Incoming Time Warner Cable CEO could exit with $50 million-plus after deal
By Liana B. Baker
(Reuters) - Time Warner Cable Inc, being circled by potential buyers, could pay out more than $50 million to incoming Chief Executive Robert Marcus as part of his contract, if the company is bought while he is CEO and he gets replaced.
Marcus, 48, is set to take over the top job at the No. 2 U.S. cable company from Glenn Britt on January 1 as takeover speculation surges.
For Marcus to receive the money upon his departure, Time Warner Cable would have to see a change in control from "an applicable merger, acquisition, sale or other agreement," once he is CEO, according to an employment agreement outlined in a regulatory filing.
If he makes way for a new chief, Marcus would receive three times his base salary of $1.5 million and three times his $5 million annual bonus, which equals $19.5 million.
Marcus would also be entitled to stock options accrued over his time at the company. Based on Time Warner Cable's closing price of $136.56 on Tuesday, Marcus would be able to cash out of roughly $37 million in stock, according to a proxy filing. That would bring Marcus' total payout to about $56.5 million.
A change-in-control agreement is common in employment contracts for CEOs, according to Daniel Laddin, a partner at Compensation Advisory Partners, which consults on executive compensation. The provision is designed to provide financial security to executives so they would be open to a deal without being worried about being out of a job, he said.
"This change-in-control provision is fairly typical. What's the unusual circumstance is to have an incoming CEO announced already, while a company is in a play," Laddin said.
The "golden parachute" for H.J. Heinz CEO William Johnson, for example, was set at about $56 million in March after the ketchup maker's acquisition by Berkshire Hathaway and 3G Capital. Continued...