would have forfeited had he left Dec. 31.

The Democrats contend the severance package totaled about $17 million. McGavick said it was somewhat less, but he didn't give a precise figure.

Pelz said the payments violated two provisions of the federal law: one that prohibits corporate contributions to candidates and another that bars contributions to candidates for personal use.

McGavick said the money had nothing to do with his candidacy. He said Safeco's main interest was to keep him from competing with the company in the near future.

McGavick pointed out that he might be looking for work if he loses the election and that his most marketable skill is as an insurance executive.

"[Safeco] acted as it always does, in its own self-interest," he said.

Safeco spokesman Paul Hollie also denied any connection between McGavick's severance package and his candidacy.

McGavick's severance appears in line with what other CEOs have been getting, said Paul Hodgson, a researcher at The Corporate Library. The group researches corporate-governance issues for investors, insurance companies and academia.

FEC spokesman George Smaragdis said he could not comment on the complaint. But he noted that in an advisory opinion two years ago, the commission said a company's severance payment to an employee who quit to run for Congress did not violate the ban on corporate contributions.

Beginning an investigation would require four of six commission members to vote that there is reason to believe a violation occurred, Smaragdis said.

Ralph Thomas: 360-943-9882 or rthomas@seattletimes.com